1MDB breaks its silence over Dr M's allegations (Updated)

KUALA LUMPUR: 1Malaysia Development Berhad (1MDB) broke its silence over former Prime Minister Tun Dr Mahathir Mohamad's allegations pertaining to the sovereign fund's financial dealings, saying the statements are either inaccurate or outright false.
In a lengthy press statement issued to the media today, the GLC provided a detailed rebuttal of claims made by the former premier in two blog entries – "The 1MDB Story" and "More Investments By 1MDB".
1MDB said Mahathir's claims that the RM5 billion sukuk assistance for the Terengganu Investment Authority (TIA) guaranteed by the federal government was prepared off-budget is false.
"A Cabinet paper was prepared and approved by the Cabinet, in line with standard practice and as required for all government guarantees.
"The government guarantee is not 'off-budget' as claimed. it is a clear and acknowledged liability of the federal government, which is ultimately the 100% shareholder of 1MDB," the statement read.
In relation to that, 1MDB said AmBank was entrusted with raising the RM5 billion instead of Goldman Sachs as claimed and fully underwrote the sukuk assistance, fully earning its RM500 million commission as the move was risky.
The GLC also denied that the loan was taken at almost 7% interest rate as it was 6.15%, which is appropriate considering the loan has a maturity period of 30 years.
1MDB also clarified that the costs for interests per year for its loans totalling RM42 billion is RM2.4 billion, a full 20% lower than Mahathir's claim of almost RM3 billion a year.
The GLC also said that the RM2 billion raised by billionaire Ananda Krishnan was used to pay an RM2 billion loan provided by a syndicate of domestic lenders and was not used to pay interest as Mahathir claimed.
The statement explained that the money was arranged by a subsidiary of Tanjong PLC as stated in Note 41 (III) (h) on page 170 of 1MDB's March 31, 2014 financial statement.
"On August 7, 2014, Powertek Investment Holdings (PIH), a subsidiary of 1MDB, entered into a subscription agreement with Tanjong under which Tanjong agreed to subscribe for equity in PIH, of up to RM2 billion on the occurrence of certain events," the statement said.
The terms also stated that the proceeds are to be used solely for repaying the RM5.5 billion loan arranged by Maybank Investment Bank and RHB Investment Bank Berhad.
However, more details could not be revealed as 1MDB is bound by confidentiality agreements.
1MDB then explained that it did not wait for the expiry of licenses before purchasing independent power producers (IPP) as only two out of the 13 it purchased had licenses near expiry.
Among the two, the KLPP (Genting) plant's license was to expire in February 2016 but was subsequently renewed for another 10 years, and 1MDB said this proved that it was a good asset purchase.
Meanwhile, the GLC is still waiting for a decision from the Energy Commission for the license extension of the Powertek plant, which will be expiring in January 2016.
Mahathir also claimed that the federal government had sold 70 acres of land to 1MDB for RM320 million, and that nearby land had been sold at RM7,000 per square feet and the GLC should at least pay RM3,000 - RM4,000 per square feet.
1MDB said the figures were inaccurate and the land was purchased at RM230 million, with the GLC being 100% government owned and any increase in land value along with any subsequent benefits will be transferred to the Malaysian government.
The GLC also said that as the master developer of the Tun Razak Exchange, it has a contractual obligation to fund infrastructure and strategic assets and deliver at least RM1,500 per square feet.
Finally, 1MDB denied that no explanations had been given regarding asset valuation, saying that these were clearly stated in the company's financial statements and that valuation had been conducted by independent valuers and auditors have signed off on the accounts.