1MDB scandal could have been prevented, says Singapore paper
Published on: Saturday, May 21, 2016
SINGAPORE: The 1MDB scandal could have been averted if there had been proper checks and balances, Singapore's Business Times reports.Tell-tale signs of trouble appeared even as early as three months into the formation of the then Terengganu Investment Authority, which later became 1MDB, but no one took heed, the report said.It said the happenings at the Malaysian state investment arm should have set off alarm bells at the regulatory authorities, government agencies and financial institutions.
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Within a span of six years, 1Malaysia Development Bhd's debt had ballooned 10 times to RM50 billion and its business deals are now the subject of probes in seven jurisdictions, including Singapore."Could the mammoth scandal around the state-backed fund have been averted? The answer is 'Yes', given the events at the strategic investment firm from the outset, which ought to have set off alarm bells at various government agencies, regulatory authorities and financial institutions."In fact, had there been vigilance and proper checks and balances in the first place, the 1MDB controversy could well have been nipped in the bud."It said the issuance of a RM5 billion government-guaranteed sukuk bond three months after the formation of the Terengganu Investment Authority was the first sign of something not being right.
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"The manner in which the sukuk was issued should have raised a red flag. Despite a "no-go" from the board, management pushed through the issue anyway – at an unusual pricing not befitting the firm's capital base."Soon, several billion-dollar deals were made with joint-venture partners from the Middle East and big-scale buyouts in the energy and real estate space – all funded with more debt and risks.
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These happenings in the firm's short existence led to crippling financial woes, shook public trust in Malaysia's leadership and the highest institutions, marred the country's international reputation, and, more recently, caused defaults on its bond payment, the report said."All that could have been avoided if someone – be it from 1MDB's board (past and present members, many of whom hold top posts in government-linked institutions) or the regulatory bodies – had spotted and acted on the irregularities in the original bond issue and, later, the hundreds of millions of dollars funnelled in and out of the country's banking system.Stay up-to-date by following Daily Express’s Telegram channel.
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