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Regarding the RM900 million Sukuk disputed by Mohd Shafie, Masidi explained that Sukuk issue by a company for business purposes has nothing to do with building roads and bridges.   

“If we want to use Sukuk for that purpose, the State Government itself should raise the Sukuk for the purpose. Simple to understand. 

“We used the money from Sukuk to take over Sabah International Petroleum Sdn Bhd (SIP) and pay off its RM700 million debt because of certain reasons. 

“First, SIP and Sabah Development Bank Berhad (SDB) belong to the State Government. SIP owes to a bank (SDB) which is also owned by the State Government.

If SIP does not pay the debt with SDB, SDB will have problems because there will be no money available for business purposes. So we have to consider both. 

“For example, if SDB goes bankrupt, the bondholders of SDB will sue the owner of SDB, which is the State Government. 

“There is no such thing that this is just a company. Yes, they are, but SIP and SDB are owned by the State Government. 

The difference between 1MDB and SMJ Energy paying off Sabah International Petroleum’s (SIP) debts through sukuk bonds is that no one in the government pockets the money.

Masidi said monies withdrawn in the 1MDB scandal were stolen but in the case of the GRS government, banks have approved the payments. 

“Why can’t SMJ (Energy) help? It has just declared an audited profit of RM259 million. Don’t worry, we are not 1MDB,” he told (Warisan-Senallang) Datuk Seri Mohd Shafie Apdal at the State Assembly on Wednesday.

Shafie had asked why the State Government took out an RM900 sukuk loan to pay SIP’s debts.

“SMJ energy is owing at 4pc interest from lenders and are using that to pay SIP debts through Sabah Development Bank (SDB) at 8pc interest. 

“These are two state government owned GLCs where SMJ Energy is Ministry of Finance (MOF) incorporated. But now there are no more payments from SIP. SDB could have profit RM60 million in payments,” Shafie said.

Masidi replied that it’s simple arithmetic: “If SIP owes the bank at 8 pc interest but through sukuk it is only 4pc, which is better? Simple logic right.

“As long as SIP doesn’t pay off its debts to SDB then it cannot profit. In fact SIP doesn’t even have enough to service the interest. 

“I’m no economist like (Shafie) but I have my 555 book where I can see that 1 plus 1 equals to 2. I try to see things in a very simple way. Because SIP has paid its dues, it can now profit annually.

“You asked about control, SIP is now a subsidiary of SMJ Energy which is under the Chief Minister’s (Incorporation),” he said.

Masidi said drastic actions had to be taken to save SDB because if SIP did not pay its dues (to SDB) then the state will have to shoulder RM5 billion in debt needed for development purposes. 

Shafie went on to argue that 1MDB Sdn Bhd was also MOF incorporated, but after the scandal it became a burden to the government which he likened to the beginnings of the SIP-SMJ Energy consolidation.

The hall erupted when Masidi replied with: “if you are so confident in your methods why didn’t you use it when you were the Minister of Finance?”.

“Come on, only 20 months…I have planned the state’s financial future, Covid was there,” Shafie replied before the additional questions sessions ended.