MOF confirms Khazanah, BNM money was used to pay off 1MDB debt

GUAN ENG SAYS HE IS READY TO FACE ANY SUIT BY 1MDB CEO ARUL KANDA

THE Finance Ministry has confirmed reports that the government of former prime minister Datuk Seri Najib Razak had used funds from Bank Negara Malaysia and Khazanah Nasional Bhd to service debt obligations of 1Malaysia Development Bhd (1MDB).

In a statement yesterday, the ministry said, as stated in its press release on May 22, the ministry had made payments on behalf of 1MDB amounting to RM6.98 billion.

“This amount includes the payment made to International Petroleum Investment Co (IPIC), as part of the RM5.05 billion settlement agreement,” it said.

The ministry said the sources for the payments made to IPIC and Aabar BVI on behalf of 1MDB included the redemption of redeemable cumulative convertible preference shares (RCCPS) by Khazanah, amounting to RM1.19 billion.

Khazanah Nasional said it had no control over the use of funds redeemed in the form of RCCPS by the Finance Ministry. As the sole holder of the RCCPS, it said, the Finance Ministry had the right to redeem it at any point of time.

“On March 7, 2011, RM3 billion RCCPS was issued by Khazanah to the Finance Ministry. The RCCPS is essentially capital injected that the Finance Ministry, as our 100 per cent shareholder, has a right to call back or redeem at any time.

“On March 14, 2014, the Finance Ministry redeemed RM1.8 billion of the RM3 billion issued. On Aug 11, 2017, the Finance Ministry redeemed a further RM1.199 billion of the remaining RM1.2 billion RCCPS,” Khazanah clarified in a statement.

“It is important to note that as the sole holder of the RCCPS, the Finance Ministry possesses the right to redeem the RCCPS at any point of time. The redemption of the RCCPS is, in effect, a repayment of shareholder capital by Khazanah to the Finance Ministry.

“Further, it is also relevant to note that Khazanah has no control over the utilisation of the funds once the RCCPS has been redeemed.”