Board kept in the dark

Inaccurate information repeatedly given to directors, says report

PETALING JAYA: The board of directors of 1Malaysia Development Bhd (1MDB) was repeatedly given inaccurate information on by the management, the Public Accounts Committee (PAC) said in its report.

Among the instances of this was when the board was told by 1MDB executive director for business development Casey Tang that the jointventure project between 1MDB and PetroSaudi was a government-to-government matter, at a board meeting on Sept 18, 2009.

“A check of the PetroSaudi International Ltd website found that the company was only set up in 2005 and is a privatelyowned company with no links to the government of Saudi Arabia, ” said the PAC in its report.

The PAC said a jointventure agreement signed on Sept 28, 2009, and a press statement on Sept 30, 2009, announcing the signing of the jointventure agreement, referred to PetroSaudi Holdings (Cayman) Ltd as “PSI” while the Written Resolution of the Sole Director of the Company, which was signed by Tarek Obaid, referred to the same company as “PSH”.

“Four different companies were registered using the name ‘Petrosaudi’, namely PetroSaudi International Ltd which was set up in Saudi Arabia, PetroSaudi International and PetroSaudi Holdings (Cayman) Ltd which was set up in the Cayman Islands and Petrosaudi International Ltd which was set up in the Seychelles,” said the PAC.

It said that the Sept 28, 2009, jointventure agreement was signed with PetroSaudi Holdings (Cayman) Ltd and that 1MDB’s board was unaware that the PSI in the agreement referred to PetroSaudi Holdings (Cayman) Ltd.

“The acronym ‘ PSI’ was used as if to give the impression that PetroSaudi Holdings (Cayman) Ltd was the same entity as PetroSaudi International Ltd (Arab Saudi).”

The PAC said that in a meeting on June 21, 2012, the 1MDB board was told of the receipt from the first US$1.75bil Note that was used for the Tanjong acquisition, which was to pay interest and the OCBC consent fee – conditions for funding the Tranche 2 Syndicated Bridging Loan.

The board was told that US$300mil remained from that amount but the PAC said that only US$194.80mil remained.

“The 1MDB board was not told of the real use of the first US$1.75bil Note which was used to pay the arranger fee, a commission to Goldman Sachs, a security deposit and the Tanjong acquisition,” the PAC reported.

“US$785.67mil was paid for the Tanjong acquisition, compared to the US$900mil that was announced while US$576.94mil was paid as a security deposit to Aabar Ltd.”