8 simplified & confirm-sure answers to confusing 1MDB questions

*This article is available in BM, tekan sini untuk baca!

There just never seems to be a day where we don’t learn something new about 1MDB.

Now as the plot thickens with the whole cabinet being reshuffled and a new AG being appointed (more on that over the next few days, stay tuned to CILISOS.MY), we found that it was getting harder and harder to find the exact information we wanted about certain topics about 1MDB.

But that got us thinking, with so many things being said, how can the rakyat distinguish right from wrong?

So we pooled our interns together from our intern erm…pool (yeap, intern-S, we have 4 atm, they wrote this other article), and tried our best to go as far as we could to find to find the sources of these information. Why? Because there’s just so much information going around right now and all we want, really, is answers.

(Sorta like an X-Men Origins movie but with less Hugh Jackman-going-shirtless-while-ripping-stuff-apart scene.)

So, here goes, 8 questions about 1MDB accompanied by simplified, confirmed-as-much-as-we-could answers.

Note for the journey ahead: We know 1MDB is really complicated and will make you go spinny-spinny-boom-boom, so for your convenience we have a TL;DR at the end of each point. So if you’re just here for the simplified answers, go straight to the bottom of each question la. (But read the whole point la if not our interns very sad… 😥 )

 

1. Is Jho Low actually connected to 1MDB?

The playboy, billionaire, philanthropist of Malaysia has always been linked to 1MDB. While he has admitted to being part of the Terengganu Investment Authority (the predecessor of 1MDB), he told the Malaysian Insider that he had not been involved with TIA (later 1MDB) since 2009.

But on the other hand, Sarawak Report has published multiple stories on Jho Low and his link to 1MDB. And we have to admit once again that Sarawak Report has never been seen as a credible source to us until recently. So we decided to go through their evidences to see what we could find.

So, as we went through the Sarawak Report articles about Jho Low, we found this one particular article.

The article talks about an attempt by Jho Low to buy out a London hotel company. It’s a long and complicated story. Basically Jho Low was part of a court case in the UK. That London hotel company that Jho Low wanted to buy? Someone else bought it, and he and a few others sued.

One of our interns, who is coincidentally a law student, was able to find the documents of this court case on judiciary.co.uk, and what she found within that court case scared us a bit. Here’s an excerpt from it.

This is basically saying that the M’sian gomen/1MDB supported Jho Low’s bid to buy out that London Hotel Company!

We’re not sure about ugaiz but with the word ‘backing’ here, it’s very hard to continue saying that Jho Low is not linked to 1MDB. And not one but two websites uploaded the documents from this court case. One is bailii.org, which uploads tons of legal cases in the UK and Ireland, and the other is judiciary.co.uk.

TL;DR – We’re gonna say yes, Jho Low is connected to 1MDB. These court documents mention them multiple times. And we’re not talking about money here. We’re just saying that there actually is a link between Jho Low and 1MDB.

What we cannot say for sure is how exactly they are connected. Was Jho Low working on projects with 1MDB? Did he help 1MDB get connected with other international companies? And did he actually orchestrate the whole 1MDB-PetroSaudi deal? Those still remain a mystery.

 

2. Has 1MDB generated any “real” revenue…at all?

So this was a question that we asked in one of our previous articles about 1MDB. By “real” we will once again use the definition of earning something by providing value to someone else. 1MDB wasn’t answering them so we thought, “Why not try and look through their financial reports?”

So what we did was try and figure out by looking at some of their financial reports. They had been uploaded by a particular Lim Sian See on her blog. Sounds fishy, yes. Like how can we trust a blog? But hear us out.

Turns out they have! Well, revenue at least. According to 1MDB’s last 2 financial statements, 1MDB has in fact been generating revenue. Billions sumore. Check it out.

We believe these revenues coincides with the purchases of 2 power plants by 1MDB, which then allowed them to generate revenue from them. (One in 2012, and one in 2013.) In fact, their 2010, 2011, and 2012 reports don’t show any revenue.

But not bad wor, in two years got almost RM7 billion revenue. But we know ugaiz not dumb la. Revenue only. Not profit.

The Star reported back in 2014 that 1MDB showed profits in 2013 and 2012 because of property revaluation. Meaning the price of their property go up so recorded as profit. And these figures presented by The Star are present in the reports we found.

And if not for these revaluations, 1MDB would actually have reported losses in 2013, and much heavier losses in 2014.

TL;DR – So has 1MDB generated real revenue? We believe so. But only recently when they started buying power plants.

 

3. Did money really disappear from the 1MDB-PetroSaudi deal?

You probably would have heard about The Edge getting a 3 month suspension (we did, our editor-in-chief even wrote a long letter of support). Yea, it’s because of this. The Edge did an extensive analysis of of how they believe Jho Low and PetroSaudi took money from Malaysia.

So we saw this and like okay la, we’ve done 1MDB topics before, shouldn’t be too difficult to understand. We were WRONG!!! Nothing could have prepared us for what we were going to find within. Are you ready?

Like gila babi wombat right? How da heck do you even decide where to start? If you’re really interested to know what was reported by The Edge, you can read it here. But basically, what we believe this article was trying to portray was this.

Now imagine the same thing, but with money.

The New York Times reported that this is actually what Jho Low does for a living. He takes huge amounts of money and moves them all over the place, making them virtually untraceable and invisible to the public eye. 

But The Edge tried to trace it, and we commend them for doing their best. Can their sources be trusted? Well, The Edge has come out and said that the source of their information is Xavier Justo, the Swiss national arrested by the Thai police who got the M’sian gomen very worked up. This still doesn’t confirm that what they said was true but consider that The Edge took all this information, analysed it, made all this funky graphs, published it, put their newspaper on the line for it.

TL;DR – Did money really disappear from the 1MDB-PetroSaudi deal? If your definition is “disappear” without a trace, then no. The Edge has seen to it that we have a glimpse of where it all went. If your definition of disappear is gone for good then we cannot say.

All we can say is that if this is true, the money has traveled to more places than any CILISOS writer. COMBINED.

 

4. Is Lester Menyanyi Melanyi really telling the truth about Sarawak Report?

Some of you are still going “Who da heck is Lester Melanyi?” Well maybe our previous article on him may help clarify. Come back after read finish k?

So yea, now that you know who he is, let’s get down to it. Is he telling the truth? Did Sarawak Report really fabricate all these stories? We tried looking for proof on whether Lester Melanyi did in fact, work for SR. Prior to 2014, we could only find 2 instances of Lester Melanyi’s name.

1. He used to work as an editor for The Sarawak Tribune but resigned in 2006 after they published caricatures of the Prophet Muhammad.
2. In 2012, it was reported that he was starting up Radio Kenyalang. Don’t think it took off though, because we couldn’t find out anything else about it.

But ever since then, nothing on Mr. Melanyi. It’s like he just…

Not until his 2 video confessions this year.

But if we cannot find proof of him working there? Maybe we can examine his evidence about Sarawak report? Our friends at Says.com actually compiled a list of the inaccuracies in his video but here are some other things that got us skeptical about his video.

1. His video confession contained the picture of a James Steward Stephen, master designer who helped faked the stuff on SR. SR was quick to point out that the picture was some random railway guy in the UK! He then says his designer got it wrong.
2. He said he was ‘paid’ to do the video, but later said that by ‘paid’ he meant expenses to make the video (travel, accomodation).
3. Tony Pua has claimed that Lester Melanyi is bankrupt. Kinda strengthens the point above.
   

   Some of the emails that Clare Rewcastle-Brown sent to The Malaysian Insider. Click to go to article.

4. He claimed that a minister asked him to sabotage Radio Free Sarawak (also under Clare Rewcastle-Brown). This same minister had earlier criticised Datuk Abdul Rahman Dahlan (BN’s strategic communications director) for supporting Lester Melanyi.
5. Sarawak Report’s editor showed emails of her conversations with Lester Melanyi. We have no way to verify these emails to be true but Lester hasn’t said anything to disprove them.

We can’t say that these are proof that Lester Melanyi is lying but these things really raise a lot of questions about how true his claims are.

TL;DR – Is Lester Melanyi telling the truth? Maybe, but personally we feel it’s highly unlikely. There really is no proof to discredit him, but at the same time, there’s plenty of reason to not believe him.

 

5. Was RM700 million really transferred to Najib’s and Rosmah’s accounts?

This is what the whole Wall Street Journal hoo-hah is about. The Wall Street Journal released an article in which they alleged that $700 million was transferred into Najib’s personal accounts.

First off, if you’re not familiar with the story, maybe 4 quick facts would help? But in short, WSJ (and later Sarawak Report) published an article saying that $700 million was transferred from 1MDB into his personal accounts just before GE13. But while this has been a huge story in Malaysia (because first time Najib name directly connected to 1MDB dealings), WSJ and Sarawak Report have yet to reveal where they got their information from. 

And with that kind of accusation towards the leader of a country, they gotta be quite brave la not having any sources.

And while WSJ have released the documents that allegedly show these transactions taking place, but as Sabah ‘nudist’ Emil Kaminski has taught us, we at CILISOS know better than to take online text documents as concrete proof.

But anyway, Najib is going to sue WSJ already. Yes, not yet sue. Last time he only sent a letter asking them to clarify (we translated it).

TL;DR – Honestly, we have no answer for this. The story starts and ends with WSJ and Sarawak Report. It is still very much in progress though, with Najib having no choice but to sue. So this is one of those answers where we have to say “Akan datang!”

 

6. Is 1MDB’s debt still RM42 billion?

So about 2 months ago, 1MDB’s CEO, Arul Kanda, showed the whole of Malaysia the breakdown of 1MDB’s debt.

You see the breakdown you also want to breakdown. 

But anyway, this RM42 billion has been the same since our first 1MDB article back in November 2014. And if we know that 1MDB borrowed money to invest, would it still be RM42 billion after so long? We CILISOS fellas not bankers la but we know if you borrow money, sure got interest la, where got lend money no interest wan?

Debts (sorta) paid:

We managed to find some articles that talks about 1MDB paying off their loans BUT by borrowing from other people.

1. A RM2 bil loan they said was paid off BUT they borrowed RM2 bil to pay RM2 bil so they cancel each other out (said by 1MDB themselves).
2. Another is a $975 mil loan in they received money from IPIC (more about them in our next point) to pay off (links here and here). While it has been described as a loan, 1MDB has said that it’s not, so since 1MDB say it’s not so minus $975 million lo. Yay!

So after paying off some debts, 1MDB debt now….-$975 million or RM3.72 billion (adjusted to exchange rate on the date 1MDB announced it, 18/7/15)

New loans:

• 1MDB took one new loan from EXIM bank, owned by a subsidiary of the Ministry of Finance *eek*.

So debt +RM560 mil (as stated in article)

Interest from loans:

• In June our Second Finance Minister Datuk Seri Ahmad Husni Hanadzlah said that 1MDB pays between RM2.4 bil to RM2.7 bil in interest on its loans annually. And in a press release, 1MDB said that their annual interest is RM2.4 bil.

Mind you that this doesn’t mean that they are paying off between RM2.4-2.7 bil of the debt, but the INTEREST only, so 1MDB debt +RM2.4-2.7 bil per year.

Let’s try and do some math with this. So, this RM42 billion is actually ‘as of March 2014’. Now is July 2015. So it’s been about 1 year 4 months so let’s cut it down to a year since that’s how most companies work.

Jalan Kerja: 

BTW PLEASE TELL US IF WE’VE MISSED OUT ON ANYTHING!!!!

TL;DR – In short, the answer is no, as far as our calculations are concerned, 1MDB’s debt is now between RM41.24 billion to RM41.54 billion! Sudah kurang! Yay!

 

7. Did 1MDB ask this bank to help them borrow money and then pay them gila high commission?

So back in 2013, the Financial Times reported (UK based business website) that 1MDB was looking to raise money for itself to start that huge labyrinth of a deal that we talked about in the previous point. To do this they hired Goldman Sachs, an international banking company.

For those of you who don’t know how bonds work (this writer admits no knowledge prior to researching this topic as well), they are basically like really big loans. For a more elaborate explanation, click here.

Anyhoo, so Goldman Sachs helped 1MDB sell bonds. 1MDB then gave them commission. Two news sources, Financial Times and Bloomberg, question this deal because of the high commission that Goldman Sachs would get from helping 1MDB. Their source? Both of them say its “someone familiar to the deal.”

….

The Edge reported that they attempted to contact Goldman Sachs about this. According to them, the costs of Goldman Sachs to 1MDB were massively above the norm.

The Edge quoted investment bankers as their sources but without any names. But with that, 3 news sources were saying the same thing. So did 1MDB or the Malaysian gomen respond? Errrr….sorta.

So our Prime Minister was the one who addressed this issue. The Malay Mail Online reported that he confirmed that Goldman Sachs did in fact help them to sell bonds. But while he went on and on about why they paid so much to Goldman Sachs, he does not disclose how much 1MDB paid them!! 

That’s a mighty big reason not to believe the gomen already. No matter how many unquoted sources other people use, if the gomen is not gonna reveal something, people are automatically going to assume that they have something to hide.

TL;DR – 3 news sources say yes, Goldman Sachs got wayyy more than the norm (with numbers), but the gomen said nothing to disprove their claims. We’re gonna say that until the gomen reveals how much they actually paid Goldman Sachs, we’re gonna have to trust the only numbers available to us.

 

8. Will the rakyat have to pay for 1MDB’s debt?

 

Some of you are like going “Phew, safe.” But this screenshot of ours was taken like late last year. This press release that we found on 1MDB’s website? It’s not there anymore. Click on the picture above and tell us we’re lying.

But it’s just one missing statement right? As in c’mon, that doesn’t mean the gomen is going to pay off 1MDB’s debt right? Let’s see shall we? There are actually 2 different sides to how much the gomen owes. On one side we have Tony Pua, and on another we have 1MDB.

Tony Pua’s side:

Free Malaysia Today reported that Tony Pua claimed that the gomen will tanggung RM36.2 billion of 1MDB’s debt if it goes south. In it he lists down the following points.(Debt in USD have been adjusted to RM using exchange rate dated 27/7/15 unless explicitly stated as RM)

1. March 2014 : Letter of support : RM11.45 billion
2. April 2014 : Government guarantee : RM5.8 billion
3. March 2015 : Ministry of Finance provides ‘standy credit facility’ : RM950 million
4. June 2015 : Letter of support : RM572 million
5. June 2015 : Government guarantees IPIC who guarantees 1MDB : $4.5 billion (RM17.1 billion) or with interest, $4.7billion (RM17.9 billion)

We checked them out and linked them to either statements from 1MDB themselves or reports of the gomen confirming them. You can check them out.

1MDB’s side:

On the other hand……1MDB says that the gomen does not guarantee this IPIC deal. In their press release, they state that the M’sian gomen still guarantees ‘only’ up to RM17.25 billion of its debt so only point a. and b. from the list earlier, counts.

So how to count if got conflicting stories? Calculate the estimated range again lo.

Jalan Kerja: 

We’ll just point out that our calculations using various sources do show a figure that is quite close to Tony Pua’s RM36.2 billion. But depending on which side you believe, the gomen is liable for either RM17.25 billion or RM36.57 billion of 1MDB’s debt. 

But you know what, that point c. of standby credit (RM950 million) that’s available to 1MDB? An amount that 1MDB claimed isn’t part of the amount guaranteed by the gomen? Astro Awani reported that 1MDB has already used RM600 million of it.

 

TL;DR – So we know that the gomen is liable for either RM17.25 billion or RM36.57 billion of 1MDB’s debt. But does that mean the rakyat tanggung? Well, check out what our friend FreeLunch had to say.

“If it’s true that it’s government owned, then the government is liable for the debt, which at the end of the day, means you and me.” – FreeLunch

Our answer is then yea la, we tanggung lo. 

 

There isn’t enough information out there about 1MDB

This article was a tough one to write. In all, it took one editor-in-chief, one junior writer, and 4 interns* to help understand and put all this information together. But at the end of the day, there still wasn’t enough info for us to draw solid conclusions upon, and even if there is enough info, how many of us know where to look? Because c’mon, the points in this article were simplified yet still enough to give us a spinny spinny boom boom.

And in the end, our confirm-sure answers could only go as far as to confirm-sure that we still don’t know a lot of things about 1MDB. So part our title actually qualifies as click-bait. #terrible #ihatecilisos #godaiinafiyah

As we concluded in one of our previous articles about 1MDB, would a little transparency be too much to ask for? At least transparent enough for people to not have to crack their brains in order to distinguish truth from fiction. Because at the end of the day, all that Malaysia wants right now, is answers. And we’re just not getting any.

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*We’re gonna show some love to our interns right now. We wanna say thank you to Wong Sue Ann, Letitia Lim, Mahadhir Monihuldin, and Khalil Majeed for researching these topics for us. #banggasos #poweredbyinterns