Business Politics

OMG… Does Selangor have its own 1MDB scandal?!

Just when ugaiz thought that there could be no more interesting stories about 1MDB…. BAM! People are talking about it again! But there’s a NEW PLAYER in town… This time around, people are linking 1MDB to DEIG (Darul Ehsan Investment Group). It is a Selangor-owned company intended to make more money for Selangor.

Er, how can making more money anger people? Well…

Taken from YB Yeo Bee Yin's Facebook

Like this lor. Taken from YB Yeo Bee Yin’s Facebook

BUT…is DEIG really gonna be the same as 1MDB? Well, they both involve huge amounts of cash, are linked in some ways to the government and we still don’t exactly know how they use the money they have.

Oppositions are 1MDB’s biggest critics, so why would they create something like 1MDB in Selangor? #2MDB? We decided to see just how similar these 2 corporations are, literally a 1MDB vs DEIG showdown. Since we are no experts, we decided to ask Alvin Vong, Director of and Bankerman, an anonymous banker and analyst from our earlier article.


1. DEIG is only worth RM10 million, not RM42 billion

We have spent a lot of time talking about how 1MDB has at least RM42 billion in debt, although it may have decreased. To be fair they also reportedly have RM51.4 billion worth of assets (at least they did in 2014).

According to DEIG themselves, they don’t have (para any assets of their own and only act as a holding company. YES, DEIG’s parent company, MBI (Menteri Besar Incorporated) has RM20 – RM30 billion total worth of assets. However, these assets were not transferred to DEIG (para for various reasons.

Alvin stated that since those assets were not transferred to DEIG, unless MBI gives their permission, those assets won’t go to DEIG. Selangor MB’s press secretary also clarified that DEIG has the authorised capital of ONLY RM10 million.

According to the MB himself (Azmin Ali) in a report by Sinar Harian, even if everything was consolidated, the funds under DEIG would only amount to RM6.3 billion and NOT RM30 billion.

Picture from our comment section

Picture from

“Don’t talk if (you) do not understand investment management and economy. The RM30 billion does not arise because the GDV changes from time to time.” ~ MB Azmin Ali

Woah woah there MB… Thankfully, Alvin explained that GDV (Gross Development Value) here is kinda like an ESTIMATION of value of assets, which changes from time to time.

Say DEIG owns 3 billion shoes. If the shoes are valued at RM10 each… TADAAAAAA RM30 billion. But if the shoes are valued at only 20sen, TADA… RM6 billion.

but wait theres more

“What would the status of assets be, if all MBI assets are transferred to and managed by DEIG, and then something unexpected happens, such as a change of government and DEIG pass(es) a resolution that is not related to MBI?” – by YB Budiman Mohd. Zohdi

Which you know is a very valid question (for people like us) since it is not confirmed that MB Azmin Ali would forever be the MB of Selangor and since there is no legislation stopping such a transfer from ever happening. So again, we check with Alvin and he doesn’t see how this would work since DEIG is 100% owned by MBI! Why? This is kinda like your own biological kid suddenly saying that he doesn’t recognise you as his dad! Which doesn’t make sense, unless you were to sell your kid lah…..


2. DEIG is a RM2 company, but that’s not as unusual as you think

People are all #UNDUDUNDUR about how DEIG has only RM2 paid-up capital. It is so alarming that this BN MP even said that the opposition should focus on this RM2 company instead and not the RM2.6 billion donation received by PM Najib. Well we can’t blame him since The Rakyat Post reported about it and even included a picture like this. Even the Companies Commission of Malaysia confirmed this.

Picture from The Rakyat post, source from Companies Commission of Malaysia

Picture from The Rakyat Post, source from Companies Commission of Malaysia

Furthermore, we guess that since we are so used to hearing about companies being started using millions, we just question anything that didn’t involve tons of cash. Like how Terengganu Investment Authority (TIA)’s paid up capital was RM1 milion, 1MDB itself has a paid-up capital of about RM3.4 million. Does that make 1MDB more credible a company?

The answer? – a little bit.

The RM2 that everyone is talking bout is DEIG’s paid up capital. That’s like if two people wanted to start a company tomorrow, they would put RM1 each, and thus own 50% of an RM2 company. Alvin said that RM2 is very normal for a company especially if the purpose is for holding assets. BTW, fun fact:

So fun!

This fact is so fun!

But of coz you can argue that if handling so much money, DEIG seems like it should be worth more right?  Bankerman says that while an RM2 company would still work, it seems like a container to split the shareholdings between 2 people.

“The number of shares offered here is 2 and each is RM1 only. As the share is privately owned, they are difficult to be valued correctly because you need to know more about the nature of its assets and liabilities to estimate share price. Obviously they have chosen to price it at RM1 and this company is like a dummy company I would say.” – Bankerman

But why call it a dummy company? Well, Bankerman calls it that as at times it is created to purchase/transfer assets between parties which is a fairly common practice among businessmen.


3. DEIG isn’t borrowing money to invest, not like you-know-who….

Okla… #1MDB.

1MDB borrowed loads of money to invest in a bunch of businesses, unlike DEIG, who as far as we can tell, is debt-free (well it is a new company).

Thing is… you might have heard the word “sovereign wealth fund” being mentioned with 1MDB. This article explains that 1MDB actually isn’t. But surprisingly, DEIG actually IS a sovereign wealth fund!

Screengrab from a DIEG committee statement. Click to read!

Screengrab from a DEIG committee statement. Click to read.

What does this mean?  DEIG as a sovereign wealth fund actually does invest with the revenue (surplus cash) generated from the state’s resources. So, DEIG is kinda like Khazanah Investment. Even the board members themselves say so click here (para

BUT here are some stuff that got us really guessing…


4. The reason DEIG was formed is to…..?

DEIG was established on December 2014, but only officially launched in May 2015, and officially registered on June 2015. Sooo many dates, sooo confusing! Anyway, don’t fret just yet, it will only go into operation early 2016. So yeah, plenty of time to figure out when to celebrate their first anniversary.

OK, but what exactly is DEIG’s purpose?

Image from

Image from

The intention behind the creation of DEIG was so that MBI can focus on CSRs instead. (CSRs = corporate social responsibility events… Y’know those charity thingies that give back to the community?) Then, DEIG is supposed to focus on investment by consolidating the GLCs (gomen-linked companies) in Selangor. Ok, that makes sense… ish. If it doesn’t don’t worry. All that has been told is that DEIG will give expert advice to make sure that the non-profitable companies will have a stronger business model and be profitable again.

In a response (para c.II) to YB Ng Sze Han, MBI is planning not to close any of its non-profitable GLCs. So as to how it plans to restructure, well we aren’t really sure. Even DEIG themselves (Para don’t know what their game plan is.

Then again, giving DEIG the benefit of doubt, it isn’t easy to restructure a company, especially since Selangor has such a huge, diverse portfolio of GLCs.

Click on the pic for full list. Image from

Click on the pic for full list. Image from

At least they seem to be legitimate companies ( judging by this, and this and this )…..


5. Wait, who is watching over those GLCs now then?

Well, it is the MBI (Menteri Besar Incorporated) punya job.

So, why change something that has been going on since 1994? Well, according to MB Azmin Ali, of all the companies, ONLY 1 company, Kumpulan Semesta Sdn Bhd is paying dividends to the Selangor State, which they used to fund the Jom Shopping program in Selangor. HUH, so many companies and yet ONLY 1 company is making money?


Imagine if every GLCs started making money then…

Yeap, hence why MB Azmin wants to start up DEIG so that it can focus on getting them to make money again. But why is there a need for 2 companies to be run as such? Sure our very own Tan Sri Tony Fernandes bought AirAsia for RM1 with a debt of RM40mil and managed to turn AirAsia into what it is today #impressive. We are not saying that we doubt the DEIG executives’ ability to make the non-profitable companies to be profitable, but quotes like these makes us worry:

“And although DEIG’s role is to do strategic investment for the state, so far no independent directors, especially those with experience in the financial market, have been appointed.” – YB Yeo Bee Yin

“Once DEIG is formed and run by the same person as MBI under MB Azmin Ali, we fear there is no sufficient check and balance,” YB Saari Sungib was quoted by New Straits Times.

We asked Alvin whether it is common for a parent company and a subsidiary to have the same Board of Directors. He did say it was common, especially if it is 100% owned by the parent company which is exactly what is going on now with DEIG! Bankerman too agreed, saying that…

“It’s not surprising to have the same board of directors because they are serving the best interest of their shareholders. Sometimes they hire different people but generally, if it is a close company, they can use the same board as long as they maintain independence from the management from the company.” – Bankerman

With that in mind, we can’t still help but wonder if DEIG would still be #2MDB? Cause you know the experts are talking about companies in general. Shouldn’t there be additional check and balance measure when it comes to the rakyat’s money?


5. BUT, YES, like 1MDB, there’s a (relative) lack of transparency


Nanti kena lectured like this…Image from

Well, when it comes to 1MDB, we aren’t too sure about whether the government/rakyat will be liable for up to RM17.25 billion or RM36.57 billion of 1MDB’s debt. Cause ugaiz should know that if loans by 1MDB are being guaranteed by the government then…

“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.” – FreeLunchon 1MDB

But unless and until more stuff gets revealed about 1MDB, we can’t tell ugaiz much. Only that the rakyat’s money will be involved.

As for DEIG, since MB Azmin wanted a new company, then it shouldn’t have debts kan? Wrong! The existing GLCs themselves already owe the Selangor Government RM450 million (para For example, this RM413mil loan. Based on MB Azmin Ali’s recent speech, the loan hasn’t been paid off yet. So will DEIG be liable for those loans?

P.S. we tried researching about the debt and it seems that the number had stayed at RM450 million since 2009!

Image from memegenerator

Image from memegenerator

Furthermore, because DEIG was set up under the Companies Act, it can take loans just like 1MDB unlike the MBI which is restricted (para c.1) from taking loans! The MB did reassured that DEIG will not take loans but as for now it’s all just words and we Malaysians should now know how politicians from various parties have been known to go back on their promises.

Image from

Image from

Not only that, both MBI (para 6.1.2) and DEIG don’t have to show its accounts to elected state assemblymen. As of now, DEIG would only be made accountable to its own Board of Directors.

But you know…..MB Azmin said that DEIG has to show its account to the Suruhanjaya Syarikat Malaysia. He also verbally assured (para d) that DEIG will have a tender board and an audit boardMalaysiakini also reports that there are plans to improve so that all financial reports of GLCs under MBI (including DEIG) will be consolidated and shown during the state assembly. So you see, MB Azmin kinda got it covered, if these plans do materialise la (As of now they are ready to be audited by the Auditor-General, but AG  probably busy with 1MDB anyway).

Another issue now is that for 1MDB, at least its assets were confirmed. In DEIG’s case, the Select Committee cannot even confirm (para that MBI has RM20 to 30 billion worth of assets. Furthermore, even they find it hard to believe (para that DEIG cannot sell off MBI’s assets without MBI’s permission. What the MB really needs to do is to just clarify all this!


BUT it’s also unfair to say that DEIG is gonna be #2MDB la

twitter image from Syahredzan bin Johan

twitter image from Syahredzan bin Johan

Yeap, ugaiz read this right! Despite everything that we said above, you still cannot fully judge DEIG. Why? Well, they haven’t even started operating yet! So it is a bit unfair to judge something that hasn’t even done anything yet.

Image from CILISOS's FB itself

Like so. Image from CILISOS’s FB itself.

It seems easy to make sensational headlines by focusing on the supposedly RM30 million, the RM2 or linking it to 1MDB (sorry ugaiz #CILISOSbertaubat ). Everyone agrees that the current GLCs need some restructuring. In fact, MB Azmin Ali has assured that the issues will be resolved before it begins operating next year. We should remember that not all sovereign investments funds are bad and that corruption happens globally.

We aren’t saying we agree with DEIG, but we are concerned about how it is being set up… just not to the extent of these guys.  Since they haven’t even started up yet, mebbe kasi chance first? 

If ugaiz still don’t agree with DEIG, then better read this other article by UiHua about writing to your elected representatives, cos at the end of the day, we’re the ones paying for it.

Eh, why so many people not happy Selangor got public holiday?


  1. thegenius

    09/09/2015 at 4:50 pm

    good writing. although im new to this site’s concept (hence im not sure if its a common thing here) but i’d lower the tone on the memes and funny pics which can put off the reader. other than that well done on being balanced.

    • Sue Ann

      09/09/2015 at 10:41 pm

      Hi, thank you for the kind words. It is pretty common for the writers here to use memes and funny pics to capture the readers attention. We do try to minimise the usage to only those that are relevant to the article.

  2. Fadzlan

    09/09/2015 at 12:27 am

    This is a very good written article, with flare some more.


    • Sue Ann

      09/09/2015 at 11:00 am

      Thank you!

  3. MusaNg

    08/09/2015 at 7:45 pm

    Sue Ann,

    This is one of the very best articles I have read on DEIG.

    Truly, it is 🙂

    The writing style may be rather casual, but there is no denying you have researched the matter quite well.

    In fact, you have saved me a lot of reading elsewhere 🙂

    Look, my take on DEIG is very simple.

    Knowing what I know from elsewhere and strengthened by the efforts of your research in this article, I support Azmin Ali’s DEIG 110%. 🙂

    Azmin Ali need worry about one and only one thing if he wants to keep me happy – present timely financial statements every year.

    I want to see an annual report with audited balance sheet and P & L for DEIG every year – simple as that, nothing more.
    So, how will I know whether Azmin Ali has presented his accounts?

    Easy 🙂

    My attack dogs in the form of the UMNO opposition will ensure it does happen and will happen in a timely manner.

    As a Selangorean, I can’t lose by playing both sides of the political spectrum against each other 🙂

    Azmin Ali can prove his credentials as an effective MB OR UMNO can prove that they are a good opposition 🙂

    BTW, even if DEIG is not trading in 2015, I would still expect to see an annual report, ok? 🙂

    If I was marking this article, which I am not, I would have given it 99/100.


    That photo above should have shown a motherly figure, say, …eeerrr… the Fat Lady of Malaysia, and the caption, UMNO 🙂

    • Sue Ann

      08/09/2015 at 10:16 pm

      Hi, thanks for the kind words.

    • MusaNg

      08/09/2015 at 11:33 pm

      That’s alright … just remember to send me the money as agreed … ok ok ok … just joking!!!

      Sheeesh!! Some people will believe anything 🙂

    • Chak Onn Lau

      08/09/2015 at 11:45 pm

      wah as intern get 99/100 ons wei sueann 🙂

    • MusaNg

      09/09/2015 at 8:28 am

      Eeerrr… I didn’t know Sue Ann was an intern but I do now 🙂

      I guess I should have taken the hint in her profile commentary about “permanent writers”.

      I looked at the article first, considered the writing style, followed the line of reasoning, rationalised what was being written, compared it with what I already knew about DEIG, and decided it was a good article.

      OK, maybe I should have taken off another mark because she did not mention balance sheets and P&Ls in her concluding paragraphs where she seemed to be giving her opinion.

      I guess I could have also taken off another mark for her profile pic – a bit too dark and I could not decide if that was a real dog or a stuffed toy.

      But, being the nice guy that I am (just don’t ask the Police Inspector-General, Khalid Abu Bakar, cos I think he doesn’t like me), I relented and decided she could have those two marks as encouragement – after all Cilisos seems to be a news portal with a difference and I would like to see it get bigger and better 🙂

    • Chak Onn Lau

      10/09/2015 at 3:38 pm

      ngawwww. We give you back two stars and one heart 🙂

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