29 June - Following the refusal of the Elections Commission (EC) to initiate any sort of investigations with respect to the allegations made in a report published by the Wall Street Journal, Coalition for Free and Fair Elections (BERSIH 2.0), Center to Combat Corruption and Cronyism (C4) and Transparency International Malaysia (TI-M) today submit four complaints to the Malaysian Anti-Corruption Commission (MACC) for their immediate action.
Complaint # 1: 1MDB overpaid by RM 1.2 billion for assets purchased from Genting Bhd
On June 18, 2015, a Wall Street Journal (WSJ) report titled “Fund Controversy Threatens Malaysia’s Leader” written by Tom Wright claimed the following:
In October 2012 1MDB acquired a Genting unit that owned a 75% stake in a 720 MW coal-fired power plant near Kuala Lumpur for about MYR 2.3 billion. Genting reported a RM1.9 billion extraordinary gain on this transaction.
In its financial accounts for 2013, 1MDB took a write-down charge of RM1.2 billion. This write-down charge signals that 1MDB recognized it had overpaid for the power assets.
We ask the MACC to investigate whether any malpractices were committed by 1MDB when it purchased the power assets at a price inflated by RM1.2 billion.
We ask the MACC to investigate the information provided. If the MACC’s preliminary findings indicate there is a basis to conduct further investigations, the MACC must conduct a forensic accounting investigation to ascertain whether proper valuation was done prior to the acquisition and whether the price paid for for the acquisition is excessive.
Complaint # 2 and 3: Genting Plantations Bhd. wrongfully donated shareholders income to YR1M
The same WSJ report also claimed:
A few months after the (October 2012) sale, a unit of Genting called Genting Plantations Bhd. (GPB) made a donation of about USD 10 million to Yayasan Rakyat 1Malaysia (YR1M), a charity chaired by Prime Minister, Datuk Seri Najib Razak.
Stock analysts at the time said the surprise donation reduced the company’s net profit in the first quarter of 2013, and said they didn’t expect it to be repeated.
We therefore ask the MACC to investigate whether this is an extraordinarily large donation (compared to previous donations by GPB, if any), what GPB expected to gain for its shareholders through this extraordinarily large donation to YR1M, and whether any malpractices were involved.
We further ask MACC to investigate whether the donation was paid as “gratification” defined under MACC Act 2008 for favour in return for paying over and above the market price by 1MDB, as described in complaint # 1 above. We remind MACC that all forms of contributions and funding must be channelled to official party accounts and not into individuals’ personal bank accounts.
Complaint # 4: YR1M wrongfully used funds intended for underprivileged Malaysians
The same article further claimed:
Though YR1M was set up to help underprivileged Malaysians through education and sports, its spending appeared designed to help the Prime Minister retain power in the May 2013 General Elections.
During campaigning for GE13 Najib visited Penang and announced that YR1M would donate two million ringgit (about USD 660,000 at the time) to two local schools which “serve Chinese communities that are not a poor demographic, but whose support would be crucial to win voting in the area.”
We ask the MACC and the police to investigate YR1M for misappropriation of funds, since the WSJ has alleged that money was donated to parties which are not in the scope of the YR1M’s objective.
For the MACC to uphold an independence and fairness, it must act without fear or favour. The MACC must also continuously inform the public of the progress of the investigations of these complaints.
Since 2008 TI-M has been lobbying for the reform of political financing in Malaysia. In 2011 a memorandum was submitted and received by the Prime Minister’s Office on TI-M’s 22 recommendations for reform to improve transparency, integrity and accountability in political financing, which include:
- Make it mandatory for election expenses for political parties and candidates to be independently audited by certified auditors;
- Make it mandatory for disclosure of all sources of financing and expenditure by political parties.
Under such reforms, the misappropriation of funds could be tracked and, even, deterred. Given that 1MDB is already steeped in controversy and allegations continue to surface, a thorough and transparent probe is much needed.
Coalition for Free and Fair Elections (BERSIH 2.0)
Center to Combat Corruption and Cronyism (C4)
Transparency International Malaysia (TI-M)
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