1 MDB "units" worthless-Second Finance Minister Husni has provided the clues

by Ganesh Sahathevan

 In explaining the nature of the so-called 1 MDB units worth USD 1.103 billion  that were once thought to be in  cash Second Finance Minister Datuk Seri Ahmad Husni Hanadzlah said:


 “There’s a mistake… mistake in the sense that, the impression (given by 1MDB) when they said they have redeemed (the funds) and saved (them) in the Singapore bank (Singapore BSI).... so the impression is that there’s cash, (but) actually that is a saving,” Ahmad Husni said told reporters at the Dewan Rakyat today. “That (the redemption) is (in) unit... that’s what it is… in unit, and then, that is being backed sovereign wealth funds” .

The US$1.103 billion is said to be  the part of a total of US$ 2.32 billion which has come  to be known as the Brazen Sky Cayman Island units, Brazen Sky being  a wholly-owned subsidiary of 1 MDB incorporated in the Cayman Islands.

When 1MDB and its CEO Azrul Iskandar aka Arul Kanda attempted to explain how and where  1MDB had invested some RM 42 billion in borrowing that sum total was broken down into a deposit with Aaabar Investments PJS ,a subsidiary of the International Petroleum Investment Corp of Abu Dhabi,and investment "units" held by Brazen Sky(see last item below).







However,  The Wall Street Journal has now reported, in a story about  the Aabar deposit:


According to 1MDB’s financial statements, the Malaysian fund made a collateral payment(the deposit)  of $1.4 billion (to secure the guarantee) . A draft report into 1MDB’s activities by Malaysia’s auditor general, reviewed by The Wall Street Journal, said the payment went to a subsidiary of IPIC called Aabar Investments PJS.

According to the Malaysia auditor general’s draft report, 1MDB fired KPMG LLP as its auditor in late 2013 after the firm declined to sign off on 1MDB’s accounts unless it received more details about $2.32 billion the fund said was invested in a Cayman Islands account.

Aabar stepped in and guaranteed the Cayman Islands funds, an official for Deloitte, which took over as 1MDB’s auditor, told a closed-door meeting of the parliamentary committee probing 1MDB, according to a transcript of the proceedings reviewed by the Journal. This guarantee was never made public.

Given the above  report by the WSJ, there are now two issues that make that guarantee worthless.First, even if it existed as WSJ said it did, IPIC is not acknowledging it.This is evident from IPIC's  statement to the London Stock Exchange tilted 1 MDB Debt Settlement Arrangements  which makes no reference at all to any guarantee other than that for  two USD 1.75 billion loan packages,which had crystallized.
And now with  IPIC and Aabar disputing  even having received the USD 1.4 billion which secured their guarantee, the guarantee can be considered as good as gone, even if it existed.

Consequently the so-called Brazen Sky "units" can be considered worthless for these would  no longer  be "backed sovereign wealth funds” as Husni claimed.
None of the above should surprise anyone given the trouble 1MDB has had in trying to prove that Brazen Sky is worth anything.
END
The US$1.103 billion is the second tranche of funds in 1MDB’s Cayman Islands foray, which totalled US$2.32 billion (RM8.23 billion). - See more at: http://www.themalaymailonline.com/malaysia/article/it-was-a-mistake-putrajaya-admits-after-confusion-over-1mdbs-cayman-assets#sthash.tF2PYivu.dpuf
The US$1.103 billion is the second tranche of funds in 1MDB’s Cayman Islands foray, which totalled US$2.32 billion (RM8.23 billion) - See more at: http://www.themalaymailonline.com/malaysia/article/it-was-a-mistake-putrajaya-admits-after-confusion-over-1mdbs-cayman-assets#sthash.tF2PYivu.dpuf
The US$1.103 billion is the second tranche of funds in 1MDB’s Cayman Islands foray, which totalled US$2.32 billion (RM8.23 billion) - See more at: http://www.themalaymailonline.com/malaysia/article/it-was-a-mistake-putrajaya-admits-after-confusion-over-1mdbs-cayman-assets#sthash.tF2PYivu.dpuf

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