Where did RM4 billion for Putrajaya’s SRC International go, asks DAP

Tony Pua said it was puzzling that the finance minister could not be specific about the business SRC International was involved in. – The Malaysian Insider pic, October 16, 2014.Prime Minister Datuk Seri Najib Razak must explain what has happened to a RM4 billion loan secured by a wholly-owned subsidiary of the Ministry of Finance, which failed to submit its annual accounts on time, a DAP lawmaker said today.

Petaling Jaya Utara MP, Tony Pua said SRC International Sdn Bhd had secured a RM4 billion Islamic loan from the government's pension fund, Kumpulan Wang Amanah Persaraan (KWAP), and which was guaranteed by the federal government.

The loan was disbursed in two tranches in August 2011 and March 2012.

However, Pua said that despite the size of the loan, SRC's financial accounts were last filed for the year ending March 2012.

He said the accounts for March 2013 which were due by September 2013 have yet to be submitted.

"Why is it so difficult for a company with hardly any activity other than a mega loan to submit its financial statements to the authorities?” he asked in his statement today.

Pua said the reply to from the Finance Minister to his parliamentary question stated that the company was set up to handle a “few stragetic national infrastructure projects”.

It also stated that “SRC was a strategic company with a long-term view to implement strategic infrastructure projects that will double the country's efforts to spur sustainable, long-term growth”.

Pua said it was puzzling that the finance minister could not be specific about the business SRC was involved in.

"There were, however, no reasons given for the delay in submitting the accounts, other than to say that the financial statements for both March 2013 and 2014 will be submitted before the end of October," he added.

Pua said another cause for suspicion was the fact that SRC was hastily acquired from 1Malaysia Development Bhd (1MDB) in February 2012, after the RM4 billion was fully disbursed.

"Why did 1MDB raise the RM4 billion government-guaranteed loan via SRC, and then why did MOF take over SRC so soon after the RM4 billion loan was fully disbursed?," he asked, adding that the same question did not get a reply from the finance minister.

Pua added that failure by the government to provide transparent answers could only lead to speculation that there was serious financial breach or misappropriation of the RM4 billion loan to SRC, which could not be reflected in the consolidated accounts of 1MDB. 
"What has happened to the RM4 billion since March 2012? 

"Datuk Seri Najib Razak, who is both the finance and prime minister, as well as the chairman of 1MDB, must answer this question," Pua said.

He added the lack of governance, transparency and accountability from the wholly-owned government corporation chaired by the prime minister himself was shocking and disgraceful.

"Such behaviour serves as a terrible example to all other government agencies," he said, adding that this could also have caused the delays in the submission of 1MDB’s March 2013 accounts and the resignation of its auditors then, KPMG Malaysia.

"To resolve this conundrum, MOF “acquired” SRC so that problems in SRC will not be reflected in 1MDB’s books.

"However, as the problems in SRC remain, the company is unable to submit its financial accounts since March 2012," he added.

It was reported that 1MDB only submitted the annual report for financial year ended March 2013 in April this year and the accounts were only finalised after 1MDB dropped its auditors KPMG just months before that, and appointed Deloitte to complete the annual audit.

Yesterday, the government confirmed the award of the 2,000mw combined cycle gas power plant in Malacca to the sovereign wealth fund via direct negotiations.

Earlier this year, 1MDB won the RM11 billion, 2,000mw coal-fired power plant project known as 3B, which was renamed Jimah East, in a controversial open tender.

It also secured a 50mw solar project on a direct award basis.

On Tuesday, Pua lambasted the third successive award of the multi-billion ringgit power contract to 1MDB this year, conveniently ahead of its planned listing.

“The rapid succession of the multibillion power producing contracts awarded to 1MDB proves that the government is pulling all stops to ensure the viability of the initial public offering (IPO) of 1MDB Energy Sdn Bhd, which was postponed twice due to unattractive valuations.

“Basically, what it means is that there is not enough value in 1MDB. [So] the government keeps giving [it] new contracts to create value in 1MDB to make sure 1MDB Energy Sdn Bhd becomes a viable listing option,” Pua said. – October 16, 2014.