SINGAPORE: Chairman of CIMB Group Bhd Datuk Seri Nazir Razak (pic) took the board of 1Malaysia Development Bhd (1MDB) to task for not addressing the growing concerns on the fund and its financials.
He said that a responsible board should appoint an independent auditor to verify the accounts immediately and deal with the mistrust pertaining to the financial position of 1MDB instead of waiting for the Auditor General (AG) to do the job.
“The immediate check for a responsible board is to appoint an independent (auditor) now … otherwise the board and management, in my view, should resign.
”It is your basic responsibility. There’s a complete mistrust in your financial situation. You have to responsibly deal with that. But instead you sit there and wait for AG.
“To me that’s irresponsible. If you do that then it’s better for you to step down and let someone else come in and take over,” Nazir told the media over a luncheon at the Asean Business Club (ABC) forum.
1MDB, a government fund has cash flow problems and unable to meet obligations to debts of RM42bil although it has assets in excess of RM51bil. But the bulk of the assets are in the form of property to be developed while the cash flow from its power generation plants are insufficient to cover its debts.
This year it has obligations of RM5.1bil to meet and the bulk is in the form of a US dollar term loan amounting to US$975mil.
In relation to the US dollar debt paper, a report from Singapore on Tuesday stated that a consortium of banks led by Deutsche Bank has asked for the repayment of the loan four months ahead of its due date.
According to the report, the lenders were jittery after doubts arose on the collateral of the loan held in a foreign bank based in Singapore.
1MDB’s president and group executive director Arul Kanda said that they were unable to comment on the repayment of the US$975mil bond issue because it related to confidential banking matters.
1MDB is a fund that is wholly owned by the Ministry of Finance and a default would trigger a cross default of its loans and also impact the credit rating of the government