This is because EPF and other government agencies which have a stake in 1MDB, such as the Retirement Fund Inc (KWAP) and Lembaga Tabung Haji, will not be able to immediately reclaim the amount invested if 1MDB defaults on its whopping RM42bil loan.
“If 1MDB fails, there is a high likelihood that the government will negotiate a delay in repayment with these government agencies or replace their investments with non-monetary assets.
“As government agencies, it is very probable that they will have to concur with the government’s request,” Rafizi told reporters in Parliament on Wednesday.
Rafizi was rebutting claims by EPF chief executive officer Datuk Shahril Ridza Ridzuan that its investment was secure as it was guaranteed by the government.
Rafizi also disagreed with Shahril’s claims that EPF would be given priority in reclaiming its RM1.72bil investment in the event 1MDB encountered further financial trouble.
EPF has subscribed to RM200mil in bonds in 1MDB and has an exposure of RM1.52bil in the state investment arm’s subsidiaries, namely Panglima Power Sdn Bhd and Jimah Energy Ventures Sdn Bhd.
Rafizi urged EPF, KWAP and Tabung Haji to liquidate and sell the bonds they held in 1MDB now before the financial state of the debt-laden company got worse.
“They must take into consideration the concerns of depositors and sell the bonds now, at a discount if need be.
“If 1MDB is unable to pay its loans, then surely the government’s main priority in bearing the cost will be to restore the economy. And that means any claims made by KWAP, EPF and Tabung Haji will be delayed,” Rafizi added.
In a written reply to the Pandan MP on Tuesday, the Finance Ministry revealed that KWAP had invested a total of RM1.4bil in 1MDB and its subsidiaries.
This is in addition to the RM4bil previously loaned by KWAP to SRC International Sdn Bhd, which is a 1MDB subsidiary.