KUALA LUMPUR (May 20): PKR secretary-general and Pandan Member of Parliament Rafizi Ramli called today for the Employees Provident Fund (EPF), Kumpulan Wang Persaraan (Diperbadankan) (KWAP) and Lembaga Tabung Haji to divest all their bonds and investments in the troubled 1Malaysia Development Bhd (1MDB) and its subsidiaries.
He disclosed documents from a recent Cabinet briefing by Second Finance Minister Datuk Seri Ahmad Husni Hanadzlah, which showed KWAP had signed a heads of agreement (HoA) for the sale and leaseback of a commercial office tower with 1MDB Real Estate Bhd (1MDB RE), a subsidiary of 1MDB, at the Tun Razak Exchange (TRX) here. TRX is owned by 1MDB.
The documents had also detailed other 1MDB’s business dealings with Australia's Lend Lease, Prudential and Gamuda Bhd.
"The risk is actually no longer just to 1MDB, but to the whole country and the Treasury," Rafizi told reporters at Parliament lobby yesterday, referring to the bonds subscribed by EPF, KWAP and Tabung Haji with 1MDB.
EPF had subscribed RM200 million in bonds issued by 1MDB in 2009. EPF also has exposure of RM1.5 billion in 1MDB subsidiaries, Panglima Power Sdn Bhd (PPSB) and Jimah Energy Ventures Sdn Bhd (JEV).
Based on the response from the Ministry of Finance recently, Rafizi said KWAP has also invested a total of RM1.4 billion in 1MDB and its subsidiaries as of March 31, 2015. They were JEV, Bandar Malaysia Sdn Bhd, 1MDB Energy Ltd and 1MDB Global Investment Ltd.
Given the negative sentiment in the capital market and threats of downgrading the country's ratings, Rafizi opined it was highly unlikely the government can absorb the RM42 billion debt of 1MDB, since the country's debt levels have reached RM700 billion when taken into account its contingent liabilities.
KWAP, the country's pension fund for civil servants, had recently come under fire over news that it planned to buy a parcel of land at TRX at RM2,300 per sq ft.
Contrary to reports stating the public does not need to worry about their money and that KWAP had not signed a sales and purchase agreement with 1MDB, Rafizi said: "A HoA is an early agreement that is undertaken to formalise the main terms."
“How is this then, not a binding contract?” he asked.