KUALA LUMPUR: The now declassified Auditor-General’s audit report on 1Malaysia Development Bhd (1MDB) has confirmed what many parties have suspected: sheer lapse of governance and flawed internal control.
Analysts, however, said the extent of impact that 1MDB’s debt can have on the country’s economy was quite minimum since the company’s debt restructuring was already taking place.
This was buoyed by the new Pakatan Harapan government’s commitment to honouring the massive debt inherited from the previous government, they added.
Universiti Putra Malaysia senior lecturer of Putra Business School Dr Ahmed Razman Abdul Latiff said the government’s commitment would bring back confidence.
Ahmed Razman, nevertheless, said what more serious was the negative perception caused by the scandal that can affect foreign investors sentiment to invest here.
“What the government can do now is to continue and finalise the investigation on 1MDB and fully cooperate with its foreign counterparts from at least six countries which are currently investigating allegations that US$4.5 billion was siphoned off 1MDB,” he said when contacted yesterday.
The audit report, which was declassified and verified by Auditor-General Tan Sri Dr Madinah Mohamad on Tuesday, disclosed that there were flaws and wrongdoings in the management of 1MDB.
The report said senior 1MDB officials had withheld information and taken some decisions without the board’s approval.
1MDB, it added, needed about RM42 billion to settle its loans, together with interest, between November 2015 and May 2039.
As of October 31 2015, 1MDB’s outstanding loans and financing totalled up to RM55 billion with assets amounting to RM58.6 billion.
A sum of RM20.31 billion of the loans and financing had received federal government guarantees and assistance.
Meanwhile, Nizam Ismail, head of regulatory practice at RHTLaw Taylor Wessing LLP in Singapore, said there was an aggressive push by the new administration to reopen criminal investigations on 1MDB.
“If there are new transaction trails being uncovered in Malaysia, this could impact financial institutions which had been involved in the money flows in Singapore, Switzerland and beyond,” he was quoted as saying by Bloomberg.