KL CHRONICLE: #1MDB Slams @WSJ for wrong reporting

Saturday, September 19, 2015

#1MDB Slams @WSJ for wrong reporting

We refer to another poorly sourced and sensationalist article by the Wall Street Journal today relating to an amount “of nearly US$1.0 billion” of payments made by 1MDB for termination of certain options. Given the severity of the unproven allegations, the malicious insinuations made and the impact on the 1MDB rationalisation plan, we would have expected at the very least that the Wall Street Journal would have the decency and courage to name its source and/or provide proof. This inability to substantiate clearly shows the shallow nature of its assertions and casts serious doubt on whether or not the Wall Street Journal editors themselves believe in the weak story, cobbled together by its reporters.

We reiterate that 1MDB cannot speak on behalf of Aabar or IPIC nor can we comment on the accounting arrangements of third parties. What we can confirm is that the notes to the 1MDB 31.03.2014 audited financial statements clearly describe the source of funding and purpose of the payments for the option termination, which for the avoidance of doubt, is structured as a deposit pending determination of the final settlement amount (i.e. it is currently a financial asset belonging to, and not yet an expense to, 1MDB).

1MDB can confirm that pursuant to the payment made by 1MDB, the options were in fact terminated. In fact, 1MDB and its relevant subsidiaries were released and discharged from all agreements, options, covenants, conditions and stipulations on their part under the options and that any rights by any other party towards the options were relinquished and terminated.

We further note a number of blatantly wrong statements made by the Wall Street Journal as described further below:

•          “The fund (i.e. 1MDB)….is at the center of a corruption scandal…”

This is patently untrue. The Malaysian Anti-Corruption Commission (MACC) has publicly stated on 3 August 2015 that no funds from 1MBD were remitted to the bank accounts of the Prime Minister.

•          “…almost $700 million entered the prime minister’s private accounts through entities linked to 1MDB…”

The use of the term “entities linked to 1MDB” is clearly misleading at best and malicious at worst. The so-called “entities” are “linked” very tenuously, if at all, to 1MDB. In the case of former subsidiary SRC International, it has not been owned by 1MDB since 2012, i.e. well before any of the alleged funds transfers took place.  As for Ihsan Perdana, it is a service provider for corporate social responsibility activities, of which 1MDB is one of a number of clients.

•          “…the Swiss attorney general’s office opened criminal proceedings against two unidentified executives of 1MDB…”

We confirm that no executives or board members of 1MDB are the subject of any criminal proceedings by the Swiss attorney general’s office. We further confirm that no 1MDB bank accounts have been frozen by either the Swiss or Singapore authorities. We, however, reiterate our readiness and willingness to assist in the investigations conducted by any foreign government agency, subject to advice from the relevant Malaysian authorities and adherence to any relevant international protocols governing such matters.

The clear errors and wrong facts, as described above, raise serious questions on the quality of journalism practised by the Wall Street Journal.

Further, there is a second, brazen and blatant reference, in as many weeks, to the Wall Street Journal having reviewed “a draft report by Malaysia’s Auditor General”.

The Standing Orders of the Malaysian Parliament very clearly states that “the evidence taken before any Select Committee and any documents presented to such Committee shall not be published by any member of such Committee, or by any other person, before the Committee has presented its Report to the House”.  It is clear that the foreign Wall Street Journal has no respect for domestic Malaysian law or the Malaysian Parliament.

1MDB is further concerned to note recent press reports highlighting allegations that there may have been a sale of information obtained in the Public Accounts Committee (PAC). If this is true, then, further to the arrogant admission by the Wall Street Journal, it is clear an attempt is being made to prejudice the PAC investigations.

Once again, 1MDB strongly urges the relevant authorities to investigate this matter thoroughly and take all requisite action to preserve the integrity and Standing Orders of the Malaysian Parliament.

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