1Malaysia Development Bhd (1MDB) today debunked various claims by former Prime Minister Tun Dr Mahathir Mohamed in his blog entries entitled, "The 1MDB Story," and "More Investments By 1MDB".

Among others, were issues relating to Terengganu Investment Authority's (TIA) money, purchase of land as well as joint-venture with PetroSaudi and RM2 billion said to be borrowed from billionaire, Ananda Krishnan.

"There was no attempt to hijack TIA money," said 1MDB in a statement Tuesday.

In 2009, various discussions were held between the Federal Government and the Terengganu state government on how each party would provide its share of funding for the TIA, whereby a number of options were discussed, it said.

Eventually, the Federal Government's contribution consisted of it guaranteeing a RM5 billion Sukuk issuance by the TIA, which happened on May 29, 2009, prior to the TIA being federalised.

"Subsequently, the state government of Terengganu decided to withdraw from the TIA which led to the entity being federalised in July 2009," it said.

Contrary to claims that no cabinet paper was presented on the Sukuk, 1MDB said one on this matter was prepared and approved by the Cabinet, in line with standard practice and as required for all government guarantees.

"Furthermore, the government guarantee is not 'off budget' as claimed. It is a clear and acknowledged liability of the federal government, which is ultimately the 100 per cent shareholder of 1MDB," it said.

On the former Prime Minister's claims that everyone knows Ananda Krishnan had to make RM2 billion to pay the interest, the strategic development company said 1MDB did indeed borrow RM2 billion as arranged by a subsidiary of Tanjong plc, which were used to repay a RM2 billion loan provided by a syndicate of domestic lenders.

"It was not used to pay interest, as claimed by Tun Mahathir," it said.

The arrangement, it said, related to Powertek Investment Holdings (PIH), a subsidiary 1MDB.

PIH had a subscription agreement with Tanjong under which Tanjong agreed to subscribe for equity in PIH, of up to RM2 billion on the occurrence of certain events ... which proceeds shall be used solely for the repayment or prepayment by PIH of any amount owing under the RM5.5 billion loan facility arranged by Maybank Investment Bank Bhd and RHB Investment Bank Bhd.

From the above, it is a clear fact that Tanjong had an obligation to subscribe to RM2 billion of equity in PIH, the proceeds of which would be used for repayment of the loan facility, said 1MDB.

However, it said, due to confidentiality agreements, it cannot elaborate on why the RM2 billion equity investment was subsequently agreed by the parties to become an RM2 billion loan, it said.

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On claims in relation to land on Jalan Tun Razak that the Government sold the 70 acres to 1MDB for RM320 million, land close by had been sold at RM7,000-psf and 1MDB should pay at least RM3,000 to RM 4,000-psf, 1MDB said it paid RM230 million, not RM320 million, to acquire the land.

It stressed the fact that 1MDB is ultimately 100 per cent owned by the Government and as such any transfer of land to 1MDB and any subsequent benefit in land value increase is ultimately 100 per cent for the Government.

"The cost of this infrastructure that 1MDB is contractually obligated to deliver in Tun Razak Exchange is at least RM1,500 psf. This is a direct benefit to any land buyer and forms part of the purchase price paid."

On allegation that "PetroSaudi did not pay a single cent" in a joint venture with 1MDB, it said PetroSaudi, via a subsidiary company, owned assets, comprising rights to oil fields in Turkmenistan and Argentina, worth approximately US$2.7 billion.

These assets were sold by PetroSaudi to another subsidiary, "Joint Venture Company," which at the time of the asset sale, was a company formed by and initially 100 per cent owned by PetroSaudi for the purposes of a proposed joint venture with 1MDB.

In return for the US$2.7 billion asset transfer, the Joint Venture Company had to pay PetroSaudi US$700 million. This indebtedness resulted from the asset transfer. Accordingly, there was no loan made or "to settle".

On Sept 29, 2009, 1MDB executed a joint-venture agreement with PetroSaudi.

Upon completion of an independent valuation, 1MDB contributed US$1 billion of cash in return for 40 per cent ownership of Joint Venture Company, and PetroSaudi was left with a 60 per cent stake in the Joint Venture Company.

In effect, 1MDB's contribution was in cash, whereas PetroSaudi's contribution was in independently valued assets worth US$2.7 billion, said 1MDB.

According to 1MDB, it was part of the joint-venture agreement that, of the US$1 billion from 1MDB, US$700 million would be used to pay PetroSaudi for the initial asset transfer to the Joint Venture Company whereas US$300 million would remain in Joint Venture Company.

Upon satisfaction with the independent valuation, as per the joint-venture agreement, 1MDB made a payment of US$700 million to a subsidiary of PetroSaudi, and obtained legal title to 40 per cent share of Joint Venture Company, a company with independently valued assets worth US$2.7 billion at the time.

Accordingly, PetroSaudi had full rights to the US$700 million paid by 1MDB and these funds were for PetroSaudi to use, at its discretion, it added.