KUALA LUMPUR, May 26 — 1Malaysia Development Berhad (1MDB) can overcome its financial problems, but the indebted firm is being hampered by negative media coverage and criticism, a minister has said.

Urban Well-Being, Housing and Local Government Minister Datuk Abdul Rahman Dahlan pointed out that it was unreasonable to expect any company to continue operating normally with the amount of controversy that greets 1MDB’s every move.

“Yes we are concerned, not sceptical. Concerned that with all this bad publicity, how can any company survive in this kind of environment where everybody is squeezing them (1MDB) out of oxygen?” he asked Malay Mail Online in a recent interview.

Fears that public funds may be used to “bail out” the state-owned firm that reportedly accumulated RM42 billion in debt in just over five years has prompted opposition towards its transactions, both old and new.

A recent sale of land in the Tun Razak Exchange to Lembaga Tabung Haji triggered public uproar, forcing the Muslim pilgrims fund to immediately seek to dispose of the property a little over a month after the purchase.

The controversy surrounding 1MDB has also spooked a consortium of German banks to consider rescinding a US$975 million (RM3.523 billion) loan ahead of its August maturity, putting 1MDB at risk of a cross-default of the entirety of its RM42 billion in liabilities.

The Kota Belud MP was sanguine, however, about the prospects for the firm now under investigation by federal auditors and a parliamentary watchdog.

“I think given the right formula, the right approach, 1MDB can be turned around. That’s the most important thing I think the people want to hear from the government, and I think that will come out soon,” he said.

Rahman said it was also important that Putrajaya publicly explain how 1MDB spent the RM42 billion in debt it racked up and what the government’s direction is for the firm.

This would allay public distrust towards the firm whose dealings have been characterised by opacity, he noted.

“So, once that is out in the public, you will be able to see whether this plan is going to work or not and that is very important to give confidence back to the voters,” he added.

Despite his prognosis of 1MDB, the minister said the firm was an important lesson for good governance on public finances, which could be extended to other government-linked corporations to prevent the same issues from recurring.

Rahman suggested inserting representatives from the Finance Ministry into the boards of such firms, and that the Cabinet be briefed once investments breach a predetermined threshold.

“But let the dust settle first, because right now, everybody talks about 1MDB with anger, and when you are angry and emotional, you don’t get the truth.

“So we got to bring down the temperature a little bit and let the Auditor-General (A-G) and the Public Accounts Committee (PAC) do their job.

“I have full confidence that they will look into this very objectively... from there we look and see how we move forward on this issue,” Rahman said.

1MDB was incorporated in 2009, after Prime Minister Datuk Seri Najib Razak announced the decision to turn the Terengganu Investment Authority state fund into a federal agency.

Since then, the fund has been dogged by negative publicity over its finances and debts, including delays in closing its annual accounts and trouble meeting loan payments.

In March, Najib ordered the A-G and the PAC to investigate 1MDB, amid growing demands for explanations over the state investment firm’s allegedly opaque investment decisions and RM42 billion debt pile.