KUALA LUMPUR, Jan 15 ― State-owned 1Malaysia Development Berhad (1MDB) violated the conditions listed in the agreement of its RM2.4 billion sukuk when it sold off part of its shares in Bandar Malaysia Sdn Berhad, PKR MP Rafizi Ramli claimed today.

The opposition lawmaker pointed to item 2(w)(i)(12) in the Islamic bond’s agreement in which Bandar Malaysia Sdn Bhd as the sukuk issuer is required to remain a wholly-owned subsidiary of 1MDB RE, which in turn is wholly-owned by 1MDB.

“The announcement of the sale of 60% of 1MDB’s stake in Bandar Malaysia Sdn Bhd to a private consortium comprised of a Chinese government-linked company will surely make Bandar Malaysia Sdn Bhd only an associated company and not a 1MDB wholly-owned subsidiary as stated in the condition.

“Therefore, one of the main pillars of 1MDB’s rationalisation programme that was carried out by Datuk Seri Najib Tun Razak has actually breached the sukuk issue agreement that is still in force,” the PKR vice-president said in his statement.

Rafizi claimed that checks of publicly-available information showed that RM1.5 billion has been issued under the RM2.4 billion sukuk agreement, with RM920.8 million subscribed by the Muslim pilgrim’s fund Tabung Haji.

He alleged that the remaining RM579.2 billion could be subscribed by the civil service pension fund Kumpulan Wang Amanah Persaraan (KWAP).

He urged the prime minister, the management of Tabung Haji and KWAP answer his three questions from 1MDB’s alleged breach of its sukuk conditions.

Rafizi asked why the managements of the two funds had yet to take legal action against 1MDB if they were unhappy with the sukuk breach, and asked them to alternatively say who gave consent for the purported breach.

“When will Tabung Haji and KWAP get back the funds that they have borrowed to Bandar Malaysia through the issuing of the sukuk that to date is estimated to be a total of RM1.5 billion?” he asked.

On December 31, 1MDB announced its sale of 60 per cent stake in Bandar Malaysia to a joint consortium comprising Johor-based Iskandar Waterfront Sdn Bhd (IWF) and China Railway Engineering Corporation (CREC).

1MDB initially put the sale value at RM7.41 billion, but subsequently explained that the difference with CREC’s stock market filing of the same deal at RM5.28 billion was due to the consortium’s absorption of various related liabilities.

Part of the deal includes 1MDB’s remaining liabilities in Bandar Malaysia such as the relocation of military bases and the liability of the sukuk bonds raised for the relocation.