1MDB pays up to RM2.7b for annual debt interest, minister says

File picture shows a man walking past a 1Malaysia Development Berhad (1MDB) billboard at the funds flagship Tun Razak Exchange development in Kuala Lumpur, March 1, 2015. — Reuters pic
File picture shows a man walking past a 1Malaysia Development Berhad (1MDB) billboard at the funds flagship Tun Razak Exchange development in Kuala Lumpur, March 1, 2015. — Reuters pic

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KUALA LUMPUR, June 15 — Troubled state firm 1Malaysia Development Berhad (1MDB) pays between RM2.4 billion and RM2.7 billion in interest on its loans annually, a senior minister confirmed today.

Second Finance Minister Datuk Seri Ahmad Husni Hanadzlah told Parliament that the interest payments are calculated based on the RM42 billion debt pile the state-owned fund accumulated since it was incorporated in 2009.

“When we reduce the debt, it (interest payments) will go down,” he said in response to points raised during the debate on the 11th Malaysia Plan.

Ahmad Husni denied claims that a large portion of the debts accumulated by 1MDB have been unaccounted for, repeating an earlier statement from the firm’s chief executive Arul Kanda Kandasamy that the funds were invested in property, financial instruments and the energy sector.

This includes RM18 billion spent on three independent power producers and inherited debt, RM1.7 billion in land purchases and RM15.4 billion in financial instruments, on top of RM5.8 billion used for the 1MDB’s financial expenditure and RM0.9 billion in surplus cash.

1MDB, currently under investigation by the Auditor-General and Parliament’s Public Accounts Committee, has been dogged by controversy in recent months.

Leading the attacks against the firm – a brainchild of Prime Minister Datuk Seri Najib Razak – is retired prime minister Tun Dr Mahathir Mohamad who has repeatedly demanded answers on the whereabouts of the RM42 billion debt that 1MDB reportedly amassed in the years since its inception in 2009.

1MDB was established after the prime minister announced the decision to turn the Terengganu Investment Agency state fund into a federal agency.

Since then, 1MDB has been faced a barrage of negative publicity over its finances and debt, and most recently cash flow problems that saw it struggle to meet a RM2 billion loan payment.

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