Explain KWAP’s RM4b loan for coal mines, 1MDB’s new CEO told

Rafizi noted that no news on any coal mines have emerged since business paper Business Times reported last May that EPF had lent RM4 billion to then-1MDB subsidiary SRC International in 2011 to buy initially coal mines from Gobi Coal & Energy. — Picture by Yusof Mat Isa
Rafizi noted that no news on any coal mines have emerged since business paper Business Times reported last May that EPF had lent RM4 billion to then-1MDB subsidiary SRC International in 2011 to buy initially coal mines from Gobi Coal & Energy. — Picture by Yusof Mat Isa

PETALING JAYA, Jan 13 — New on the job as he is, 1 Malaysia Development Berhad’s (1MDB) chief executive Arul Kanda Kandasamy must explain the RM4 billion borrowed by a former subsidiary from the Retirement Fund (Incorporated) or KWAP to purchase stakes in a Mongolian coal mine company or face a lawsuit, PKR’s Rafizi Ramli said today.

The PKR vice-president noted that no news on any coal mines have emerged since business paper Business Times reported last May that KWAP, Malaysia’s second-biggest pension fund, had lent RM4 billion to then-1MDB subsidiary SRC International in 2011 to buy initially coal mines from Gobi Coal & Energy.

"The investment reportedly did not happen and until now, we don't know how the RM4 billion was spent," the federal opposition lawmaker told a press conference at PKR's headquarters here.

“If there is no satisfactory explanation from him or from Datuk Seri Najib Razak's explanation, I will arrange for pensioners who have pensions in KWAP to take legal action against 1MDB, KWAP and the Finance Ministry did simply spending people's pensions on spurious investments,” the Pandan MP added.

Rafizi also hit out at Arul Kanda for accusing 1MDB’s critics of speculating without having knowledge of the full facts.

“All this while, the problem faced by the people about 1MDB is the company’s refusal to be straightforward and to report transparently to Parliament about its activities,” he said.

“It is precisely because there is so little information on 1MDB’s investments that federal lawmakers are forced to conduct their own investigations and ask the relevant questions in Parliament and in the media,” the Pandan MP added.

1MDB, a brainchild of Prime Minister Datuk Seri Najib Razak, has come under intense opposition scrutiny following revelations of its growing debt pile.

Financial daily The Edge recently reported that the investment arm, which started as Terengganu's oil investment fund, had fail to pay a short term debt amounting to RM2 billion, prompting warnings of a rating downgrade.

But Bloomberg reported last Tuesday Arul Kanda as defending the investment company’s credentials, insisting that it has been a “responsible borrower”.

*A previous version of this article inaccurately named the Employees Provident Fund (EPF), instead of KWAP. The error is seriously regretted and has since been rectified.