KUALA LUMPUR, Dec 23 — There is no compelling reason for 1 Malaysia Development Berhad (1MDB) to continue to keep its funds in the Cayman Islands, especially with the strengthening of the greenback against the Malaysian ringgit, an opposition lawmaker said today.
PKR's Kelana Jaya MP Wong Chen said the funds, which the opposition estimates to total some RM18 billion, would have been converted to US dollars since it is an offshore account which means that 1MDB would gain from the exchange rate if it were to repatriate all the money.
Wong claimed that 1MDB would have converted the money at a rate of US$1 to RM3.07 when it migrated the funds to the Cayman Islands in September 2012, according to reports.
The US dollar, however, has since regained strength with the exchange rate now at US$1 to RM3.48, he added.
“In other words, the Cayman Islands money has in fact made substantial exchange rate gains since September 2012 equivalent to RM0.41 sen or 13 per cent.
“Having made substantial foreign exchange gains, why can’t 1MDB repatriate all its money back to Malaysia?” Wong said in a statement.
Wong said the argument by 1MDB chairman Tan Sri Lodin Wok Kamaruddin defending their decision to keep the funds in the Cayman Islands was “financially illogical,” since the exchange rate is favourable to Malaysia.
Wong stressed that it also goes against an earlier promise by deputy Finance Minister Datuk Ahmad Maslan, who told Parliament last November that all the money parked in the Cayman Islands would be brought back to Malaysia by the end of this year.
“PKR therefore demands 1MDB immediately discloses and publishes a full account of all its money in the Cayman Islands and we also demand the Finance Minister Najib Razak to direct 1MDB to return the money to Malaysia before year end,” he said.
Yesterday, Lodin said 1MDB is maintaining billions of ringgit in deposits in the Cayman Islands to protect the funds from the current volatility in the currency market.
He said the international tax haven is as well regulated and home to thousands of blue-chips including 200 Malaysian firms.
“Repatriating these funds to Malaysia would have exposed them to fluctuations on the foreign exchange market, as being witnessed at the moment.
“In order to ensure that 1MDB maintained a strong liquidity position with a truly diversified global portfolio, these funds were invested in a 1MDB subsidiary that was registered in the Cayman Islands,” Lodin said in a statement.