RECENTLY, Abdul Khalid Ibrahim attended a private briefing that the CEO of 1Malaysia Development Berhad (1MDB), Arul Kanda Kandasamy, held especially for PAS.

He then issued a press release that sought to cavalierly whitewash important concerns that the rakyat have regarding 1MDB.

Making clear that he is satisfied that 1MDB will generate enough value to clear its debts, Khalid brushed aside allegations that:

– the rationalisation exercise by the government for 1MDB is equivalent to a US$42 billion (RM180 billion) mega bailout; and,

– 1MDB is unable to perform its financial commitments and obligations because of misappropriation and leakages, and claims to have focused the discussion towards the company’s debt-restructuring plan.

He claims that the debt restructuring is “in good progress (and) the issue of bailing out 1MDB is (therefore) irrelevant”.

Admittedly, Khalid is a good friend. But, l just could not resist the calling of my inner conscience.

He has said his piece, and it is now my turn to rebut.

All that Khalid has told us on value creation is that 1MDB is riding on general economic growth to deliver a capital gain in due course, and that this is borne out by the net present value (NPV).

May we remind him that the NPV is what is in Arul’s mind?

Did he actually study the NPV calculations?

Whether the expected surplus will eventuate depends on more than a few variables, including those that are uncontrollable. Crucially, nothing in Khalid’s press release gives any impression that he had asked Arul about 1MDB’s business plan in any detail.

The debt-restructuring plan does not deny the existence of a bailout. It is an integral part of it! Now in its initial and development stage, but crippled, 1MDB can:

– arise only with the help of the government and its foreign partners;
– service interest under the debt-restructuring plan only because the government continues its drip-feed of cash and insertion of credit support into 1MDB; and,
– hive off assets to 1MOF only because debt holders in 1MDB already have or were newly given guarantees and indemnities acceptable to them.

All these are the hallmarks of a bailout!

If the debt restructuring is in good progress, the process of bailing out 1MDB cannot be said to be irrelevant when it is essential to sustaining the debt restructuring.

But, is the debt-restructuring plan still on track?

1MDB struggled to pay half the amount of an arbitrated settlement amount to IPIC! Will it be another default come August 31?

If the rationalisation exercise has to be funded to the extent of new debt and/or an equity of RM42 billion (as suggested by Khalid), it is a bailout to that extent.

1MDB may well repay its debts eventually, but only by straining the cash reserves of the Treasury and weighing down the country’s sovereign risk rating with each new government guarantee or indemnity issued when needed in the rationalisation exercise.

Yes, make no mistake, this is a bailout. Yet, ostensibly without remorse, Khalid did not report on the details of the debt-restructuring plan and business plan, and did not ask whether they would be executed properly by people of ability and integrity.

In fact, he tried to explain that 1MDB’s inability to perform its financial commitments and obligations was due to it being hobbled by accusations of misappropriation and leakages.

That is just being in denial, if not out rightly despicable.

1MDB’s inability to perform its financial commitments and obligations does not result from “accusations of misappropriation and leakages”, as Khalid seemed to suggest.

The fact of the matter is that it is the result of “actual” misappropriation and leakages.

He should not deny the undeniable and defend the indefensible.

From the outset, the real plan at 1MDB had been to deviate from the business plans that it represented to shareholders and bondholders.

It appears to have been “masterminded” by people outside 1MDB and involved the highest levels of the government.

Therefore, what ability and what integrity is 1MDB expected to show going forward, when its highest level of decision-making reports to the same people under whose ultimate leadership 1MDB has already suffered a massive loss before it has started operations?

To say that 1MDB is a sorry saga is a gross understatement. The 1MDB brand name is emasculated, having been perennially raped and plundered.

The country and taxpayers are now hugely burdened by this fiasco.

Jho Low, with his local and international conspirators, must be brought to book soonest. In the same vein, the reckoning on MO1 is imminently nigh!

It is a major lapse in Khalid’s sense of priorities that he downplayed the shenanigans at 1MDB to date.

Instead of seeking political opportunities in the ruins of 1MDB, he should have used his credentials to impress on all, especially PAS, his newly found platform, that the asset-rationalisation exercise was a huge bailout, necessitated by the audacity of those who plotted the plunder of 1MDB, a dastardly crime.

* Dr Dzulkefly Ahmad is Amanah’s director of strategy.

* This is the opinion of the writer or publication and does not necessarily represent the views of The Malaysian Insight. Article may be edited for brevity and clarity.