BANK Negara’s acquisition of a 22.6ha plot of land for RM2 billion is likely to be a bailout for 1MDB, said the Straits Times.

The Singapore daily said the RM2 billion price tag for the prime piece of land beside the Sasana Kijang complex has sparked claims from the opposition that the government is raiding Bank Negara’s coffers to bail out troubled state fund 1Malaysia Development Berhad.

Bank Negara confirmed the purchase on January 4, adding that it will relocate the Global Islamic Finance University and International Shariah Research Academy for Islamic Finance to the new site.

BNM governor Muhammad Ibrahim told The Edge Financial Daily on Monday that “it was not the government that wanted to sell the land to us. We actually approached the government many months ago to buy the land.”

Last year, 1MDB settled the final tranche of its US$1.2 billion (RM4.9 billion) debt to Abu Dhabi’s International Petroleum Investment Co (IPIC) ahead of the December 31 due date.

1MDB made the final payment of US$630 million to IPIC on December 21, The Malaysian Insight reported.

Petaling Jaya Utara MP and a fierce 1MDB critic Tony Pua told the Straits Times “Malaysians cannot be blamed for believing that Bank Negara allowed itself to be raided” with the “outrageous purchase” of some 23ha “to bail out 1MDB”.

Pua also asked why the bank paid commercial rates – of nearly RM823 per sq ft – for a piece of land that is to be used as an education hub, as the government usually sells land at a nominal fee to public educational institutions.  

Pakatan Harapan chairman Dr Mahathir Mohamad has also questioned the deal, saying that “I was prime minister for 22 years (up to 2003) but I have never known Bank Negara to spend so much to buy land”.

“Whenever Bank Negara wanted to expand, the government was ready to give it land. But this time, we hear Bank Negara bought land for RM2 billion. It has never happened before in our country. What is the reason? It is a way to steal Bank Negara’s money,” he was quoted as saying.

1MDB and IPIC reached a debt settlement on the US$1.205 billion at the London Court of International Arbitration last April.

The settlement was another chapter in the saga of scandal-tainted 1MDB, which is at the centre of money laundering and fraud investigations in six countries.

The United States’ Department of Justice said up to US$4.5 billion could have been stolen and siphoned off the state fund which was a brainchild of Prime Minister Najib Razak, who headed its advisory board.

In July 2016, the DoJ said some US$731 million of 1MDB money made its way into the personal accounts of Malaysian Official No. 1, which a minister later confirmed was Najib.

Najib has denied all wrongdoing, saying that the funds came from Saudi royalty.

The deal between IPIC and 1MDB began in 2012 when the former guaranteed two bonds worth US$1.75 billion each for 1MDB to raise funds for the purchase of power-generation assets. In return, 1MDB was to make collateral payments to IPIC.

However, by the end of 2015, problems arose when IPIC said it did not receive a US$3.5 billion payment due to it.

1MBD, on the other hand, said it had made payments to an IPIC subsidiary, Aabar Investments PJS Limited or Aabar (BVI), registered in the British Virgin Islands.

The DoJ’s 1MBD probe confirmed that Aabar BVI is a fraudulent company made to impersonate the real Aabar, which is named Aabar Investment PJS.

As they could not agree on the missing monies, in May 2016, Abu Dhabi and Putrajaya agreed to take the dispute for private arbitration in London.

Pua has previously said 1MBD’s April settlement with IPIC was an acknowledgement that it had lost the first US$3.51 billion payment to IPIC. – February 9, 2018.