ABNORMAL contracts and hidden problems about troubled state firm 1Malaysia Development Bhd (1MDB) were among the discoveries in the classified red files of the Najib Razak administration.

The contracts, which were off limits even to the Finance Ministry’s senior officers, stipulated that the government would pay firms even if they had not completed enough work on a given project.

This was revealed to Finance Minister Lim Guan Eng who exposed these practices when he started work as part of the Pakatan Harapan government.

Najib, who was prime minister under the defeated Barisan Nasional government, had also helmed the Finance Ministry.

“Usually we would pay according to work completed. So, if a company finishes 30%, they would get paid 30%. That is normal,” Lim told Malay daily Sinar Harian in an interview.

“But in some contracts, the work completed was only 20% but the company would already get 70% of (the total payment). Why is this?

“Because the contracts are not based on work progress but on time period. Every six months (government) must pay, regardless as to whether work is done.

“We’re investigating this practice, and I will make a statement soon.”

Lim said it was difficult for the government to review these deals as they had been signed.

“We can ask why it was done since its not within the nation’s interest.” 

When he took over, Lim had exposed these red files, saying that they contained compromising information on the government’s finances that were hidden not just from the public but from the bureaucracy itself.

Most damning was the payment of debts owed by 1MDB, which totaled about RM42 billion.

 While they were in power, the Najib administration and 1MBD had claimed that the company was able to meet its debt payments.

But Lim found out that the Malaysian taxpayer had forked out RM7 billion to service 1MBD’s debt.

“We were surprised at all the scandals we found (in the red files), including the 1MDB payments. Before this 1MDB said they were paying their debts.

“But in the end we found out that 1MBD did not pay one sen of those debts. It was the government and the public who were paying on behalf of 1MBD.”

“Can you imagine if we had used this money for the people?”

Lim said the goverment is obligated to a further RM38 billion, including interest, in 1MDB debts until 2039. – June 2, 2018.