THE multi-billion ringgit losses of 1Malaysia Development Bhd may be just the tip of the iceberg, new Finance Minister Lim Guan Eng has hinted, following the discovery of  certain “red files” which could open the floodgates on financial scandals involving the ministry under the previous administration.

“If you talk about scandals running into billions, the nasty ones, I think that is it,” said Lim.

“But the probe is ongoing. Documents are still being dissected. It is a painful process but a necessary one.

“You got to wait and clean it up,” he told Bernama in an exclusive interview one month after the 14th general election, which saw Pakatan Harapan pull off a shock victory to take over Putrajaya.

On the possibility that files could have been destroyed before the changing of guards, he said, “You can destroy documents but we can re-construct them. These days you have got money trails. So it is very hard to hide.”

Lim said what awaited him at the ministry when he reported for duty on May 22 was worse than he had expected.

“I was shocked. I have been swimming in a sea of red ink (ever since),” he said.

It was revealed that the government had paid RM6.9 billion to service 1MDB’s debts since April last year.2017.

That was followed by the revelation that the previous Barisan Nasional government had also used money raised from a deal with sovereign wealth fund Khazanah Nasional Bhd as well as proceeds from a land sale to Bank Negara Malaysia to meet 1MDB’s debt obligations.

And while Malaysians were digesting these bits of information, they were hit with another whammy – a potentially scandalous gas pipeline project involving RM9.41 billion, also linked to 1MDB.

“They were lying through the teeth,” said Lim, of the national debt figures provided by former government officials .

“So they said they were following IMF (International Monetary Fund) standards. So, it is RM686.8 billion (debt). But what about the government guaranteed debts (amounting to RM199.1 billion) and public-private partnership projects worth RM201.4 billion, which all totals up to RM1 trillion debt.

“In economic terms, a doubtful debt is recognised as a bad debt and it should be written off.

“What we have here is bad debt that we are paying off on behalf of companies like 1MDB,” he explained.

Fortunately, the country was now in safe hands, Lim assured Malaysians.

“We can now really address our debt issue,” he said, adding that the new government did not believe in sugar-coating the truth.

He said the people deserved to know the truth and it was important to establish a true baseline on the country’s state of finances before they could be rebuilt.

Meanwhile, he said,  the goods and services tax (GST) has been abolished, fuel prices had stabilised and the “Bantuan Sara Hidup Rakyat” programme introduced.

Grade 41 and below civil servants will each receive a special Raya payment of RM400, while  pensioners will receive RM200.

“That is RM22 billion given back to the people. We can do this without the GST,” he said.

Moving forward, he said more needed to be done to cut spending. “As Tun Mahathir said, we  cannot be expecting free handouts anymore.

 “We have to take the (bitter) medicine. After all, our prime minister is a doctor. I think it (country’s debt problem) can be cured.” – Bernama, June 9, 2018.