1MALAYSIA Development Berhad’s (1MDB) sold a piece of land in Air Itam to a company based in the Cayman Islands but the transaction was incomplete, the Parliament was told.

Finance Minister Lim Guan Eng in a written parliamentary reply said that Silk Road Southeast Asia Real Estate Ltd had bought the land about a year ago through a shares sale agreement (SSA), but has yet to request for the shares to be transferred.

Silk Road is based in George Town on Grand Cayman, the biggest of the Cayman Islands in British Overseas Territory in the Caribbean.

“In 2013, 1MDB bought the 235.1 acre (95.1ha) land through My City Ventures Sdn Bhd subsidiary 1MDB RE (Ayer Itam) Sdn Bhd at RM1.38 billion.

“Then, the Finance Ministry Inc took over the ownership of the land when its subsidiary Sentuhan Budiman Sdn Bhd (SBSB) took over Silk Road shares through SSA on August 24 last year.

“The money paid for the shares was about RM2.7 billion,” he said.

However, Lim said until today SBSB has yet to receive any application from Silk Road to transfer the shares, even though the former’s parent company My City Ventures had been paid.

“The transfer of shares to Silk Road has yet to be completed,” he said.

Lim said this in a July 19 parliamentary reply to a question from Bukit Bendera MP Wong Hon Wai, who was formerly Air Itam assemblyman in Penang, on the status of the 1MDB-owned land.

The Edge Financial Daily reported today that My City Ventures was a RM2 company set up in 2013 with RM145,503 paid-up and issued capital. 

Its total assets plunged from RM1.07 billion to RM137,882 in its 2015 financial year. For the financial year that ended on March 31, 2017, the company posted a net profit of RM18,478 with no revenue.

A source was quoted as saying that the transaction reeked of money laundering, as the buyer did not seek the transfer of the shares.

The business daily reported that the money might have come from the Finance Ministry’s wholly-owned Suria Strategic Energy Resources Sdn Bhd’s RM9.4 billion gas pipeline project that was awarded to China Petroleum Pipeline Bureau on November 1, 2016.

The money originated from pipeline project’s financing through China Exim Bank before travelling to Silk Road, with an Arab shareholder.

The funds then returned to Malaysia, where it was transacted in Chinese currency for the Air Itam land, and later used to service the US$3.5 billion International Petroleum Investment Co (IPIC) loan.

It is known that the Air Itam land sale took place when the Penang government has put a freeze on all transactions related to 1MDB’s land.

The freeze was ordered by Lim himself several years ago, when he was Penang chief minister to compel 1MDB to explain its multi-billion debt scandal and the ownership of the Air Itam land.

In 2015, Lim said records only showed that the controversial sovereign wealth fund only secured 20% of 116.89 acres of the freehold land it jointly bought with other buyers in 2013.

He also said the state had no records of the remaining 117.1 acres.

The land was for the development of affordable homes by the previous Barisan Nasional administration, which used the lack of affordable housing as an election issue against the then Pakatan Rakyat government in Penang.

Days before the 2013 general election, then prime minister Najib Razak, who founded 1MDB, announced that the BN federal government would build 9,999 units of low-cost and low-medium housing in Air Itam.

In 2016, the Air Itam land and other 1MDB properties were transferred to the Finance Ministry controlled by Najib. – July 30, 2018.