May 23, 2018 / 11:33 AM / a year ago

Malaysia's 1MDB unable to repay debts; finance ministry picks PwC for audit

KUALA LUMPUR (Reuters) - Malaysia’s newly appointed finance minister has asked for PricewaterhouseCoopers (PwC) to be appointed as auditors for scandal-hit state fund 1Malaysia Development Berhad (1MDB), he said on Wednesday.

FILE PHOTO: A construction worker talks on the phone in front of a 1Malaysia Development Berhad (1MDB) billboard at the Tun Razak Exchange development in Kuala Lumpur, Malaysia, February 3, 2016. REUTERS/Olivia Harris//File Photo

1MDB is the subject of money laundering investigations in at least six countries, including the United States, Switzerland and Singapore.

Lim Guan Eng made the announcement in a statement issued after a meeting with some 1MDB directors and the fund’s president, Arul Kanda.

“The directors of 1MDB confirmed that 1MDB was ‘insolvent’ and was unable to repay its debts,” Lim said, adding that he had asked the ministry’s legal advisers to review Arul’s position at 1MDB.

Lim said Arul was uncertain about the value of investments totaling 9.8 billion ringgit, and didn’t even know whether they exist at all.

These were $940 million worth of investment “units” previously held with BSI Bank, Singapore, and $1.56 billion worth of overseas investment funds belonging to 1MDB Global Investments Limited.

Lim said it was “unbelievable” that Arul was clueless about the investments, adding that Arul had claimed he was on “garden leave” until the end of his contract in June.

Arul did not answer telephone calls or respond to messages from Reuters to seek comment.

“I have instructed that the Ministry of Finance take steps to appoint PwC to conduct a special position audit and review of 1MDB so that Malaysians would know the true financial state of affairs in 1MDB,” Lim said in the statement.

“We would then be able to determine the cost of the shenanigans to the tax-payers.”

The United States filed forfeiture complaints in 2016 and 2017 seeking to recover more than $1.7 billion in assets traceable to funds allegedly misappropriated from 1MDB.

The complaints alleged more than $4.5 billion was diverted from 1MDB and laundered through a web of shell companies and bank accounts located in the United States and elsewhere.

Reporting by Joseph Sipalan; Writing by Praveen Menon; Editing by Simon Cameron-Moore and Clarence Fernandez

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