Bold steps, not excuses, to solve problems in 1MDB – T.K. Chua

Datuk Seri Abdul Wahid Omar, with due respect to your corporate experience and track record, I think you are giving excuses when it comes to explaining the mess in 1MDB.

For your information, the problems in 1MDB are not due to a wrong business model and so there is nothing for you to re-evaluate. 

There is no business model that teaches us to buy assets using excessive and expensive borrowings but the assets so acquired have no immediate potential to generate cash flows. What kamikaze model is that?

I think even someone uneducated will not do that except those hot shots in 1MDB doing business using someone else’s money.    

Wahid, what is the point for you to talk about strategic steps being taken to solve the problems in 1MDB now?

In Malaysia, we do things not to create values, we do things to create fiascos and then forming task forces and committees to try to solve the problems we have created just like what you are trying to do now. 

Is this not the norm in recent time? You think about it, from 1MDB, NFC, PKFZ, InventQJaya, entertainment valley, halal hubs, tuna fishing to sturgeon project, the problems are the same.    

Coming back to the three strategic steps you have mentioned, I think they are rather comical. 

Your first step was to halt 1MDB from taking new loans. There is nothing strategic about not taking new loans. This is, in fact, imperative.   

How does the company take new loans when it is running out of cash to pay even the interest charges of existing loans?  I hope you are not talking about Putrajaya providing loan guarantees again.

Your second step was for 1MDB to focus on the two main projects, namely the Tun Razak Exchange (TRX) and Bandar Malaysia. Again, I am perplexed. These two projects should have been the focus of attention of the company from the very beginning, certainly not after using its lands to borrow excessively to buy into overpriced assets that generate no cash flows. 

How do you develop TRX and Bandar Malaysia without injecting more capital or borrowing more money now? 1MDB would have made billions by just reselling TRX and Bandar Malaysia without lifting up a finger. You do not need Goldman Sachs or Caymans to achieve that. 

Your third step – the initial public offering (IPO) of energy assets is to be undertaken soon. Again, this is something that I don’t quite understand.

Since when is IPO a magic wand able to solve all your problems or an Aladdin lamp able to create something out of nothing? If 1MDB has acquired those energy assets at exorbitant prices and hence with low potential returns, how can it profit from the IPO of these assets?  Who will be taking up the IPO without thinking?

* T.K. Chua reads The Malaysian Insider.