Winding up 1MDB not end of story for those behind debt scandal

Granted, the 'winding up' or 'liquidation' of the scandal-ridden 1MDB is finally on the way, as reported by Straits Times, Jan 7.

Under the unit Budiman committee led by the Second Finance Minister Johari Abdul Ghani, the remaining trophy assets of 1MDB, viz the 197ha Bandar Malaysia, 28ha Tun Razak Exchange (TRX) and the 94.7ha parcel of land in Penang's Air Itam district will be transferred to Piramid Pertama and Aroma Teraju, both 100 percent Finance Ministry-owned companies.

That done, resolution of 1MDB's debt obligation, according to a senior government official familiar with liquidation excercises, will be separately carried out by the government.

Very specifically, in Malaysia, our winding up laws are contained in our Companies Act 1965 (section 254 - voluntary liquidation). Companies may be wound up or liquidated by a number of ways or forms. A creditor voluntary liquidation is usually initiated when a company is already insolvent, that is, unable to pay off all of its debt.

The 1MDB case is clearly a voluntary winding up by directors and shareholders or a shareholder-initiated liquidation. Not as yet insolvent though, but that 1MDB is debt-ridden, is a gross understatement.

Those responsible must pay

Mitigating the worsening crisis, winding up the company, embarking on a divestment of its assets to settle its debt seems the most pertinent or logical.

As it stands, 1MDB's current debt load is estimated at about US$4.787 billion. 1MDB's debt profile is admittedly a very complex one. While some of the debt comes with outright guarantees, some are only with letters of comfort or letters of support. A major obstacle will be securing support for the plan from its creditors and bond holders. We could only wish Johari and his Budiman team well.

Be that as it may, it must be outrightly mentioned that winding up or liquidating a company is surely not an 'exit strategy' to escape scot-free all allegations of 'wrongdoings'. All those complicit in getting the company to the current dire straits must face the long arm of the law.

Lest it be arguably intended as such, the Act makes provision, enabling the conduct of directors and managers to be investigated and whether there has been any fraud being committed.

So winding up or liquidating 1MDB, should have never been embarked if it is meant to provide an escape route for all the perpetrators, be they Malaysian nationals and all the other international conspirators. They must all be made to face the consequences for their alleged crimes.

Besides, it will be to the chagrin of the rakyat should any shortfalls in the repayment of debts to creditors and bond holders, that tax-payers money be resorted to or 'cannibalised' again.

Eye on legal cases

Finally, money if found stolen or embezzled from 1MDB, must be lawfully returned to the rightful owners of 1MDB, that is, the Malaysian people or citizenry.

Malaysians, nay the entire world, are keeping a watchful eye on the legal cases, as that of the 'forfeitures of assets' of 1MDB in the United States of America (DOJ) and the multiple cases initiated by the Money Authority of Singapore (MAS), to cite but two jurisdictions.

It is highly likely that there would be 'scapegoats' in embezzlement of this magnitude. If justice is to be done and seen to be done, let the rule of law be truly established and not be stifled or subverted. Let everyone responsible be brought to book, no matter how high up one is in the hierarchy of power.

Finally, regardless of whether 1MDB is a premeditated scheme to defraud or a bona-fide business enterprise that was hideously 'hijacked', winding up 1MDB as to arguably escape the long arm of the law, is indeed a great folly.

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DZULKEFLY AHMAD is strategy director of Parti Amanah Negara and former Kuala Selangor MP.- Mkini