By Eileen Ng From The Malaysian Insider

More time is needed to bring back the remaining US$1 billion (about RM3.3 billion) in 1Malaysia Development Bhd’s (1MDB) funds that are in the Cayman Islands due to the portfolio’s size and nature of investments, its newly appointed group executive director Arul Kanda said, adding that the strategic development firm has begun operations to repatriate the money.

“I understand that it was originally stated these funds would be redeemed by the end of the year that has just concluded but as a former banker, I can tell you that – with investments of this size and nature – it takes a while to wrap them up.

“However, the process to do so has already commenced, and I can assure you that we will make an announcement about this as soon as it is done,” the 38-year-old head of the controversial and debt-ridden fund told The Malaysian Insider in an email interview.

A total of USD$2.33 billion was parked in the Caymans and 1MDB had brought back part of it.

The company has come under fire for its Caymans investments from opposition federal lawmakers and former prime minister Tun Dr Mahathir Mohamad.

DAP’s Petaling Jaya Utara MP Tony Pua had questioned the delay in getting the funds back, despite pledges from Putrajaya and the company that all the money would be repatriated by the end of last year.

He had said the delay not only raised questions about 1MDB but also threatened the stability of Malaysia’s financial system.

Last November 6, deputy finance minister Datuk Ahmad Maslan had said in Parliament that 1MDB had repatriated part of the funds in the Caymans and would bring back the balance by the end of 2014.

The company’s financial statements for the year ending March 2014 which was filed in October 2014 had also stated that the US$1.23 billion would be received in full before the end of November last year.

Last month, however, 1MDB’s chairman Tan Sri Lodin Wok Kamaruddin had said that 1MDB only “expects to redeem the remaining amount in the coming months”.

Lodin had added that repatriating the funds back to Malaysia would have exposed the money to fluctuations on the foreign exchange market.

This follows the decline of the ringgit in the past 10 months to RM3.55 against the US dollar.

Dr Mahathir had repeatedly criticised the company, noting that a large part of the money raised from the issue of debt paper by 1MDB had been sent to the Cayman Islands, a move which many, including the opposition, had also questioned.

Lodin had said there was nothing unusual about companies of 1MDB’s size investing their funds in the Cayman Islands, pointing out that it is one of the largest registered funds internationally, with the Cayman Monetary Authority recognised as one of the leading fund regulators in the world.

“Repatriating these funds to Malaysia would have exposed them to fluctuations on the foreign exchange market, as being witnessed at the moment,” he said.

The Edge Financial Daily had reported last year that the depreciating ringgit would hurt 1MDB, which has a sizeable chunk of its total RM42 billion in debts in the US dollar denomination.

This chunk, which amounted to RM22.25 billion according to 1MDB’s financial statements for the financial year ended March 31, 2014, has now grown to about RM25.7 billion – an increase of about RM3.96 billion – due to the ringgit’s decline by some 6.5% in 2014. – January 10, 2015.

IMAGE: 1MDB newly appointed group executive director Arul Kanda says it will take some time to wrap up the investments in the Cayman Islands. – Reuters pic, January 10, 2015.

For more on this story go to: http://www.themalaysianinsider.com/malaysia/article/more-time-needed-to-bring-back-caymans-funds-says-new-1mdb-chief#sthash.cL1lz1Vn.dpuf

See related iNews Cayman story published January 7 2015 “Where is RM4 billion Caymans fund?, DAP asks 1MDB” at: http://www.ieyenews.com/wordpress/where-is-rm4-billion-caymans-fund-dap-asks-1mdb/

 

Related story:

1MDB Cayman Islands fund has redeemed over RM4 billion

1Malaysia Development Bhd (1MDB), the state strategic development firm, has already redeemed more than RM4 billion in the segregated portfolio company (SPC) registered in the Cayman Islands.

There was also a RM435 million dividend from the investment which would be accounted for in the financial year ending March 2015.

The 1MDB blog today stated that the Chairman of the Board of Directors recently issued a statement confirming that the remainder of the funds in the SPC would be redeemed in the coming months.

The process to do so had already commenced, and an announcement made as soon as this was completed.

1MDB said third party individuals who were not privy to the decision making process of the company, and did not have the full facts or understood the context of decisions made internally, continued to make speculative statements.

It cited Petaling Jaya Utara MP Tony Pua as having issued a statement recently concerning its last set of submitted financial accounts, and described it as containing disingenuous allegations based on old information that has been in the public domain for months.

1MDB said these allegations were centred around the financial accounts for the year ended March 31, 2014.

It stated that on August 1, 2014, the Board of Directors of the company had authorised the redemption of all investments in the SPC to be received no later than December 31, 2014, and amounting to US$2.33 billion (RM7.71 billion at the time the results were submitted).

“Without knowledge of the full facts, the MP has speculated that this note was used to deliberately mislead our auditors and his oft-repeated allegation that ‘the funds are tied up in investments of highly questionable value’, which if disposed today, would result in massive unbearable losses to the company,” 1MDB said.

1MDB said while it welcomed scrutiny and questions, it requested that any statements about the company is based on facts, rather than speculation, misleading information or hearsay. – Bernama, January 9, 2014.

IMAGE: State investment vehicle 1Malaysia Development Bhd hit out at critics over its Cayman Islands funds, saying it had redeemed more than RM4 billion already. – Reuters pic, January 9, 2014 For more on this story go to: http://www.themalaysianinsider.com/malaysia/article/1mdb-says-redeemed-more-than-rm4-billion-of-caymans-funds-bernama#sthash.Yzu46MwZ.dpuf