August 18, 2022

Singapore’s NRA Capital emerges as valuer of 1MDB’s Cayman investments

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Screen Shot 2016-04-16 at 10.49.37 AMBy Anita Gabriel From The Business Times

Singapore – Singapore’s boutique finance house NRA Capital was roped in to value 1Malaysia Development Berhad’s US$2.318 billion (S$3.15 billion) controversial Cayman Islands investment by fund manager Bridge Capital Partners.

This was disclosed in the Hansard transcripts on the hearings of Malaysia’s Public Accounts Committee with Deloitte, the auditor which signed off the March 2013 and 2014 accounts of the troubled state-backed firm 1MDB.

NRA Capital is under the Netresearch group of companies founded by Kevin Scully, a well-known veteran market strategist in Singapore.

When contacted by The Business Times, Mr Scully said “valuing listed and unlisted companies and assets is what NRA Capital does in the ordinary course of the business.”

Screen Shot 2016-04-16 at 10.49.19 AMDuring the three-hour PAC proceedings which largely delved into the factors that led to Deloitte’s true and fair view of 1MDB’s accounts, Deloitte disclosed that it had met with NRA Capital to understand its “methodology and competence” in valuing the Cayman-Islands registered Bridge Absolute Return Fund in which 1MDB had invested.

The fund was managed by little-known – up until the scandal blew up, that is – Hong Kong firm Bridge Capital which in turn hired NRA Capital as valuer of the investments; Bridge Capital subsequently changed its name to Avestra of Australia.

The case that rocked Malaysia: 1MDB
In March, the Wall Street Journal reported that deposits into personal accounts of Malaysia’s prime minister totaled more than US$1 billion (S$1.4 billion) – hundreds of millions more than previously identified. Tim Leissner, a Goldman Sachs partner who handled deals for 1MDB was suspended and later quit after bank investigators found he allegedly violated firm policies. On Feb 5, private banker Yak Yew Chee withdrew his request to release money in his bank accounts, which had been frozen by Singapore authorities as part of their probe into 1MDB. Yak Yew Chee, a senior private banker with Swiss bank BSI, was the first name to emerge from the Singapore probe into 1MDB, after it was reported that he was seeking access to his bank accounts which were frozen as part of the investigations. In January, Malaysia’s attorney-general said on in January that US$681 million (S$974 million) transferred into Prime Minister Najib Razak’s personal bank account was a gift from the royal family in Saudi Arabia. It was later reported that the payment was personally authorised to Prime Minister Najib Razak by Saudi Arabia’s late King Abdullah. Malaysians, eager to see if bank details that were published in the report were Madam Rosmah’s, have been transferring RM1 (36 Singapore cents) to her account, liberal news portal Malaysian Insider reported. Nine documents detailing how almost US$700mil (S$943mil) in 1MDB funds allegedly ended up in Prime Minister Datuk Seri Najib Tun Razak’s (pic) personal bank accounts have been released by the Wall Street Journal (WSJ). The documents showed alleged bank transfers from various companies to Najib’s personal accounts on March 2013, December 2014 and February 2015. However, some details such as the last five digits of the AmIslamic Bank Bhd account, said to belong to Najib, were redacted. The development fund, which owns a large portfolio of power plants, has missed payments on the bridge loan that was due end-December and its lenders were keen to see it paid before they had to write it down in first-quarter earnings, bankers said. Local media have reported that the final deadline was Feb 18. Malaysia’s indebted and controversy-ridden state investor 1MDB will be left as a skeletal structure and possibly dissolved under a debt repayment plan in which most of its assets will be sold, sources with direct knowledge of the matter said. 1MDB, a property-to-energy fund whose advisory board is chaired by Prime Minister Najib Razak, has built debt of nearly 42 billion ringgit ($11.73 billion) to build a portfolio of power plants Malaysian billionaire Krishnan is preparing to settle a $550 million loan owed by troubled state fund 1MDB, four sources familiar with the matter said – a last-minute reprieve for the fund whose debt woes are pressuring the ringgit and the country’s sovereign credit rating. Arul Kanda, newly appointed president and group executive director of Malaysia’s state investor 1Malaysia Development Bhd (1MDB) In his first week on the job, Kanda, the new head of loss-making Malaysian state investor 1MDB has had a ringside view of his future challenges. A missed loan payment that spooked bond and currency markets… And a possible delay in an ambitious asset sale he must pull off to cut a debt pile of nearly $12 billion. Regarded as a cross between a sovereign wealth fund and a private investment vehicle, with Prime Minister Najib Razak chairing its advisory board, 1MDB is struggling under the burden of $11 billion in borrowed money.

Ng Yee Hong, Deloitte Malaysia’s partner, said at a hearing with PAC in June last year: “We met with the fund manager… and we obtained evaluation statement from the fund administrator. We further met with the valuer that has given input to the fund administrator, who in turn came up with the valuation statement.

“This company is called NRA Capital.”

Mr Ng was responding to questions by the members of the bi-partisan parliamentary committee on whether Deloitte – 1MDB’s third auditor since the firm’s inception in 2009 – was “satisfied” with its investments in Cayman Islands funds, which took place in 2012.

1MDB’s Cayman investments was slammed by critics for its choice of Bridge Partners, a modest outfit for a state-backed entity, as fund manager and the investment, among others, have since morphed into a full-scale financial scandal for Malaysia.

Moreover, the investments in Cayman Islands-registered funds followed complex transactions of Islamic notes issuance and asset flipping which began with a US$1 billion cash investment by 1MDB in a joint-venture with PetroSaudi International that eventually flopped.

The much-awaited PAC report which was released last week highlighted that key aspects of this investment were pushed ahead by 1MDB’s top management without the board’s approval and that funds were paid to firms whose ownership could not be verified.

The Cayman Islands investments was one of two “level three assets” – assets that are deemed illiquid – worth over RM13 billion (S$4.53 billion) held by 1MDB as stated in the 2014 accounts.

The second portion, according to Mr Ng in the transcripts, have been invested in funds managed by DBS Bank Ltd Hong Kong, Amicorp Fund Services, Orangefield Fund Services and Manulife Trust Ltd.

The custodian bank for all these investments is Swiss bank BSI, whose private banker at its Singapore branch was also the relationship manager to Jho Low and several 1MDB entities. The banker, Yak Yew Chee, has had his bank accounts frozen amid a probe by the Monetary Authority of Singapore and the Commercial Affairs Department into the 1MDB money trail. Mr Yak left the bank in February.

Deloitte was appointed after KPMG, which had signed off 1MDB’s accounts for 2010, 2011 and 2012, was “removed”.

According to the Hansard transcripts on PAC’s session with KPMG Malaysia partners, 1MDB’s management was “unhappy over delays on the 2013 audit” as KPMG had requested further details on the Cayman Islands investments to ascertain its underlying value.

IMAGE: Reuters

This article was first published on April 15, 2016.

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