By Stephanie Jacob
Zeti Akhtar Aziz
Bank Negara Malaysia (BNM) did not make an error in revoking the permission it initially granted 1Malaysia Development Bhd (1MDB) allowing it to take US$1.83 billion (about RM8 billion at current exchange rates), said governor Zeti Akhtar Aziz.
Earlier, BNM issued an administrative order revoking its earlier approval given to 1MDB.
She explained that the bank engaged 1MDB on at least five separate occasions during the latter’s application process, and that this, along with other correspondence, was considered in the decision to grant 1MDB permission for its investments abroad.
However the permission was later revoked when the central bank decided that it had not been given full disclosure by 1MDB.
“The bank’s decision was based on the bank’s findings that the permissions given to 1MDB was based on inaccurate, or made without complete disclosure of, materials relevant to the bank’s decision,” explained Zeti.
Zeti said: “We do not just rely on the forms that are filled up (by 1MDB). We rely on many other written information which are from any organisation that borrows to invest abroad.
“And we do not just, at the point of approval, end all engagement with the investor that invests abroad. We also request for updated information on the status of their investment abroad. And we have information of all our requests for information throughout this investment activity taken by this entity, 1MDB. We have numerous engagements and correspondence and all this was considered by the bank in relation to our decision to grant permission.
“So other investors should be very aware that if they want to invest massively abroad… they have to submit not only the forms but detailed information of the investment. And BNM will continuously assess the information and if information is not provided then future request will be rejected. And in the case of 1MDB, I do believe that consequently some of their requests were indeed rejected,” she added.
In a public response to BNM’s order that it repatriate the funds it has taken overseas, 1MDB had said that it could not repatriate the amount as it has been used or earmarked for debt repayment.
BNM is currently evaluating and validating 1MDB’s public response to the revocation of their approval before taking its next course of action.
“We are now evaluating 1MDB’s response to this administrative order and 1MDB has publicly stated that the funds for the redemption for this offshore investments have been utilised and are also earmarked for debt for assets swap as part of their rationalisation plan.
“So the bank is validating this now and will take into account any firm binding commitments 1MDB has made under its rationalisation plan which will contribute to reducing its debt burden. And this is important (for 1MDB) to achieve a swift and rapid conclusion of its financial position and ensure that it can continue to meet its outstanding debt commitments going forward,” said the governor.
Zeti emphasised that the bank would fully enforce its regulations and take action against anyone who contravened it.
She also said that the bank will not get involved in any political agendas. “The central bank will never be drawn into politics. We will do everything to protect the institution. Its effectiveness depends on the trust and respect of the people, industries and the market. We will not be drawn into any political agenda. The bank will just do our job which is to maintain macroeconomic stability,” Zeti said.
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