Sunday, October 27, 2019

Day 26: 1MDB Stupidly Pay $1B for 40% Stake

The Kuala Lumpur High Court heard Thursday that 1MDB were fools to have paid $1 billion to obtain a 40 percent stake in the joint-venture company 1MDB-PetroSaudi Ltd while Saudi-linked PetroSaudi International Limited’s purported subsidiary PetroSaudi Holdings (Cayman) Ltd only injected $108 million (instead of the agreed $1.5 billion) to get the 60 percent share. 

Testifying against Najib Razak (left) in his corruption trial, 1MDB’s former CEO Shahrol Azral Ibrahim Halmi was asked in court about the 2009 joint venture deal that eventually resulted in zero returns for the Malaysian company. 

The 49-year old prosecution witness admitted that he had relied mainly on Google search as well as representations made by PSI themselves before entering into the said JV. 

The degree of reckless stupidity was further demonstrated when Shahrol also admitted during cross-examination that Jho Low (left) was advising both PSI and 1MDB at that same point in time. 

And he maintained that these details were not recorded in any of 1MDB’s BOD minutes. 

Shahrol (right) confirmed again that many things that were discussed were not minuted in order to protect Najib. And he claimed this was how Najib wanted things done. 

He even declared that “1MDB was Datuk Seri Najib, Datuk Seri Najib was 1MDB” – as there was no difference in his mind between the entity and the former prime minister.

Bank Negara Malaysia came out with a damning statement Thursday that houses in Malaysia are “seriously unaffordable” by international standards. 

Financial Surveillance Department director Qaiser Iskandar Anwarudin (left) said according to the median multiple methodology developed by Demographia International and recommended by the World Bank, United Nations and Harvard University, a house was deemed affordable if it was priced not more than three times of annual household income. The affordability (in Malaysia) has deteriorated with the median multiple affordability (the ratio of house price to households’ annual income) rising to 4.8 times in 2016 from 3.9 times in 2012. 

Meaning most Malaysians cannot afford to buy newly-launched houses that carry a price tag of RM417,262 on average when the maximum affordable house price nationwide stands at only RM282,000.

In fact, seventy-three percent of unsold properties in Malaysia was not affordable with Johor recording the highest number of unsold houses followed by Selangor, Kuala Lumpur, Perak and Pulau Pinang. 

The solution is simple, really. Developers must bring to market affordable houses.

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