US$1.5 billion assets non-existent, says DAP lawmaker

The US$1.5 billion (RM5.4 billion) worth of assets PetroSaudi International (PetroSaudi) injected into the 2009 joint venture with 1Malaysia Development Berhad (1MDB) was non-existent, DAP said today, adding that the strategic investment fund had been aware of this all along.

DAP lawmaker Tony Pua told a press conference in Kuala Lumpur today that while 1MDB had invested US$1 billion into the joint venture, known as 1MDB PetroSaudi Limited, PetroSaudi had merely used an oil field belonging to Turkmenistan as its asset.

The Turkmenistan government had signed a Production Sharing Agreement (PSA) with Buried Hill Energy (Cyprus) Public Company Limited for an exploration licence that would allow the latter to develop offshore Block 3, which includes the Serdar Field in the Caspian Sea.

Buried Hill subsequently signed a farm-in agreement with PetroSaudi on July 4, 2009 to develop the oil field.

“So the oil field never did belong to PetroSaudi. Moreover, 1MDB PetroSaudi, through its subsidiary PetroSaudi Turkmenistan 1 Limited, terminated the farm-in agreement later on,” Pua said.

“This means that 1MDB was aware all along that it was all false.”

As a result, PetroSaudi had 60% shares in the joint venture, despite having zero assets and not having to invest a single sen in it, said Pua.

Copies of a July 8, 2009 letter, purportedly from Buried Hill’s chairman and CEO Roger Haines to the firm’s shareholders, were distributed to the media today.

“Under the agreement we signed, Buried Hill will remain operator of Block III and PetroSaudi will receive a 50% working interest in our PSA in return for funding all of the appraisal and pre-development costs on Block III,” read the letter.

In a separate letter, purportedly from Buried Hill to PetroSaudi and its subsidiary companies dated March 5, 2010, Buried Hill agreed to pay PetroSaudi Turkmenistan 1 Limited US$7.099 million upon notice of the termination of their farm-in agreement on November 24, 2009.

Meanwhile, Pua said today that the US$1.5 billion valuation report of the assets was not prepared by Buried Hill or the Turkmenistan government, but a private company which had completed it under one week.

“The day the valuation report was produced, September 29, was the same day the joint venture was signed between PetroSaudi and 1MDB,” he said.

When asked to respond to 1MDB president Arul Kanda’s claim that 1MDB had made a profit of US$488 million from its business arrangements with PetroSaudi, Pua asked that he show proof of the money.

“Show us the money. The money has been transferred to Cayman Islands, then it was retrieved again, but no one knows where the actual money is.

“They refuse to bring back the money even though they are desperate for cash to the point that they have to borrow money from Ananda Krishnan and request an RM3 billion bailout from the Cabinet,” said Pua.

He added that even if 1MDB had managed to profit from the joint venture, it did not justify the alleged fraudulence involved in the entire deal.

“I hope to hear from the Auditor General soon about this, it is a matter of immediate urgency. The documents are out there and I am certain the people involved will be speeding up the process of erasing evidence,” said Pua.

Meanwhile, Segambut MP Lim Lip Eng, who was also at the press conference, urged authorities to respond to the allegations surrounding 1MDB.

He said if there was no word from authorities within 24 hours, he would lodge a police report tomorrow.

Serdang MP Dr Ong Kian Ming meanwhile asked why Datuk Seri Najib Razak had not appointed a representative from the Finance Ministry to sit on 1MDB’s board of directors.

He said such a practice was common for companies under the ministry to ensure their interests were protected

“But still there is no representative from 1MDB. Is this something the prime minister purposely didn’t want, or was it pure incompetence in carrying out his role as the finance minister?” asked Ong. – March 2, 2015.

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