1MDB stands for the 1Malaysia Development Berhad. In its own words, the 1MDB had this to say about itself published as part of the media statement released in April 2013 (Gunasegaram, 2013): “1MDB is Government-owned and supported but driven by private sector thinking and practices. It strives to fulfill the aspiration of the Government with the agility of the private sector. Bonds raised are part of capital for the strategic initiatives it Undertakes.” The 1MDB had its origin as Terengganu Investment Authority (TIA) which was a body intended to be a sovereign wealth fund to promote the economic interests of the state of Terengganu located in the east coast of the peninsular Malaysia (Khairie, 2015). TIA was set-up in end-February 2009 after then deputy Prime Minister Najib announced its formation three days before the 2009 by-election in Kuala Terengganu, held after the passing of incumbent Member of Parliament Razali Ismail. To start off its operation, TIA had raised some RM5 billion in a federal government-guaranteed bond issue.
However, within a few months following the raising of the funds, the federal government had taken over the entity and renamed it 1MDB. 1MDB had become such a problem by late 2014 as encapsulated in an interesting piece published in Kinibiz that had detailed out ten questions that those associated with the companies needed to answer (Gunasegaram, 2014b). As the former senator S. Ramakrishnan had succinctly noted on the damage that the company had entailed (Ramakrishnan, 2015): … 1MDB sovereign fund turned out to be swelling pool that might drag down even the BN government. The complex money trails round the globe and the complex wheeling and dealing is simply complicated for even professionals…Within five years since its inception the sovereign fund accumulated 42 billion in debts and still counting. Assets pasted their expiry dates were purchased with excessive prices and prime lands allotted at nominal prices hoping for high gains on valuations. . Excessive loans with high interest rates taken to finance the purchase of overpriced assets finally exposed the unsustainable business model of 1MDB. Billions of dollars transferred out with no questions from BNM to dubious accounts in Cayman Islands managed by unknown fund managers from Hong Kong makes 1MDB a thriller story… 1MDB will be remembered and quoted as how funds should not be managed. It is sad that a noble initiative turned out to be colossal mistake.
However, within a few months following the raising of the funds, the federal government had taken over the entity and renamed it 1MDB. 1MDB had become such a problem by late 2014 as encapsulated in an interesting piece published in Kinibiz that had detailed out ten questions that those associated with the companies needed to answer (Gunasegaram, 2014b). As the former senator S. Ramakrishnan had succinctly noted on the damage that the company had entailed (Ramakrishnan, 2015): … 1MDB sovereign fund turned out to be swelling pool that might drag down even the BN government. The complex money trails round the globe and the complex wheeling and dealing is simply complicated for even professionals…Within five years since its inception the sovereign fund accumulated 42 billion in debts and still counting. Assets pasted their expiry dates were purchased with excessive prices and prime lands allotted at nominal prices hoping for high gains on valuations. . Excessive loans with high interest rates taken to finance the purchase of overpriced assets finally exposed the unsustainable business model of 1MDB. Billions of dollars transferred out with no questions from BNM to dubious accounts in Cayman Islands managed by unknown fund managers from Hong Kong makes 1MDB a thriller story… 1MDB will be remembered and quoted as how funds should not be managed. It is sad that a noble initiative turned out to be colossal mistake.