WSJ: BN govt used BNM to pay RM2b to service 1MDB debts

PETALING JAYA: The defeated Barisan Nasional (BN) government was said to have turned to Bank Negara Malaysia (BNM) to pay off US$500 million (RM 2billion) in debt owed by the troubled state investment fund 1Malaysia Development Bhd (1MDB).
The Wall Street Journal reported today that 1MDB was in financial distress late last year and lacked the cash flow needed to pay the sum owed to Abu Dhabi's International Petroleum Investment Company (IPIC).
The ministry had made use of government assets to make several payments to bail out 1MDB, one source said.
Finance Minister Lim Guan Eng had revealed that 1MDB cannot meet its debt obligations on its own, and needed the Finance Ministry to pay nearly RM7 billion of its debt and interests last year.
The WSJ report said funds that 1MDB claimed originated from its sale of power plants as part of its "rationalisation programme" had come instead from BNM through a land deal.
BNM said on Jan 4 that it had agreed to purchase a plot of land from the government for about RM2 billion after several months of discussions.
1MDB is the subject of money-laundering investigations in at least six countries, including the United States, Switzerland and Singapore. In civil lawsuits, the US Justice Department has alleged that about US$4.5 billion was misappropriated from 1MDB.