Finance Minister Lim Guan Eng speaks to the media in Putrajaya May 23, 2018. — Picture by Shafwan Zaidon

KUALA LUMPUR, May 23 — The Ministry of Finance (MoF) said today that the directors of 1Malaysia Development Bhd (1MDB) have confirmed that the fund cannot repay its debts since it was “insolvent”.

In a statement here, Finance Minister Lim Guan Eng also said that chief executive Arul Kanda Kandasamy explained he was on garden leave and unaware of the firm’s financial situation.

“The Directors of 1MDB confirmed that 1MDB was ‘insolvent’ and was unable to repay its debts. The former chief finance officer, Azmi Tahir, has also written to MoF in March 2018 to state that 1MDB will not able to service its interest due in April and May 2018.

“However, Arul Kanda when asked, highlighted that he is on ‘garden leave’ until the end of his contract in June 2018. Therefore, he claimed that he is in the dark as to the financial situation of the company,” Lim said.

Lim had two meetings to determine 1MDB’s financial status today, together with deputy treasurer-generals Datuk Siti Zauyah Md Desa, Datuk Ahmad Badri Mohd Zahir and Datuk Asri Hamidon.

The first meeting was with the Board of Directors, Datuk Norazman Ayob and Datuk Kamal Mohd Ali. The second was with Arul Kanda who was accompanied by the former CFO Azmi Tahir and former general counsel Ivan Chen.

The minister said Arul Kanda was absolutely uncertain of the value or existence of 1MDB’s “investments” — US$940 million (RM3.74 billion) “units” previously held with BSI Bank, Singapore and the US$1.56 billion overseas investment funds with 1MDB Global Investments Limited.

“It is completely unbelievable that a highly paid and ‘experienced’ investment banker can be so irresponsibly clueless as to not know whether RM9.8 billion worth of investments are even real,” Lim said, contrasting it with Arul Kanda’s tour to “explain” 1MDB on behalf of Barisan Nasional before the polls.

“I have found Arul Kanda to be utterly dishonest and untrustworthy, and instructed the legal advisers to the Ministry of Finance to review his position as the president of 1MDB.”

Meanwhile, Lim said the board claimed they have repeatedly disputed the value and even the existence of these investments during the monthly board meetings, since there was a lack of evidence in the past two years.

Yesterday, the DAP secretary-general said the MoF has been bailing out 1MDB’s debt service obligations since April last year.

The total amount paid by the MoF has amounted to RM6.98 billion, including payments to IPIC’s settlement agreement amounting to RM5.05 billion.