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Crooked bridge over troubled water

SINGAPORE (Oct 22): It must be exhausting for officials at the Ministry of Foreign Affairs (MFA) to have to constantly correct statements in Malaysia.

For instance, they had to disabuse Johor Menteri Besar Osman Sapian this past week of what he thought will be discussed during his visit to Singapore on Oct 27. Osman reportedly said the construction of the “crooked bridge” would be on the table. Other items he said would be on the agenda were the price at which Singapore buys raw water from Malaysia, as well as bilateral development and investments.

In a statement, MFA said the coming meeting does not have the mandate to discuss the 1962 Water Agreement, nor did Singapore receive any official word to discuss the “crooked bridge”.

However, Malaysian government officials are now also feeling the need to correct statements in Singapore. On Oct 7, The Sunday Times reported that Malaysia faces a looming interest payment of US$50.3 million ($69.47 million) to Abu Dhabi in connection with the 1Malaysia Development Bhd scandal. It suggested that a full settlement of the payment would set a “dangerous precedent”, as it would amount to an explicit recognition by the Pakatan Harapan government of the liabilities and commitments it inherited from the previous government on all 1MDB-related matters.

On the other hand, failure to honour the interest payment would trigger a default on the Abu Dhabi debt estimated at US$3.5 billion, and crystallise cross-defaults on other 1MDB-related debt amounting to more than US$2 billion. That would have negative consequences for Malaysia’s credit rating and weigh on its currency.

Then, on Oct 14, The Sunday Times reported that a statement to the London Stock Exchange showed that Malaysia owes Abu Dhabi US$6.9 billion. The report stated that the revelation had sent shock waves through the Malaysian government, as this is twice what the government says it owes Abu Dhabi.

The announcement to the London Stock Exchange relates to a plan by Abu Dhabi’s state-owned International Petroleum Investment Co (IPIC) on Oct 1 to transfer specific liabilities and financial commitments related to multibillion-dollar bonds issued by 1MDB to its parent entity, Mubadala Development Co PJSC. IPIC shareholders are set to vote on the corporate restructuring at end-October.

Tony Pua, political secretary of Malaysia’s finance minister Lim Guan Eng, denied The Sunday Times report that Malaysia now owes Abu Dhabi US$6.9 billion in a statement on Oct 15. He also took issue with the slant of the Oct 7 report. “I’m stunned by the ST reporting standards when both the writer and its editors failed to read and understand the legal-financial statement by IPIC,” Pua said. He went on to grumble about several previous 1MDB-­related reports that he said were inaccurate.

On Oct 17, Warren Fernandez, editor of The Straits Times, said the paper stood by its reporter and the reports filed, as these were based on documents and information from highly placed and reliable sources. The reporter Leslie Lopez also responded to Pua, stating that Malaysian government lawyers remain in the dark about the settlement agreement between 1MDB and Abu Dhabi because they are unable to source documentation related to the deal.

The following day, Mubadala also contradicted the Straits Times report, stating that the bonds have no connection with 1MDB.

Meanwhile, Malaysia’s finance minister Lim told reporters his government has no intention of defaulting on 1MDB-related debt obligations, and that the government is working towards some lofty goals. “We want to join the community of civilised countries, where we respect accountability, transparency, and uphold integrity, so that Malaysia will be free from corruption.”

So, perhaps the Malaysian government shouldn’t distract itself with the “crooked bridge” and the price of raw water supplied to Singapore. And, it would help if newspapers on both sides of the Causeway get their facts right, and ensure that their stories are even-handed.

This story appears in The Edge Singapore (Issue 853, week of Oct 22) which is on sale now. Subscribe here