by Ganesh Sahathevan
The Malaysian Loans Guarantee (Bodies Corporate) Act 1965 which regulates the issuance of Malaysian Government guarantees,states,among other things:
Restriction on borrowing powers of body corporate so long as guarantee outstanding
6. So long as the Government shall continue liable under any guarantee given under this Act in respect of any sums raised by a body corporate, the body corporate shall not except with the consent of the Minister exercise any other power to borrow possessed by it.
Now,according to information put out by 1MDB in 2014,the Malaysian Government explicitly guaranteed two loans, a RM 5 Billion Medium Term Islamic Note issue, and a RM 800 Million term loan.
It appears that all other borrowing came after that, but it is not clear if 1MDB had obtained government approval to raise those loans. Recall that PM Najib has declared that he had nothing to do with 1MDB,except as some sort of absentee overseer.
However, Malaysia has two finance ministers, and therefore ,the blame must fall on the Second Finance Minister , Johari Ghani.Of course, he may want to blame any number of his predecessors, but he cannot , as he did recently with the IPIC matter, claim that he has nothing to do with any of it.
All this in addition to the problem of dealings with IPIC breaching the External Loans Act 1963.