GOVT PENSIONERS WISE UP: Concerns grow about monthly payments after 1MDB scandal

Malaysia Hronicle

12/7/2015

KUALA LUMPUR  - Former civil servants are worried whether their monthly pensions will be affected as a company at the centre of the latest 1Malaysia Development Berhad (1MDB) probe had borrowed money from Retirement Fund Incorporated Inc (KWAP).
KWAP, which was set up to help the government disburse pensions, had lent RM4 billion to SRC International Sdn Bhd, one of three companies raided on July 3 as a special government task force investigated claims it funnelled money into the bank accounts of Prime Minister Datuk Seri Najib Razak.
The fund had also invested RM1.4 billion in other 1MDB subsidiaries – Bandar Malaysia Sdn Bhd, 1MDB Energy Limited, 1MDB Global Investment Limited and Jimah Energy Ventures Bhd.
The probe by the task force was into allegations that SRC International and two other 1MDB-linked companies transferred money into Najib’s accounts between December 2014 and February 2015.
“We’ve had some members come up to us and ask whether their monthly pension payments would be affected (by the investigation),” said Datuk Omar Osman, who heads the 1Malaysia Civil Servants Retirees Club.
“We tell them not to worry because KWAP is doing what it can to secure the money that it has invested. Pensioners hope their monthly pensions would not be affected by what was going on in SRC.
“We hope that whatever KWAP does to help the government pay out pensions, it does with utmost care so as to not jeopardise monthly payments,” said Omar, who is a former president of Cuepacs, the umbrella group of public sector unions.
A pensioner who requested anonymity said KWAP’s ties to 1MDB’s problems were a topic of discussion among his former civil servant friends even before the current probe into Najib accounts.
“But it’s not like people are angry or they are about to go to the streets, because at the end of the day, they still receive their monthly payments,” said the former officer of a statutory body.
Presently, pensions are still being paid out by the government while according to KWAP’s website, the fund assists the government in funding those payments.
In order to meet this function, KWAP, to a limited extent, is allowed to invest in the stock market, properties and companies to generate an income.
Its loan to SRC International in 2011 has sucked KWAP into 1MDB’s troubles even before the probe into the Najib’s accounts was launched last week.
The loan is also guaranteed by the government.
In May, Petaling Jaya Utara MP Tony Pua said the Finance Ministry (which now owns SRC International) still could not account for RM3.6 billion KWAP had lent it.
On May 21, several PKR leaders filed court injunctions to stop KWAP, Employees’ Provident Fund and haj pilgrims’ fund (Tabung Haji) from investing any more money into 1MDB or its subsidiaries.
Former Finance Ministry deputy secretary-general Tan Sri Ramon Navaratnam is aggrieved and let down by developments in KWAP and how it was snared into 1MDB’s mess.
The problem, he said, stemmed from the fact that Putrajaya’s policymakers did not understand that the government has “no business being in business”.
In the private sector, money could be risked for profit but could also be lost with the ups and downs of a business cycle, said Ramon, who is also a pensioner.
“With the government, it’s the people’s money that is being risked. How can you hold the welfare and the future of the people at risk?
“As a pensioner and a taxpayer, I am greatly saddened about how we have gotten into this mess.”
Datuk Azih Muda, who is currently heads Cuepacs declined to comment on the loan and the fund’s investments in 1MDB, saying only the government has guaranteed the RM4 billion.
“The money will not be lost, that is the guarantee from the government. It will be paid back,” said Azih, who also sits on KWAP’s board.
Azih also had a message for civil servants who are worried about their pension payments.
“I urge civil servants not be swayed by perception and sentiment, not to get involved in the politicking around the investigations and to continue doing their duties.”
KWAP has not returned request for comments on these concerns. - TMI