1MDB needs a new script

BESIEGED by relentless attacks over its laundry list of doubtful investment moves, Malaysia's state-backed fund 1Malaysia Development Berhad (1MDB) is full throttle on defensive mode.

That strategy, if it's not already clear, seems to be merely fanning the frenzied and mostly worried attacks.

If 1MDB truly wants to placate critics, it needs to follow some very simple, basic rules which its other state-backed counterparts have learnt to do the hard way.

For starters, 1MDB under its newly-appointed chief executive Arul Kanda can hold annual reviews of its accounts starting this year when the books are closed for its year ending March 2015 - for all media, not just selective ones and by extension, the public.

It needn't look too far to assess the effectiveness of this strategy.

Just this week, the country's sovereign wealth fund Khazanah Nasional held its annual review - its tenth since 2005 when the fund, led by a top brass overhaul, decided that it would no longer keep the public in the darker over its investments.

It took Khazanah half its life span or ten years to turn its back on the secretive-style of investing which had previously drawn huge public outcry in the country.

These days, the annual events where Khazanah provides some key indicators and updates on its investments are markedly more staid, relatively dull even; and that's a good thing. Transparency begets trust which begets credibility, all of which 1MDB is in deficit at this point.

This is particularly crucial for 1MDB, Malaysia's most-watched company, as it prepares to launch a giant listing, touted as Southeast Asia's largest, of its energy assets sometime this year.

Another thing that will serve the fund and its communications team well is to rid itself of the notion that all its critics have a political agenda.

That's undeservedly self righteous for a fund that has racheted up over RM40 billion in debt, rolled over a RM2 billion debt three times over a year, switched auditors and bosses twice and is in the red to the tune of RM665 million in 2014.

1MDB's chief executive Mohd Hazem Abdul Rahman is gone after less than two years at the job. The lack of information on his departure has left the market in a cloud of speculation.

1MDB provided nothing on this except to say that his successor, Mr Arul, will lead a "strategic review" involving a "full range of strategic and financial alternatives to achieve the greatest value" for the firm.

This remark comes barely a month after 1MDB's chairman Lodin Wok Kamaruddin asserted that the firm was in sound financial health.

The weak messaging crops up elsewhere too.

The strategic development firm had set up SRC International Sdn Bhd in 2010, a firm tasked with acquiring and managing resources for the country, and had taken a hefty loan from a government-linked entity a year later. In 2012, SRC was transferred to the Ministry of Finance.

1MDB has provided no indication on what the loan, taken while SRC was under its umbrella, was utilised for and why SRC had split from the fund. More recently, the fund, under pressure to bring back some US$2.3 billion it had invested in several Cayman Islands funds through little-known money managers, said it has fully redeemed the investments there. That's a first good step; but it is just not enough. Is the money, all of it, back in the country?

Mr Arul has promised more transparency from hereon. He can start by poring over those "tonnes of documents sitting on his table". He had admitted to a Malaysian tabloid a week ago that he hasn't had a chance to look at them and hence, may not be able to answer all the questions. He should post crucial information proactively - without being asked.

As long as 1MDB scrimps on details and adopts selective disclosure, it will continue to feed the nagging suspicion that there is something amiss.

Mr Kanda, the 38-year old former Gulf-based banker, is now 1MDB's public persona. He needs a sharpened agenda to lift the fund's waning fortunes. He needs a new script to turn around public perception.

Is he able to pull that off while the board which he reports to remains unchanged?