IBTimes UK

Malaysia can go bankrupt from the impact of the default on 1MDB loans, former prime minister and outspoken critic of the government, Mahathir Mohamad said.

In an article written for opposition mouthpiece Malaysia Chronicle bylined 'Mahathir Mohamad' the political patriarch said the 1 Malaysia Development Berhad is not a wealth fund and that a failure to service billions of dollars it borrowed will eventually lead to bankruptcy.

"The Government will have financial deficits which may lead to bankruptcy if the loans are not serviced and the principal paid," the article written by Mahathir says.

Mahathir, who has been on a warpath with Prime Minister Najib Razak, said Malaysia could undergo a similar fate as Greece if it cannot pay back the liability from 1MDB.

"The sum is so huge that if the Government cannot pay them it could be bankrupted. This has happened to Greece," he says.

On Wednesday Malaysia's finance ministry dissolved the board of advisors of 1Malaysia Development Berhad (1MDB) and took over the state funds' remaining assets. The ministry said in a statement the ownership in 1MDB's subsidiaries and four land assets would be transferred to it.

Last week Mahathir wrote in a blog post that Malaysia has never witnessed a more messy scandal than the 1MDB corruption.

"The people, who find it difficult to imagine the scale of RM1 million (S$345,000), are attempting to imagine how much is RM1 billion, RM42 billion. The rakyat is confused with stories of so much money going all over the world," he added.

Many countries including Singapore, Hong Kong, Switzerland, UK and the United Arab Emirates are investigating into the money trail linked to the corruption at the Malaysian state investment fund

Prime Minister Najib has denied any wrongdoing and rejects calls for his resignation over the long-drawn scandal over transactions at the fund.

IBTimes UK