Tag Archives: 1MDB

Swiss Launch Money Laundering Investigation Into 1MDB

Le Temps, one of Switzerland’s premiere newspapers, has tonight (Friday) received confirmation from the Attorney General’s Office that an official investigation has now been launched into 1MDB.

It is a highly significant move, because it signals that international banking regulators and law enforcers are now engaging in the scandal, which has engulfed Malaysia for several months.

The statement confirms that the Attorney General’s office formally opened an investigation on 14th August into two companies and an unnamed individual, in connection with 1MDB and relating to money laundering of the proceeds of corruption against a foreign country.

Over recent weeks the Prime Minister of Malaysia has moved to close down the country’s own investigations into the matter, leaving many to wonder if 1MDB’s financial irregularities would pass unnoticed.

At the same time he sacked his Deputy Prime Minister, his Attorney General and several members of his cabinet, while also shutting the country’s premiere independent business newspaper and, of course, banned Sarawak Report.

However, with each high-handed move Najib Razak has engendered concern within the international financial community, which regards transparency and due legal process as a crucial pre-cursor to investment.

The ringgit has plunged by a quarter over the past few months and there are now fears of a free-fall if the Prime Minister’s refusal to abide by normal due processes continues.
Whistleblower in Thailand jailed for three years this week for revealing 1MDB’s secrets

Whistleblower, Xavier Justo, jailed for three years in Thailand this week for revealing 1MDB’s secrets

The Swiss press have been alerted to the story by the arrest and apparent vilification of a whistleblower into 1MDB, the Swiss national Xavier Justo.

Justo received a three year sentence in Thailand for allegedly blackmailing PetroSaudi International over his information about their conduct during the highly controversial joint venture with 1MDB, where US$1.19 billion appears to have been siphoned out via a company owned by Najib Razak’s proxy, businessman Jho Low.

Involved in these deals have been RBS Coutts, Zurich, JP Morgan and the Swiss private banks BSI and Falcon, which was bought by the 1MDB joint venture partner from Abu Dhabi, the Aabar sovereign wealth fund.

The Chairman of Aabar was sacked two months ago, following a spate of revelations about 1MDB followed by the CEO, sacked earlier this week.

Altogether, the various moves and declarations by the international finance community over 1MDB-related matters indicate a growing momentum of concern about the multi-billion dollar scandal in Malaysia, where the Prime Minister appears unable to answer the most basic questions.

Next weekend, as the international community has noted, the well renowned Bersih [Clean] movement has scheduled the 4th of a series of peaceful protest marches, calling for a clean up against corruption.

Bersih 4 is specifically directed against Najib Razak’s current failure to explain the arrival of US$681 million into his own bank account, which was believed by investigators to be linked to the 1MDB scandal – before their investigations were closed down

The last such march, held before the 2013 General Election and directed against cheating by the ruling party, rallied over 300,000 people.

Temperatures are said to be rising even higher now, following what was generally regarded as a bought result by the ruling party and this latest evidence of corruption. There are indications that intimidatory tactics against the marchers by ‘counter-groups’ and the police will reach new levels.

Government employees have also been warned they could lose their jobs if they participate in the march, which is a clear violation of their constitutional rights.

The notice to Le Temps from the Swiss Attorney General states:

“Regarding the state of affairs to which your request relates, we confirm that the MPC [Swiss Confederation] opened a criminal case against two 1MDB bodies, dated August 14, 2015, and against Unknown [an individual who is yet to be named] . The procedure is being conducted under the laws concerning the bribery of foreign public officials (art. 322septies CP), dishonest management of public interests (art. 314 CP) and money laundering (Art. 305bis CP). The opening of the criminal action follows two communications from the office for money laundering (MROS).[Translation]

It is the first key sign that the investigation into 1MDB has been globalised into the hands of other implicated regulatory authorities. As Malaysia abdicates its own leading role in the investigation the markets have markedly started to panic, as evidenced by the ongoing collapse of the Ringgit.

Other international regulators are clearly being forced to take action to ensure confidence for investors.

Read more…
Swiss Launch Money Laundering Investigation Into 1MDB !
21 Aug 2015 Sarawak Report

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Did 1MDB pay Aabar US$1 billion to terminate options?

In 2012, 1Malaysia Development Bhd (1MDB), using subsidiaries, issued two bonds totalling US$3.5 billion (RM11.55 billion) bonds to finance the acquisition of power assets from Tanjong and the Genting Group.

The subsidiaries were 1MDB Energy Ltd and 1MDB Energy (Langat) Sdn Bhd. The total proceeds after netting off expenses and fees to Goldman Sachs and other intermediaries was US$3.1 billion (RM9.3billion).

The two bonds were co-guaranteed by 1MDB and Abu Dhabi’s International Petroleum Investment Company (Ipic). The Ipic guarantee came at a very heavy price because 1MDB agreed to the following:

1) Ipic got to keep RM4.25 billion – 45% of the net proceeds of RM9.3 billion or 37% of its gross debt of RM11.55 billion – as refundable security for the guarantee.

2) Ipic was given a 10-year option to subscribe for up to 49% of the future listing of the power assets. Ipic transferred the option to its subsidiary Aabar Investments and hence, it is called the Aabar options.

As we have argued many times previously, 1MDB’s style of borrowing is an extremely expensive one. It is ridiculous that a company gets to keep only 37% of the RM11.55 billion it borrowed.

It is like borrowing money from Ah Longs (illegal moneylenders)!

If that was not bad enough, 1MDB also agreed to share 49% of any upside on the power plants it bought via the Aabar options.

Just like the money it poured into its aborted joint-venture with Saudi Petroleum took a few twist and turns, the same appears to have happen with the Aabar options.

In its Full Year March 31, 2014 accounts (which was submitted to the Companies Commission of Malaysia only in November) 1MDB made the following disclosures under the Significant Events Subsequent To The End of The Reporting Period:

First, it said that a substantial sum of the US$1.22 billion (RM4.03 billion) redeemed from Cayman Islands was used for debt servicing, working capital and payments to Aabar as “refundable deposits” pursuant to an agreement to extinguish the options. It did not reveal the amount of the refundable deposits but we can assume it was the bulk of the US$1.22 billion.

Second, it said that in May, 2014 it had taken a bridging loan facility of up to US$250 million to finance the acquisition of the options granted to Aabar Investment.

Third, it was also revealed that on May 22, 2014, 1MDB and Aabar had signed a settlement agreement to terminate the options. No details were given except that the final settlement will depend on the final valuation of the IPO.

Lastly, 1MDB revealed that on September 2, 2014, Aabar had written to inform 1MDB that it did not wish to exercise the options and the company had “agreed to compensate (Aabar) at a consideration agreed under the terms and conditions” of the May 22 settlement agreement.

What 1MDB did not disclose was that on September 1, 2014, a day before it received the notification from Aabar, it took a US$975 million loan from Deutsche Bank. Was it also to pay Aabar?

There are two questions to ask about this chain of events that happened during the May to September period.

1) What was the total amount 1MDB had paid to Aabar? If you add the bridging loan of US$250 million plus a substantial amount of the US$1.22 billion redeemed from Cayman and the US$975 million loan from Deutsche Bank, it is a lot of money that 1MDB raised during that 5-month period. How much went to Aabar?

2) Why was there a need to sign the May 22, 2014 settlement agreement? Was there not such a termination clause under the original option agreement signed in 2012 as is normally the case in such agreements? Or is the May 22 termination agreement a revised settlement agreement?

In the name of transparency, good governance and to clear doubts about the utilisation of the Caymans money and the payment to Aabar, 1MDB must reveal details of the original agreement with Aabar and also the May 22, 2014 settlement agreement.

1MDB must also disclose how much money has been paid to Aabar thus far to terminate the options and justify why it had agreed to the amount and went ahead to pay Aabar given that the IPO of its power assets is facing headwinds.

We can already hear Arul Kanda citing “legal and commercial confidentiality” for not answering questions he wants to avoid. But those are the questions the public want an answer to. – The Edge Malaysia, March 2, 2015.

Source..
Did 1MDB pay Aabar US$1 billion to terminate options?
BY THE EDGE MALAYSIA
2 March 2015

Emails Blow Malaysia’s 1MDB Fund Wide Open

Sarawak Report blog details how deeply a flamboyant financier and friend of PM Najib actually ran the fund

In December of last year, the controversial investment fund 1Malaysia Development Bhd abruptly called in all of its computers, employee laptops and servers and wiped them clean of all emails.
(Read: Controversial Malaysian Investment Fund’s Computer Records Wiped Off)

It was too late. The reason has come embarrassingly clear with a report by Clare Rewcastle Brown, the indefatigable blogger who edits The Sarawak Report. Rewcastle Brown had already obtained thousands of emails and documents before the shutdown, detailing that transactions by the fund were actually run by Taek Jho Low, a close friend of the family of Prime Minister Najib Tun Razak. There were times when the CEO of 1MDB, Shahrol Halmi, and his Malaysian colleagues had no idea what was going on.

Jho Low has repeatedly told the media that he has had nothing to do with 1MDB’s investment activities, and that he has received no money or benefits. But the emails allegedly show that he orchestrated a 2009 joint venture between 1MDB, as the fund is known, and a fledgling oil exploration firm called PetroSaudi International, which was little more than a shell.

Although money provided by 1MDB was putatively going into oil exploration, Sarawak Report’s emails indicate that Jho Low siphoned off US$700 million and channeled the money to a firm he owned called Good Star Ltd. The emails and other documents show that money was then used to purchase UBG bank in Sarawak, owned by the former Chief Minister, Abdul Taib Mahmud, “at a very advantageous price for the chief minister and his family, who had been failing to get a deal on the open market.”

1MDB has denied any money has been lost and in fact on Feb. 21 it claimed that the PetroSaudi JV had turned a profit of US$488 million. 1MDB president Arul Kanda Kandasamy said on 1MDB’s website that that the money it had invested in the venture had been converted into Murabaha notes, an Islamic financing structure.

That assertion remains to be proven. But whether the fund earned money or not, the extent to which a private citizen and friend of the Prime Minister used 1MDB’s influence and apparently in his own business deals is highly irregular.

PetroSaudi, for instance, agreed to act as a “front” for Jho Low on such deals, according to the documents, and it was a subsidiary of PetroSaudi International registered in the Seychelles, which bought UBG, using money siphoned from 1MDB.

The extent to which Jho Low was using 1MD for his own purposes may go beyond just the PetroSaudi deal. Documents on file in London indicate that the young tycoon attempted to use Malaysia’s sovereign credit via 1MDB in his vain attempt to buy three exclusive London hotels including Claridge’s. Lawyers in Los Angeles have charged that money to fund the film The Wolf of Wall Street also may have been guaranteed by 1MDB. That deal was ultimately settled out of court and the lawyers refuse comment.

The revelations are certain to add to the precarious state of Najib’s premiership. As finance minister, he put together the arrangement that uses the Finance Ministry to back 1MDB. He is also its chief economic adviser. He is under intense fire over 1MDB both from the opposition and from former Prime Minister Mahathir Mohamad, who said on Feb. 10 that “something is rotten in Malaysia” and demanded that Najib step down. The prime minister’s popularity has fallen to 44 percent and seems likely to descend further. Revelations about the 2006 death of the late Mongolian translator and party girl Altantuya Shaariibuu are also coming closer to him. His own brothers have published formal statements questioning his comments that the sources of his wealth were his family.

The article, titled “Heist of the Century, displays documents that show an initial meeting took place in New York on Sept. 8, 2009, between Jho Low, then the head of Wynton Capital, a UK-based businessman named Patrick Mahony, who had been introduced a few days earlier by PetroSaudi’s CEO, Tarek Obaid. In addition to being CEO, Obaid is a friend of PetroSaudi’s owner, Prince Turki bin Abdullah, one of the sons of the then King of Saudi Arabia. Mahony worked for the investment group Ashmore, which was funding PetroSaudi’s main operation, an oil well in Argentina.

Also at the meeting were two of Jho Low’s close colleagues, Li Lin Seet and a UBG bank lawyer, Tiffany Heah.In an email written to “Jho, Seet and Tiffany” the following day, Mahony made clear on behalf of PetroSaudi that the company was very willing to become involved in a series of deals proposed by Jho Low, which were expected to involve 1MDB and Petronas, Malaysia’s national energy firm. In that email, Mahony said he also understood that Jho Low wanted “to use PetroSaudi International as a front” for certain deals and he said that “we would be happy to do that.”

1MB officials apparently only became aware of the PetroSaudi transaction about 10 days before the initial billion-dollar deal was signed. The emails show that Jho Low initiated formal written introductions between 1MDB and PetroSaudi just days before the transaction was signed. There is no evidence that the Malaysian fund concluded any due diligence into PetroSaudi at all.

Jho Low repeatedly insinuated that he represented Malaysia’s highest authorities, in this case the “YAB PM” – Najib – directly, in the matter. He focused on playing up PetroSaudi’s owner Prince Turki’s royal connection, insinuating that the negotiations were officially connected to “furthering Saudi-Malaysia bi-lateral ties,” although there was nothing to suggest bilateral ties had anything to do with the matter.

“There is no evidence to suggest that this ‘loan’ was anything apart from an entirely contrived transaction between two arms of PetroSaudi, a company with very little working capital,.” Sarawak Report said. “The US$700 million was repaid by 1MDB alone, as PetroSaudi had brought in “zero cash” into the joint venture and had only committed the valuation of its assets.”

In fact, according to Sarawak Report, “Jho Low crafted the whole Joint Venture deal before either PetroSaudi or 1MDB saw what was in the plan. These same emails provide the equally telling information that the first draft copy of the Joint Venture deal to be negotiated with 1MDB was drawn up by Jho Low’s own office.”

Two days before negotiations were due to start on the billion dollar deal, “that draft was still being eagerly anticipated by Low’s contacts at PetroSaudi,” the story notes. In an email from Mahony on Sept. 21, he said “ETA for first draft of agreement is still in a few hours…?

Mahony suggested that his lawyers and Jho Low’s lawyers should first liaise with each other, before they contacted 1MDB’s lawyers about the content of the proposed JV document being drawn up by Jho Low’s team in New York.

“I also need to get the 1mdb lawyer and my lawyer in touch asap,” Mahony wrote. “I will wait until you send the jva but what i suggest is that when you send me the jva, you introduce me to your lawyers by email and then i will forward the jva to my lawyers and introduce my lawyers to your lawyers. Thanks.”

“The inescapable conclusion is that the jetlagged team, arriving from Malaysia the next day, had acted as little more than onlookers in the drawing up of this ‘joint venture’, for which only they would be putting up any cash, on behalf of the Malaysian public,” the report added. “According to the contract about to be placed on the table in front of them USD$1 billion was due on day one, with further drawing rights available of up to USD$5 billion.”

Read more…
Emails Blow Malaysia’s 1MDB Fund Wide Open
March 1, 2015 – Asia Sentinel

How US$700 million was allegedly siphoned off 1MDB via ‘loan’ for a few days!

Businessman Jho Low orchestrated the 2009 joint venture between 1Malaysia Development Berhad (1MDB) and PetroSaudi International to allegedly siphon off US$700 million from the strategic development fund, whistleblower website Sarawak Report has claimed.

The UK-based website revealed that the 1MDB PetroSaudi joint venture company’s US$700 million loan repayment to PetroSaudi in 2009 was a front and the funds channelled to a firm allegedly owned by Low, called Good Star Limited.

The US$700 million loan repayment provision was part of the joint venture contract between Petro Saudi International and 1MDB, Sarawak Report said, citing documents it had obtained. It also published those documents with its report.

“What that evidence goes on to show is that critical manoeuvres for transferring the USD$700 million ‘loan’ cum ‘premium’ into the control of Jho Low took place straight after the signing of the agreement (between PetroSaudi and 1MDB) on September 29 – that and Jho Low was involved and copied in on every step,” Sarawak Report said.

According to copies of the PetroSaudi loan agreement obtained by Sarawak Report, the US$700 million had been loaned from PetroSaudi Caymans Holdings to the 1MDB PetroSaudi joint venture company on September 25, 2009.

“However, there is no evidence to suggest that this ‘loan’ was anything apart from an entirely contrived transaction between two arms of PetroSaudi, a company with very little working capital.

“Three days later, 1MDB was committed to pay it back in hard currency,” it said.

On September 29, 2009, PetroSaudi CEO Tarek Obaid issued a letter of demand to 1MDB PetroSaudi Limited for US$700 million be credited to account number 11116073, at RBS Coutts Bank Ltd in Zurich, Switzerland.

Sarawak Report claimed that the account was registered under a company called Good Star Limited, which was controlled by Low.

“This means that the money, which was stated as having been paid back to PetroSaudi as part of the joint venture agreement, was in fact signed over by Tarek Obaid to an entirely separate third party, Good Star Limited.”

It added that the US$700 million was repaid by 1MDB alone, as PetroSaudi had brought in “zero cash” into the joint venture and had only committed the valuation of its assets.

Good Star then paid Tarek Obraid a “broker fee of US$85 million” on the same day the letter of demand was written, it said.

Sarawak Report claimed that the entire 1MDB-PetroSaudi joint venture deal had been initiated by Low and his team on September 8, 2009 – less than a month before the deal was signed.

Those involved in the initial meeting were Low, UK businessman Patrick Mahony, and Low’s colleagues Seet Li Lin and lawyer Tiffany Heah.

Mahoney worked for an investment group called Ashmore, which was funding PetroSaudi’s omain operation, while Seet is the chief investment Officer of Good Star Limited, and the vice-president of Low’s company Jynwel Capital, said Sarawak Report.

The website said it managed to contact Seet to ask about his role at Good Star, but he denied knowing anything and then “turned off his phone”.

In an email transaction between Low and Mahony, the latter said he understood Low wanted “to use PetroSaudi International as a front for certain deals” and that “we would be happy to do that”.

Sarawak Report said 1MDB’s CEO, Shahrol Halmi, and his Malaysian colleagues were only involved in the proceedings in September 15, on the initiative of Low, who organised the conference call between the parties.

The website also furnished an email, purportedly written by Shahrol, which it said showed that 1MDB was still in the dark about the actual business of PetroSaudi International, as Shahrol had yet to receive the company’s profile days before signing the joint venture.

On February 21, 2015, 1MDB claimed that its joint venture with PetroSaudi had earned it a profit of US$488 million.

In a statement on the company’s website, 1MDB president Arul Kanda Kandasamy also claimed that the money it had invested in the venture had been converted into Murabaha notes when the plan did not go through.

“In 2009, 1MDB entered into a joint venture with PetroSaudi, which was set up to undertake investments in certain projects.

“Both parties eventually decided not to proceed with the joint venture and our investment was converted into Murabaha notes.

“These Murabaha notes were paid back in full, with 1MDB earning a profit of US$488 million, in 2013,” Arul said in the statement. – March 1, 2015.

…source
Jho Low allegedly siphoned off US$700 million from 1MDB, says website
1 March 2015 – Malaysian Insider

HEIST OF THE CENTURY – The PetroSaudi-1MDB Joint Venture

Together with London’s Sunday Times newspaper, Sarawak Report has completed an in-depth investigation into the trail of the missing billions at the heart of Malaysia’s 1MDB (One Malaysia Development Berhad) financial scandal.

We have obtained access to thousands of documents and emails relating to transactions by 1MDB, including its initial joint venture with the little known oil company PetroSaudi International from 2009.

What the documents establish is that, in spite of copious official denials, the entire joint venture project was conceived, managed and driven through by the Prime Minister’s associate and family friend the party-loving billionaire tycoon, Jho Low.

The documents also prove that the USD$700 million so-called “loan” that was supposedly repaid to PetroSaudi as part of the joint venture agreement, was in fact directed into the Swiss bank account of a company called Good Star, which is controlled by Jho Low.

That money was then partly used to buy out Taib Mahmud’s UBG bank in Sarawak at a very advantageous price for the chief minister and his family, who had been failing to get a deal on the open market.

PetroSaudi had agreed to act as “a front” for Jho Low on such deals, according to the documents, and it was a subsidiary of PetroSaudi International registered in the Seychelles, which bought UBG, using money siphoned from 1MDB.

How Jho Low managed the 1MDB PetroSaudi Joint Venture deal

Among the email exchanges obtained by Sarawak Report are documents from an initial meeting that took place in New York on September 8th 2009, between the then Wynton Capital head, Jho Low and the UK businessman Patrick Mahony, who had been introduced a few days earlier by PetroSaudi’s CEO, Tarek Obaid.

Mahony worked for the investment group Ashmore, which was funding PetroSaudi’s main operation, an oil well in Argentina.

– SR

Read more…
HEIST OF THE CENTURY – How Jho Low Used PetroSaudi As “A Front” To Siphon Billions Out Of 1MDB!
28 February 2015 – SR