24
Aug
16

WSJ: US subpoenas Goldman Sachs for documents on 1MDB dealings

WSJ: US subpoenas Goldman Sachs for documents on 1MDB dealings

Goldman Sachs Group Inc has reportedly been subpoenaed by the United States authorities for documents related to dealings with 1MDB

The Wall Street Journal (WSJ) today, citing a person familiar with the matter, said under the subpoenas, the bank is providing documents to the investigators.

The financial daily last month reported that US investigators are trying to determine if Goldman Sachs broke the law when it did not alert authorities over a suspicious transaction involving the troubled state fund.

However, it reported today the authorities have to date yet to interview the bank’s current and former Goldman employees.

“Goldman Sachs is also providing information to the Monetary Authority of Singapore, the city-state’s central bank and financial regulator that also has inquired about the firm’s work for the fund in question – 1MDB, the person said,” reported the daily.

It said the Department of Justice (DOJ) and the Securities and Exchange Commission, along with the New York State Department of Financial Services are looking into Goldman’s role in a series of bond sales it managed for 1MDB.

The latest action follows the DOJ initiating a series of lawsuits to seize 1MDB-linked assets on Wednesday, July 20, in what the US touts to be its largest action ever brought under its Kleptocracy Asset Recovery Initiative.

WSJ noted Goldman’s ties to 1MDB can be traced to the fund’s launch in 2009. The bank has underwritten three bond offerings worth US$6.5 billion, and it has advised the fund on two acquisitions.

Goldman’s role in arranging the bond sales, and some $590 million the firm collected from 1MDB for its work, are laid out in the US government’s lawsuits, it said.

…more
WSJ: US subpoenas Goldman Sachs for documents on 1MDB dealings
30 July 2016

23
Aug
16

1MDB and Deloitte may have breached the Companies Act 1965

1MDB and Deloitte may have breached the Companies Act 1965

The statement by Deloitte and 1MDB that the audited financial statements of 2013 and 2014 of 1MDB can no longer be relied upon poses a very serious question of whether both accounts in the respective years were properly audited by Deloitte.

Audited accounts under the Companies Act when audited by auditors constitute a final position of a company’s financial status and lawfully should represent a fair and true of the company’s financial status. Within a prescribed period the accounts are then submitted to the Suruhanjaya Syarikat Malaysia (Companies Commission of Malaysia or SSM) for their record and retention.

For all intents and purposes, all audited accounts of companies submitted to the SSM are deemed to be final and definitely not allowed to be altered or amended in any way. The general acceptance is that all accounts audited should have been properly audited by the appointed auditors registered with the SSM.

Therefore it is extremely unusual for Deloitte to now issue a statement that the 2013 and 2014 accounts they audited cannot be relied upon. This is tantamount to saying that the accounts audited by them were not accurate in the first place and that no proper standard of accounting procedures were adopted in their course of the audit.

If any of the transactions or due diligence was of a doubtful nature then Deloitte should have made a qualification on their accounts. Did they make any qualification? No they didn’t and that certainly constitutes gross negligence on their part.

The revelation of the court papers by the US Justice Department (DOJ) last week only serves to jolt Deloitte into a state of fear that they had not done a proper audit when the DOJ’’s 136 pages of court documents outlined with clarity how the various 1MDB transactions unfolded through a web of shell companies.

Since the 1MDB board concurred with Deloitte that the 2013 and 2014 cannot be relied upon, this serves to confirm that in view of the elaborate disclosures by DOJ, the audited accounts of 2013 and 2014 was no longer consistent with the 136 pages of court papers filed by DOJ.

Deloitte must have been aware that with the comprehensive investigation being conducted in the US by the DOJ, Federal Bureau of Investigation (FBI), and Internal Revenue Service (IRS), it is most likely that their revelations was most likely to be more accurate than the audited accounts of 1MDB which in all probability were manipulated to conceal the money transferred to third party accounts totally unrelated to International Petroleum Investment company.

The SSM should immediately conduct an enquiry to ascertain the reason why and how the 2013 and 2014 audited accounts did not bear any semblance to the transactions in the 136 pages of court documents disclosed by the DOJ. The companies commission should then determine whether any breached of the Companies Act of 1965 occurred in the submission of their false audited accounts of 2013 and 2014.

The most probable assumption one can derive was that the 2013 and 2014 1MDB accounts were deliberately and wilfully tampered with to conceal various transactions that entailed money transferred to a series of shell companies which ultimately found its way to Riza Aziz and ‘Malaysian Official 1′.

…more
1MDB and Deloitte may have breached the Companies Act 1965
Richard Teo
29 July 2016 – malaysiakini

22
Aug
16

Report: Wife claims Justo was tricked to confess

Report: Wife claims Justo was tricked to confess

The wife of former PetroSaudi International employee Xavier Andre Justo has been reported claiming she believes he had been tricked into confessing his crimes by his former colleagues, in an attempt to protect themselves and their associates.

In a lengthy expose by UK’s The Guardian, Laura Justo reportedly said after her husband was arrested for allegedly attempting to blackmail his former employer in Bangkok June last year, he was visited by his former colleague Patrick Mahony, a director who handled PetroSaudi’s business affairs.

“Laura says that Mahony offered Justo a deal: confess and plead guilty, and PetroSaudi will get you out of here by the end of the year.

“Justo reluctantly agreed. He signed a confession – without a lawyer present – which claimed that he had attempted to blackmail his former employers, and apologised to Mahony and (PetroSaudi chief executive officer Tarek) Obaid ‘for the harm stress and anxiety I caused them’.

“According to Laura, a man who claimed to be a Scotland Yard detective – and later told her he had been hired by PetroSaudi – took down Justo’s confession,” reported The Guardian today in their feature story ‘1MDB: The inside story of the world’s biggest financial scandal’.

However, Laura grew increasingly suspicious of the contacts at PetroSaudi when it became clear her husband would not be out of jail by the end of 2015.

Instead, things seemed to be getting worse for Justo after he was sentenced to three years in a Thai jail on Aug 17, 2015, with The Guardian saying he was now sleeping on a thin blanket after his mattress was withdrawn a few months after he arrived, as was his exercise hour.

“Laura came to believe that Justo was a victim of a deceit by his former friends, who tricked him into confessing and handing over copies of PetroSaudi’s servers, in an attempt to protect themselves and their Malaysian associates by burying the case.

“In May 2016, in a last-gasp effort to save her husband, Laura turned to the one person who she knew Justo trusted: (Sarawak Report editor Clare) Rewcastle Brown, who brought her to The Guardian,” reported the news daily today.

Justo was one of the first individuals early during the 1MDB scandal who had emerged to discredit allegations related to the sovereign fund scandal.

Justo claims framed

According to the report, Laura has also handed over notes smuggled out of prison in which Justo says he has been framed.

She also believes that Mahony has controlled her husband’s life behind bars, deciding how comfortable his living conditions would be and his permitted visitors.

The Guardian noted that foreign prisoners have a list posted outside the prison of permitted visitors, and on it Mahony is listed as number two while Laura is number five.

Laura told the British daily that she has emails, WhatsApp messages and recordings of phone calls from last year that suggest that Mahony is under increasing pressure from “a powerful person” on one hand, and from US and Swiss investigators combing through 1MDB’s deals, on the other”.

In one particular recorded conversation with Laura in Nov 2015, Mahony supposedly referred obliquely to the powerful person whom he claimed could help reduce Justo’s sentence.

“I told you the other evening, who the ultimate person is controlling this, and I am due to have another meeting with him soon …

“This guy is still stressed because it’s his political career on the line. He’s in deep shit and that’s all he cares about, nothing else,” The Guardian quoted Mahony saying in the recording.

…more
Report: Wife claims Justo was tricked to confess
29 July 2016 – malaysiakini

21
Aug
16

Why Najib’s prime ministership is over

Why Najib’s prime ministership is over

Last week the US Department of Justice (DoJ) announced that it was taking action to seek ‘the forfeiture and recovery of more than US$1 billion in assets’ related to 1Malaysia Development Berhad (1MDB). This action will likely start the process that will eventually lead to the removal of Najib Razak, Malaysia’s sixth prime minister.

An artist paints a picture of Malaysia’s Prime Minister Najib Razak in Kuala Lumpur, Malaysia, 7 December 2015. (Photo: Reuters).

According to the DoJ, from 2009 to 2015, more than US$3.5 billion in 1MDB funds was allegedly sent from one financial institution to another around the world, to hide the origins of the fund and, perhaps more importantly, to hide the ultimate beneficiaries. Although the DoJ did not name Najib directly (he is thought to be ‘Malaysian Official 1’), two of those named were directly connected to Najib.

The first is Riza Aziz, Najib’s stepson. Riza is infamous in Malaysia for being one of the producers of the Martin Scorsese film, The Wolf of Wall Street. The DoJ filed forfeiture claims against the royalties from the film, suggesting that it was funded by 1MDB money.

The second is Low Taek Jho, better known as Jho Low, an ethnic Chinese businessman from a wealthy family in Penang. Jho Low is infamous for partying with Paris Hilton and singer Usher. More importantly, Jho Low, has admitted to being an ‘advisor’ to the Terengganu Investment Authority (TIA) before it was taken over and renamed 1MDB. The allegations are that Low was the mastermind behind the complex deals between 1MDB and Abu Dhabi financiers, which lead to an even more complex system of payments around the world. The transactions are so complex that financial authorities in three countries (Singapore, Switzerland and Luxembourg) are still in the process of trying to follow the money trial.

While the US DoJ may be the first to openly accuse 1MDB of money laundering, Singapore was in fact the first country to take action. In May, the Monetary Authority of Singapore, Singapore’s de facto central bank, ordered the closure of BSI Singapore, part of a Swiss private bank. The Singapore BSI branch was a key conduit for 1MDB. More actions against financial institutions in Singapore, Switzerland and Luxemburg can be expected in the near future.

What the DoJ and others are hoping for now is for one of the main actors to turn into a witness for the prosecution. There is a strong likelihood that one of the bank employees or even a former employee of Goldman Sachs, who arranged the 1MDB bonds, will tell all in return for staying out of jail. Even Jho Low may talk if there are the right incentives.

But it is certain that Najib will have to go. The question is not if, but when. Politically it will be impossible for him to carry on. The Malaysia elite pride themselves as honourable members of the international community. Senior members in the United Malays National Organisation (UMNO), the ruling party, cannot accept a leader who will very soon be a pariah in Western capitals.

Thus far, there was no ‘smoking gun’ and Najib’s clever use of his massive powers of patronage has allowed him to deny all links to the 1MDB money. This is no longer the case. The detailed paper trail provided by the DoJ will presumably show how 1MDB money ended up in the hands of Aziz and Low. It is expected to also disprove Najib’s claims that the money was a ‘donation’ from a Saudi Royal. The DoJ documents will, in all likelihood, effectively destroy the excuses given by Najib thus far.

UMNO cannot afford to keep Najib since the next general election is due in 2018, less than two years away. Planning for elections in Malaysia for the ruling coalition usually takes up to 12 months.

…more
Why Najib’s prime ministership is over
James Chin, University of Tasmania
28 July 2016 – East Asia Forum

20
Aug
16

1MDB: The inside story of the world’s biggest financial scandal

1MDB: The inside story of the world’s biggest financial scandal

On 22 June 2015, Xavier Justo, a 48-year-old retired Swiss banker, walked towards the front door of his brand new boutique hotel on Koh Samui, a tropical Thai island. He had spent the past three years building the luxurious white-stone complex of chalets and apartments overlooking the shimmering sea and was almost ready to open for business. All he needed was a licence.

Justo had arrived in Thailand four years earlier, having fled the drab world of finance in London. In 2011, he and his girlfriend Laura toured the country on a motorbike and, two years later, they got married on a secluded beach. The couple eventually settled down in Koh Samui, a tourist hotspot, just an hour’s flight south of Bangkok. After trying out a couple of entrepreneurial ventures, Justo eventually decided that he would go into the hotel business. He bought a plot with an imposing house and began building: adding a gym, villas and a tennis court.

That June afternoon, he was expecting a visit from the tourism authorities to sign off on the paperwork. Instead, a squad of armed Thai police burst through the unlocked door, bundling Justo to the ground. The officers tied their plastic cuffs so tightly around Justo’s wrists that he bled on the dark tiled floor. The police quickly moved into his office, ripping out the computers and emptying the filing cabinets.

After two days in a ramshackle local jail, Justo was flown to Bangkok and paraded before the media, in a press conference befitting a mafia kingpin. Still wearing shorts and flip-flops, he was flanked by four commandos holding machine guns, while a quartet of senior Royal Thai Police officers briefed the assembled reporters on the charges against him.

Justo was charged with an attempt to blackmail his former employer, a little-known London-based oil-services company named PetroSaudi. But behind this seemingly mundane charge lay a much bigger story.

Six months earlier, Justo had handed a British journalist named Clare Rewcastle Brown thousands of documents, including 227,000 emails, from the servers of his former employer, PetroSaudi, which appeared to shed light on the alleged theft of hundreds of millions of dollars from a state-owned Malaysian investment fund known as 1MDB.

The documents that Justo leaked have set off a chain reaction of investigations in at least half a dozen countries, and led to what Loretta Lynch, the US attorney general, described last week as “the largest kleptocracy case” in US history.

According to lawsuits filed last week by the United States Department of Justice (DoJ), at least $3.5bn has been stolen from 1MDB. The purpose of the fund, which was set up by Malaysia’s prime minister, Najib Razak, in 2009, was to promote economic development in a country where the median income stands at approximately £300 per month. Instead, the DoJ alleged that stolen money from 1MDB found its way to numerous associates of Prime Minister Najib, who subsequently went on a lavish spending spree across the world. It also accused Najib of receiving $681m of cash from 1MDB – a claim he denied. Money from 1MDB, the US also claimed, helped to purchase luxury apartments in Manhattan, mansions in Los Angeles, paintings by Monet, a corporate jet, and even financed a major Hollywood movie.

The US justice department breaks the alleged theft down into three distinct phases: the first $1bn defrauded under the “pretence of investing in a joint venture between 1MDB and PetroSaudi”; another $1.4bn, raised by Goldman Sachs in a bond issue, misappropriated and fraudulently diverted to a Swiss offshore company; and $1.3bn, also from money Goldman Sachs raised on the market, which was diverted to a Singapore account.
United States Department of Justice has claimed that money from 1MDB was used to buy Claude Monet’s Nymphéas Avec Reflets de Hautes Herbes, valued at $57.5m.

“A number of corrupt 1MDB officials treated this public trust as a personal bank account,” Lynch told the press last week. “The co-conspirators laundered their stolen funds through a complex web of opaque transactions and fraudulent shell companies, with bank accounts in countries around the world, including Switzerland, Singapore and the United States.” PetroSaudi, which is not a party to the lawsuit, denied the US allegations and said that the DoJ’s asset-forfeiture claims are “no more than untested allegations”.

Najib, who has used every ounce of his power to obstruct investigations into the scandal – a charge he denies – is not mentioned by name in the US lawsuits, which refer to him as “Malaysian Official 1”. But the man at the centre of the intricate swindle depicted in the US lawsuits is an adviser to Najib: Jho Low, a Harrow-educated 29-year-old friend of the prime minister’s stepson. Low, a babyfaced young man who likes to party with Lindsay Lohan and Paris Hilton – and calls his Goldman Sachs banker “bro”, according to the DoJ – is accused by the US of masterminding the theft of $2bn from 1MDB, which was sent to bank accounts in Switzerland, Singapore and the Virgin Islands. Low has said that he has not broken any laws and was not being investigated.

Low’s sidekick is Riza Aziz, Najib’s stepson. Riza produced The Wolf of Wall Street – Martin Scorsese’s tale of corruption, decadence and greed – and both he and Low were thanked by name in Leonardo DiCaprio’s Golden Globes acceptance speech for best actor. In 2011, Low took a 20% stake in EMI, the world’s largest music-publishing company, for $106m – in the same year, he bought a $30m penthouse for his father at the Time Warner Center in Manhattan, overlooking Central Park. Riza’s Hollywood production company has said: “There has never been anything inappropriate about any of Red Granite Pictures or Riza Aziz’s business activities.”

All this and more is laid out in the US filing, which details claims of an amazing heist, carried out by conspirators who rinsed billions from the people of Malaysia through offshore accounts and shell companies in tax havens such as the Seychelles and British Virgin Islands. The scale of the enterprise echoes Balzac’s maxim that behind every great fortune lies a great crime.

…more
1MDB: The inside story of the world’s biggest financial scandal
by Randeep Ramesh
28 July 2016 – The Guardian

19
Aug
16

Very few expect the US to stop at civil action to seize assets allegedly embezzled from 1MDB

US action puts time limit on 1MDB affair

Very few expect the US to stop at civil action to seize USD1 billion in assets allegedly embezzled from 1MDB, says a Business Times report.

SINGAPORE: The US Government’s move to seize assets allegedly stolen from 1MDB may place a “time limit” on the status quo, says a report in The Business Times.

Prior to the civil forfeiture suit filed by the US Department of Justice (DoJ) it seemed as if there was no “expiry date” on the 1MDB affair and its political ramifications.

This, the report said, was likely to change with the exposes in the 136-page complaint filed by the DoJ which, among other things, alleged that a total of USD731 million of 1MDB’s funds meant for investments in energy and real estate were circuitously routed to a private bank account.

Therefore, it would be hard for the authorities to claim “don’t know” and pretend that nothing was wrong, the report quoted an unnamed observer as saying.

Very few, according to The Business Times report, expect the US to stop at the civil action to seize USD1 billion in assets allegedly embezzled from 1MDB.

That means the Malaysian administration would have lots of explaining to do.

As recent as March this year, the narrative by Malaysian officials was that Jho Low, one of those named in the DoJ suit, had never worked in 1MDB or made any decisions or transactions involving the company.

The US filings allege the opposite.

According to the report, based on communication transcripts, Low was referred to as “the 1MDB Operator or intermediary in Malaysia” by an unnamed Goldman Sachs managing director in an email in 2012, the year that the Terengganu Investment Authority changed its name to 1MDB.

The filings also allege that Low had diverted tens of millions of dollars from his Good Star account to fund “The Wolf of Wall Street”, the five-Oscar nominated Hollywood movie produced by a firm co-owned by Riza Aziz, Najib’s stepson.

Some observers, according to the report, expect Umno to come under pressure to act if the US action cranks up.

…more
US action puts time limit on 1MDB affair
July 26, 2016 – FMT

19
Aug
16

Properties, jet, litany of assets listed in US Justice Dept lawsuits

Asset Seizure
(image source: The Edge)

Properties, jet, litany of assets listed in US Justice Dept lawsuits

The United States Department of Justice seeks to seize a total 17 assets including luxury properties and a jet, stated the lawsuits naming the maker of blockbuster film ‘The Wolf of Wall Street’ states.

The court documents filed in Los Angeles related how the properties were allegedly purchased in the US, Switzerland and the United Kingdom from funds diverted from 1MDB.

The court documents said the funds were diverted from 1MDB “for the personal benefit of the co-conspirators (and) their associates”.

They used the funds to purchase luxury estates in the United States, pay gambling expenses at Las Vegas casinos, acquire more than US$200 million in artwork, invest in a major New York real-estate development project, and fund the production of major Hollywood films.

1MDB maintained no interests in their assets and saw no returns on these investments, the lawsuits stated.

It named Prime Minister Najib Abdul Razak’s step-son, Riza Aziz, businessman Low Taek Jho and two former Abu Dhabi officials as among the prime players in the “embezzlement” of funds.

The court documents also named “MALAYSIAN OFFICIAL 1” as a high-ranking official in the Malaysian government who held a position of authority with 1MDB as well.

“During all times relevant to the complaint, MALAYSIAN OFFICIAL 1 was a ‘public official’ as that term is used in 18 U.S.C. § 1956(c)(7)(B)(iv) and a ‘public servant’ as that term is used in Section 21 of the Malaysian Penal Code,” the court documents stated.

Najib, who is also finance minister, was chairperson of the 1MDB board of advisors, which has since been dissolved. 1MDB is fully-owned by the Ministry of Finance.

Seventeen assets sought

The documents stated that this is a forfeiture action on assets involved in and traceable to an international conspiracy to launder money misappropriated from 1MDB.

The 17 properties that it sought to seize stated in the 136-page document filed on Wednesday include:

  • The L’emritage property including the L’Ermitage Hotel at 9291 Burton Way, Beverly Hills, California 90210;
  • The L’ermitage business assets that includes all chattels and intangible assets, inventory and equipment maintained by LBH Real Estate;
  • Hillcrest property 1: a real property located in Beverly Hills, California;
  • The Park Laurel condominium located in New York that is owned by Park Laurel Acquisition LLC
  • A Bombardier Global 5000 jet with the manufactured serial number 9625 and registration number N689WM, with two Rolls Royce engine;
  • Time Warner Penthouse located in New York owned by 80 Columbus Circle (NYC) LLC;
  • The Oriole mansion located in Los Angeles, California;
  • The Greene condominium located in New York owned by 118 Greene Street (NYC) LLC;
  • EMI Assets of any rights including copyright and intellectual property rights, as well as the right to collect and receive any profits owned by JW Nile (BVI) Ltd;
  • Symphony CP (Park Lane) LLC assets which is a Delaware limited liability company owned directly or indirectly by Symphony CP Investments LLC and Symphony CP Investments Holdings LLC, based in New York, which owns what is known as the Park Lane Hotel;
  • The Walker Tower Penthouse which is located in New York, and owned by 212 West 18th Street LLC;
  • The Laurel Beverly Hills mansion, located in Beverly Hills, California, and owned by Laurel Beverly Hills Holdings;
  • Hillcrest Property 2: which like Hillcrest Property 1 is located in Beverly Hills, California;
  • A Vincent Van Gogh Artwork titled ‘La maison de Vincent a Arlest’;
  • A Claude Monet painting titled ‘Saint-Georges Majeur’;
  • Another Claude Monet painting titled ‘Nympheas avec Reflets de Hautes Herbes’; and
  • The Qentas townhouse located in London, UK.

…more
Properties, jet, litany of assets listed in US Justice Dept lawsuits
21 Jul 2016 – malaysiakini




All that is necessary
for the triumph of evil
is for good men
to do nothing.

- Edmund Burke
Where have 2.6 stars gone?
When the people
fears their government,
there is TYRANNY;
when the government
fears the people,
there is LIBERTY.

- Thomas Jefferson
Do you hear the people sing?

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