Archive for April, 2016

30
Apr
16

The 1MDB affair, Turning the screw – Economist

The 1MDB affair, Turning the screw

AS IF being investigated by seven countries wasn’t enough, 1MDB is also flirting with default. Government gumshoes in Switzerland, America and elsewhere are said to be close to mapping the full money trail in a suspected multi-billion-dollar scam centred on the heavily indebted Malaysian state investment fund. As their probes intensify, 1MDB’s relationship with a big backer is unravelling: IPIC, an Abu Dhabi sovereign fund, has declared 1MDB to be in breach of an important financial contract between the two—and has duly terminated it. The move complicates an already tricky debt restructuring at 1MDB. It also fans the flames of a scandal that touches the upper reaches of Malaysian politics and international finance.

IPIC bailed out 1MDB last year with a $1 billion loan and an agreement to take responsibility for interest payments on some of 1MDB’s bonds; in return 1MDB was to transfer undisclosed assets to IPIC. But on April 18th the Gulf fund said 1MDB was “in default” on the deal, and stopped making payments to bondholders, including $50m due this week. That kicked off a five-day grace period. 1MDB says it has “ample liquidity” to cover the obligations.

The reason for IPIC’s ire is $1.1 billion that appears to have gone missing. 1MDB was supposed to transfer this to IPIC as part of their deal, but IPIC says it was never received. Investigators believe this was part of a larger sum—perhaps $3.5 billion—that was siphoned off from 1MDB to a shell company in the British Virgin Islands which had an almost identical name to one of IPIC’s subsidiaries, Aabar, but was unconnected to it.

Investigators think some of the diverted money ended up in the personal bank accounts of Najib Razak, Malaysia’s prime minister (pictured). Bank records seen by the Wall Street Journal show that $15m was spent on personal items such as jewellery, with a larger amount funnelled into the ruling coalition’s 2013 election campaign. Mr Najib denies ever having taken public money for personal gain. Malaysia’s attorney-general says a $681m payment into the prime minister’s accounts was a legal personal donation from a Saudi royal.

The investigators believe much of the cash that flowed into Mr Najib’s accounts came via an offshore firm whose beneficial owner was a business partner of a Malaysian financier called Jho Low, a member of Mr Najib’s inner circle at the time, according to the Wall Street Journal. Mr Low is thought to have played a key role in the transfers. He has denied wrongdoing.

Some $150m is also believed to have flowed from 1MDB to Red Granite Pictures, a film-production firm co-founded by Mr Najib’s stepson. This outfit subsequently financed “The Wolf of Wall Street”, a Hollywood film about a hedonistic crook. Red Granite denies wrongdoing. Mr Najib’s younger brother may also be caught up in the affair: Nazir Razak has taken a voluntary leave of absence from CIMB, the Malaysian bank he chairs, while a review is conducted into a $7m transfer into his personal account from the prime minister.

Investigations within Malaysia have been timid or stymied. Last year the attorney-general was replaced—supposedly on health grounds, though leaked documents appear to show he was about to bring criminal charges against Mr Najib. His successor has rebuffed calls by the central bank for 1MDB to face charges. A parliamentary report into the fund’s affairs identified irregularities but stopped short of alleging outright fraud.

That leaves other countries to make the running. On April 12th the Swiss said the scope of their enquiries was widening, and that they were now investigating two former public officials from the United Arab Emirates—understood to be former bigwigs at IPIC and Aabar. The statement, unusually blunt for an ongoing probe, talked of suspected “embezzlement”, “criminal mismanagement”, “forgery” and “money-laundering”.

…more
The 1MDB affair
Turning the screw
Apr 23rd 2016 – Economist

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30
Apr
16

No reason why auditor-general’s report still cloaked in secrecy

No reason why auditor-general’s report still cloaked in secrecy

The classification of the auditor-general’s report on 1Malaysia Development Bhd (1MDB) under the Official Secrets Act 1972 (OSA) has raised suspicions something is not right with its findings.

“This cloak of secrecy around the auditor-general’s report presents a new set of suspicions over the real workings and machinations of 1MDB,” Centre to Combat Corruption and Cronyism (C4) director Cynthia Gabriel told Malaysiakini.

“(Now) it looks like there is really something to hide.”

Cynthia was commenting on the auditor-general’s report which is still classified under the OSA despite Public Accounts Committee (PAC) chief Hasan Arifin who had, in March, said that the report would be declassified once PAC’s own report on 1MDB is tabled in Parliament.

PAC’s report on 1MDB was tabled in Parliament last Thursday, which was the last day of the parliamentary session.

Cynthia, meanwhile, stressed that the auditor-general’s report should not have been classified in the first place because it had breached the “normal pattern”.

The auditor-general, she pointed out, normally presents his findings to Parliament which will then be debated by lawmakers.

“There is no understandable reason why it should be classified as an official secret. It is only through the auditor-general’s findings that the public can have an opinion on what actually transpired,” she said.

Urging for the report to be declassified immediately, Cynthia also wants to know whether the auditor-general had received instructions to classify the report or otherwise.

“This is because normally his reports are never classified under the OSA, so why make an exception with the 1MDB report?”

Although the PAC had tabled its report, Cynthia said the auditor-general’s report was different.

“Even the PAC depends on the auditor-general for his own findings in order to make their informed opinion. It’s imperative that Parliament must (also) have access to the auditor-general’s report,” she said.

…more
No reason why auditor-general’s report still cloaked in secrecy
16 April 2016 – malaysiakini

29
Apr
16

1MDB’s payment to Aabar may have ended up in the movie business

Malaysia fund 1MDB’s payment to Abu Dhabi fund IPIC may have ended up in the movie business

The trail of breadcrumbs from a troubled Malaysian state investment fund took another twist Tuesday when Swiss authorities said some of the money ended up in the movie business.

On Monday, an Abu Dhabi sovereign wealth fund, International Petroleum Investment Co. (IPIC), and its subsidiary Aabar Investments PJS, said that they never received $3.5 billion in payments from troubled 1Malaysia Development Berhad (1MDB).

The payments were related to a guarantee for a bond placed by Goldman Sachs.

Instead, the payments appear to have been sent to a nearly identically named firm registered in the British Virgin Islands (BVI), Aabar Investments PJS Ltd.

Switzerland’s Office of the Attorney General said on Tuesday that as part of its criminal investigation of suspected embezzlement from 1MDB, it was extending its probe to two former officials in charge of Abu Dhabi sovereign funds.

Inquiry slams ex-CEO, board of Malaysian wealth fund

“The Swiss authorities have elements in hand allowing them to suspect that the amounts paid in connection with this guarantee were not returned to the Abu Dhabi sovereign fund that supported the commercial risk,” the Swiss statement said. “To the contrary, these funds would have benefited others, particularly two public officials concerned as well as a company related to the motion picture industry. A former 1MDB body, already indicted in the Swiss proceedings has also benefited from these amounts.”

Earlier this month, the Wall Street Journal reported, citing global investigators, that much of the financing for the Leonardo DiCaprio movie “Wolf of Wall Street” originated from 1MDB. The investigators said that the movie’s $100 million budget came from a company called Red Granite Pictures, which is led by Riza Aziz, the step-son of Malaysia’s Prime Minister Najib Razak, the WSJ reported.

Additionally, the United Arab Emirates’ central bank has ordered a freeze on the assets of Khadem Al Qubaisi, formerly the managing director of IPIC, and former Aabar CEO Mohamed Badawy, banking sources told Reuters last week. The reason for the freeze was unclear, Reuters said.

Swiss authorities asked Singapore and Luxembourg for “mutual legal assistance” in the matter. In January, the Swiss authorities said in a statement that Malaysia had been asked for legal assistance over around $4 billion that may have been misappropriated from Malaysian state enterprises in four instances over 2009-2013.

1MDB linked to financing ‘Wolf of Wall Street’: Report

On Monday, 1MDB said in a statement that it was surprised by IPIC’s statement denying ownership of Aabar BVI. 1MDB said its own records show “documentary evidence” of Aabar BVI’s ownership, but the Malaysian fund didn’t provide more detail beyond adding that the agreement was negotiated with Khadem and Badawy.

The 1MDB board is headed by Najib, who has been plagued by WSJ reports that as much as $700 million passed from 1MDB to his personal bank accounts. Najib has vociferously denied any wrongdoing.

…more
Malaysia fund 1MDB’s payment to Abu Dhabi fund IPIC may have ended up in the movie business
12 April 2016 – CNBC

29
Apr
16

Documentary on ‘Wolf of Wall Street’ money trail

Oscar nominee making film on ‘Wolf of Wall Street’ money trail

Oscar-nominated producer Mike Lerner is producing a documentary of the alleged corruption leading to the making of Hollywood hit ‘Wolf of Wall Street’, linked to the 1MDB scandal.

This comes after Swiss investigators say they have “elements in hand” to show some of the US$3.5 billion paid by 1MDB to a British Virgin Island firm as part of a power plant deal, went to a company in the “motion picture industry”.

“In ‘The Master and His Wolf’, we have a gripping story with a cast of fantastical characters, movie stars, prime ministers and a system of money laundering, with direct links between Malaysia via Saudi and Abu Dhabi companies which goes right to the heart of Hollywood’s elite,” British produce Mike Lerner told The Hollywood Reporter.

“Because of this historically massive corruption, the Malaysian government is on the brink of disaster while two suspicious murders with alleged links to the fraud remain shrouded in secrecy,” added Lerner.

“And all for what? Greed, celebrity obsession and the ambition to stand on a red carpet. Stories don’t get much bigger.”

Lerner is the producer behind documentaries ‘Pussy Riot: A Punk Prayer’, a critically-acclaimed documentary on the anti-government punk activists in Russia.

Red Granite, the Hollywood production company owned by Prime Minister Najib Abdul Razak’s stepson Riza Aziz, produced ‘The Wolf of Wall Street’.

Red Granite’s principal funder is Abu Dhabi businessperson Mohamed Al Husseiny, whom 1MDB said is one of two officials from Abu Dhabi state firm Aabar who convinced 1MDB to make payments to the BVI firm with an almost identical name.

1MDB said Husseiny, who was Aabar CEO, and Khadem al Qubaisi, informed 1MDB that Aabar BVI is a subsidiary of the International Petroleum Investment Corporation (IPIC) – a statement now denied by IPIC.

No due diligence conducted

Lerner told the entertainment news portal that filming for Malaysia for the new project has been completed, and the crew will now travel to Abu Dhabi, Switzerland, Luxembourg, Hong Kong and Singapore.

…more
Oscar nominee making film on ‘Wolf of Wall Street’ money trail
14 April 2016 – malaysiakini

28
Apr
16

The men who allegedly set up fake Aabar

The men who sold 1MDB on a fake Aabar

1MDB is in quite a pickle after the International Petroleum Investment Co (IPIC) and Aabar Investment PJS denied links to an Aabar company that 1MDB had been making payments to.

The company, Aabar Investment PJS Ltd or Aabar BVI (British Virgin Islands), had received US$3.5 billion from 1MDB.

1MDB said it transferred the funds to Aabar BVI after being told by then IPIC managing director Khadem al Qubaisi and Aabar chairperson Mohamed Al Husseiny that the BVI firm is an IPIC subsidiary.

So who exactly are these two men alleged to have fooled 1MDB?

Khadem al-Qubaisi

Khadem is well known Emirati businessman, who according to his now defunct personal website, started working in IPIC as an investment manager in 2000, before becoming its managing director (MD) seven years later.

A reported billionaire, Khadem is said to have a penchant for expensive US properties.

The New York Post said this includes Manhattan’s most expensive penthouse worth US$50.9 million, which he has unsuccessfully tried to sell.

Sarawak Report meanwhile has claimed that under him, IPIC’s capital base had shrunk from over US$70 billion to less than US$15 billion.

His career in IPIC then came to an abrupt end when he suddenly left the company’s board and was replaced as MD following a reshuffle decreed by the United Arab Emirates President Khalifa Zayed in April 2015.

Khadem then resigned as chairperson of Aabar properties and other IPIC subsidiaries such as Cepsa and Nova Chemicals.

Mohamed al-Husseiny

Said to be Khadem’s left-hand man, Mohamed has a rather low-public profile, attracting less attention than his boss.

He was appointed as Aabar Investment PJS’ CEO in 2010, and held the post until August last year when he quit to reportedly helm private equity firm Trustbridge.

He is also a director at Falcon Private Bank, and was a board member from 2009 to 2013, and was re-appointed in April last year.

According to The Wall Street Journal, Falcon, a subsidiary of IPIC, is being probed after investigators traced a 2013 transfer of nearly US$700 million from an account at Falcon Private Bank in Singapore to accounts allegedly belonging to Prime Minister Najib Abdul Razak.

He is also reported as a principal investor in Red Granite, a Hollywood firm owned by Prime Minister Najib Abdul Razak’s stepson Riza Aziz.

At least US$3.5b from 1MDB

Both Khadem and Mohamed are alleged to have set up Aabar BVI in March 2012, two months before it received US$576.94 million from 1MDB as a security deposit.

In total, the company is said to have received at least US$3.5 billion from the Malaysian sovereign wealth fund.

The Wall Street Journal claims US$155 million of these funds ended up financing Red Granite’s Hollywood film ‘The Wolf of Wall Street’.

Aabar BVI was then liquidated in June last year, as pressure on Najib and 1MDB began picking up steam.

Since then, the UAE has frozen both men’s accounts, and issued travel bans amid an alleged probe into their business dealings.

According to Sarawak Report, Mohamed had also been arrested by Abu Dhabi authorities in late March, and would be extradited to the United States to facilitate in the US’ probe on 1MDB.

…more
The men who sold 1MDB on a fake Aabar
14 April 2016 – malaysiakini

27
Apr
16

Shocking details of the ‘681 American pies’

Confidant of Malaysia Prime Minister Najib Had Central Role at Troubled 1MDB Fund

Jho Low controlled hundreds of millions of dollars of money thanks to network of contacts, amassed riches himself

In March 2013, a young Malaysian financier sent a heads-up to an employee at a Kuala Lumpur bank that “681 American pies” would soon be arriving from overseas.

The sender, Jho Low, emphasized the need for secrecy, according to a transcript of BlackBerry instant messages reviewed by The Wall Street Journal. The employee, he wrote, should tell the bank’s chief executive that “PM” didn’t want his name, address or identity-card number to appear on the transaction.

Within days, $681 million arrived in two transfers at AmBank Bhd. to be deposited in the personal account of Malaysian Prime Minister Najib Razak, according to documents seen by the Journal.

Global investigators believe those transfers represent a portion of the money diverted from a Malaysian state economic-development fund called 1MDB over several years, according to people familiar with probes in two countries. As they dig deeper, investigators have increased their estimates of siphoned funds to as much as $6 billion, a sharp increase from a few months ago, said a person familiar with one country’s probe.

Mr. Low has been in Mr. Najib’s inner circle, a family friend, according to people who know the prime minister. At several pivotal moments, Mr. Low’s actions, influence and connections have been vital to the alleged diversion of 1MDB funds, a Journal examination found. Investigators describe Mr. Low as playing a central role, with the prime minister his “enabler,” according to the people familiar with probes in two countries.

In addition, according to these people and to investigative documents, Mr. Low himself was the recipient of 1MDB funds, with control over hundreds of millions of dollars.

Mr. Low has denied any wrongdoing. He also has said he was only an occasional and unofficial adviser to 1MDB, which stands for 1Malaysia Development Bhd. The fund has denied wrongdoing as well, and has said it didn’t pay any money to Mr. Najib’s accounts.

Mr. Najib has said he did nothing wrong and derived no personal gain from transfers into his account. Earlier this year, Malaysia’s attorney general said the $681 million deposited in the prime minister’s account was a legal donation from a member of the Saudi Arabian royal family, most of which was later returned, and cleared Mr. Najib of wrongdoing.

AmBank didn’t respond to a request for comment.

As 1MDB sought partners for its investments, Mr. Low provided business connections in Saudi Arabia and the United Arab Emirates, some of them cultivated in his student years. Global investigators believe that some of these contacts ultimately became part of the diversion of 1MDB money via a web of offshore companies registered in lightly regulated places such as the British Virgin Islands.

Along the way, Mr. Low, 34 years old, appears to have amassed riches as some 1MDB money landed in accounts held by him and members of his family, according to bank records and people familiar with investigations. He became a jet-setter, partying in Las Vegas nightclubs, buying luxury properties on both U.S. coasts, amassing a collection of modern art and befriending Hollywood celebrities.

One was Leonardo DiCaprio, whom Mr. Low introduced to a stepson of Prime Minister Najib, named Riza Aziz. The connection helped a film company the stepson co-owned produce the 2013 DiCaprio film “The Wolf of Wall Street,” which was financed with money that originated with 1MDB, according to documents and people familiar with investigations in two countries.

The production company has said it had no reason to believe the source of its financing was irregular and has said it is seeking to repay the financing. Mr. DiCaprio and his representatives didn’t respond to requests for comment.

…more
Confidant of Malaysia Prime Minister Najib Had Central Role at Troubled 1MDB Fund
By TOM WRIGHT and BRADLEY HOPE
April 18, 2016 – Wall Street Journal

27
Apr
16

Ex-1MDB CEO claimed Najib refused revaluation of assets despite concerns

Ex-1MDB CEO claimed Najib refused revaluation of assets despite concerns

Former 1MDB chief executive officer Shahrol Azral Ibrahim Halmi claimed that Prime Minister Najib Abdul Razak had refused the revaluation of assets in 1MDB’s joint-venture with PetroSaudi International (PSI) despite concerns raised by the 1MDB board of directors.

This is according to the Public Accounts Committee (PAC) report tabled today which referred to Najib in his position as 1MDB board of advisers’ chairperson.

According to the report, the 1MDB board of directors had doubts about the joint-venture in which 1MDB was to commit US$1 billion in cash while PSI would only need to commit at least US$1.5 billion in energy assets to their joint-venture vehicle 1MDB PetroSaudi Ltd.

Edward L Morse, who was appointed by Shahrol Azral to conduct an independent valuation of PSI’s assets on behalf of 1MDB on Sept 29, 2009, was strangely able to produce the valuation report on the very same day.

The PAC report said Morse knew about his appointment as early as September 20, 2009, but noted that the valuation report was completed in eight days, despite the complexity of the assets and initial statements that it would take months.

Furthermore, the valuation of the assets was only completed a day after the joint-venture deal was signed on Sept 28, 2009, in defiance of the conditions set out by the 1MDB board of directors which required the independent valuation be completed beforehand.

The 1MDB board of directors in its meeting on Oct 3, 2009, made note of its unhappiness and also expressed puzzlement at the speed Morse was able to complete the valuation report.

Board wanted Najib to approve second valuer

At a subsequent meeting on Oct 10, 2009, the board of directors sought Najib’s intervention.

“During the meeting, the 1MDB board of directors raised about the need to shortlist 10 credible valuers for the approval of the board of advisers’ chairperson.

“The management can then discuss with PetroSaudi Holdings (Cayman) Ltd about the appointment of a second valuer.

“However, during the 1MDB board meeting on Nov 7, 2009, Shahrol Azral informed that a second valuation of the assets was not needed as the board of advisers’ chairperson (Najib) did not agree with the suggestion but ordered the 1MDB board of directors to appoint a consultancy company to evaluate the ownership of the joint-venture company.

“However, checks by the Auditor-General’s Department found no documentation to prove any appointment of a consultant was made,” said the PAC report.

Ultimately, 1MDB signed the joint-venture deal without knowing for sure if PSI was holding up its end of the bargain with the said assets.

As soon as 1MDB signed the deal on Sept 28, 2009, it was required to deposit its part of US$1 billion in cash within two days, into the joint-venture vehicle 1MDB PetroSaudi Ltd, which was promptly done.

However, the PAC report found that only US$300 million was deposited into the joint-venture account, which was approved by Bank Negara, while US$700 million was diverted without approval to Good Star Ltd.

…more
Ex-1MDB CEO claimed Najib refused revaluation of assets despite concerns
7 Apr 2016 – malaysiakini




Nuclear lessons for Malaysia (Part 1) (Part 2)
BN govt is directing attention to distant past and distant future, in order to distract people from present misdeeds and poor governance
Felda - A picture is worth a thousand words
How the 1MDB Scandal Spread Across the World (WSJ)
We cannot afford ridiculously expensive RM55 Billion ECRL!
All that is necessary
for the triumph of evil
is for good men
to do nothing.

- Edmund Burke
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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