WHERE did the US$1.4 BILLION disappear to?

PAC report: 1MDB paid US$1.4b to Aabar without board approval, unsure if right company

KUALA LUMPUR, April 7 — 1Malaysia Development Berhad (1MDB) paid a security deposit of about US$ 1.4 billion to Aabar Ltd without approval from its board of directors, even as it remains unclear if the company belongs to Abu Dhabi sovereign fund International Petroleum Investment Co (IPIC), the Public Accounts Committee (PAC) said.

The parliamentary committee said in its report on state investment firm 1MDB tabled today in Parliament that 1MDB has yet to confirm that Aabar Ltd is a subsidiary of IPIC, or of the similarly-named Aabar Investments PJS in Abu Dhabi.

“1MDB had presented a Certificate of Incumbency issued by Offshore Incorporations Limited to prove that Aabar Ltd is an IPIC subsidiary.

“Offshore Incorporations Limited that’s operating in Hong Kong is an agent that provides company registration services in BVI (British Virgin Islands). The National Audit Department found that Aabar Ltd was not listed in the IPIC group based on 2013 and 2014 financial statements,” said the PAC report.

International business paper the Wall Street Journal recently reported, citing global investigators, that US$155 million (RM600 million) originating from 1MDB moved into Red Granite, the firm that funded Hollywood movie “The Wolf of Wall Street”, in 2012 involving offshore shell companies.

The report said this sum was part of 1MDB’s US$1.4 billion payment to Aabar that is believed to never have reached Aabar in Abu Dhabi, but went instead to a separate company with an almost identical name, Aabar Investments PJS Ltd, in the British Virgin Islands.

PAC said the National Audit Department found that “many” of 1MDB management’s actions were merely justified with general approvals from the company’s board of directors, instead of the needed specific approvals.

The panel noted, for instance, the 1MDB management’s failure to inform the board of directors about a letter from Tarek Obaid, CEO of Saudi Arabian oil company PetroSaudi International Ltd, suggesting a joint venture with 1MDB and the proposed terms.

According to PAC, joint venture company 1MDB PetroSaudi Ltd, was registered on September 18, 2009, eight days before 1MDB’s board of directors gave approval with conditions.

The PAC also noted that the 1MDB management contradicted the board of directors by changing the joint venture’s bank account from BSI SA in Geneva, which had been approved by the board in a resolution dated September 25, 2009, to JP Morgan (Suisse) Geneva through a resolution dated September 30, 2009.

“The 1MDB board of directors said this was done without their knowledge in a meeting on October 3, 2009. The National Audit Department’s interview with several former members of 1MDB’s board of directors found that they were unaware of the existence of the resolution, even though their signatures were on the document,” said the PAC.

PAC report: 1MDB paid US$1.4b to Aabar without board approval, unsure if right company
April 7, 2016 – MMO


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