Questions the PAC report did not answer

PetroSaudi, Good Star

1MDB was to pump US$1 billion (S$1.35 billion) into its first venture in 2009, a tie-up with Saudi energy firm PetroSaudi to develop a purported oilfield that did not materialise. Instead, US$700 million was paid to another company, Good Star. Then chief executive Shahrol Halmi claimed Good Star was a subsidiary of PetroSaudi, to which the joint venture owed the amount. But neither the loan nor its purpose could be verified, or who Good Star’s owner was. It was claimed that PetroSaudi belonged to the Saudi government and the late King Abdullah, but this could not be verified.

Role of Jho Low

Businessman Low Taek Jho (above), better known as Jho Low, has been reported to be the actual owner of Good Star. He has denied any wrongdoing or having influence over 1MDB. But the Terengganu Investment Authority (TIA), 1MDB’s predecessor, expedited the sale of a RM5 billion (S$1.72 billion) bond at his request in his capacity as TIA’s adviser, despite the board of directors’ instruction to stop the issuance. Mr Low was not interviewed by the Public Accounts Committee (PAC).

‘Aabar Ltd’ mystery

1MDB raised US$3.5 billion in bonds in 2012, which were jointly guaranteed with Abu Dhabi’s state firm International Petroleum Investment Company (IPIC). 1MDB was to lodge US$1.367 billion as a security deposit with IPIC’s subsidiary, Aabar Investment, along with share options valued at US$300 million. However, 1MDB paid US$993 million to redeem the options and a further US$855 million and US$295 million as “security top-ups”. More befuddling than the payments is the fact that they were deposited with Aabar Ltd, a company that cannot be verified as belonging to Aabar Investment or IPIC.

Does US$2.318b exist?

1MDB claims to have gleaned US$2.318 billion in investment fund units from a final sum of US$1.83 billion invested in the joint venture with PetroSaudi. But the PAC did not investigate claims that the amount does not exist. 1MDB has said US$1.22 billion was used to pay Aabar, leading to a situation wherein unverified money was paid to an unverified company. The remainder was originally said to be held in cash in the Singapore branch of Swiss bank BSI, but later it was clarified to still be held in units. This was also eventually handed over to Aabar in a debt-equity swap.

How involved was Najib?

Datuk Shahrol (above, left) cites Prime Minister Najib Razak (above, right) indirectly on two occasions – as the ultimate shareholder or the advisory board chairman – when he defied instructions from the board of directors. The PM’s written consent is also required under Article 117 of 1MDB’s memorandum of articles and association for any change to the board, management team, company structure and major financial decisions including investments.

This means that all deals would have to be approved by him, but there is no mention of any direct action by him in the PAC report. He was also not summoned to give testimony.

PAC findings may give Najib’s critics more ammo
Shannon Teoh
9 April 2016 – Strait Times


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