Archive for August, 2016


1MDB and the US gov’t – what comes next?

1MDB and the US gov’t – what comes next?

COMMENT Some people were surprised when I said that the US government’s seizure of assets – condos, mansions, hotels, and art work – all of which were purchased with money stolen from 1MDB and the Malaysian people – was only the beginning.

It’s true. There’s lots more to come.

There will be criminal indictments coming, most likely including Riza Aziz and Jho Low, who both are very closely connected to Prime Minister Najib Abdul Razak.

There will be a mention in a future criminal prosecution of an “unindicted co-conspirator,” who now is widely known as ‘Malaysian Official 1’. When he no longer is in office, he will be indicted in the US.

Here are some thoughts about what happens next on the US side. The US government already has seized these assets, or asked other governments, such as Switzerland and the UK, to seize them.

So now Najib’s stepson Riza and his close adviser Jho Low cannot sell anything or try to get their money out of the US or other countries. They have been blocked.

Under US law, the next step is for Riza, Jho Low, and others to try and prove in a court of law that the assets that were seized from them truly were purchased with their own money – and not from funds stolen from 1MDB.

Of course, they cannot prove that. The Federal Bureau of Investigation (FBI) and the Department of Justice (DOJ) filing was meticulous, thorough, and totally professional. The evidence is all there. It even includes the transcripts of wiretapped phone calls of a panicked Jho Low talking to his bankers.

Thanks to the FBI and DOJ, it is so clear. We know where the money came from. It was stolen from the Malaysian people, through 1MDB.

Your money, not ours

As US attorney-general Loretta Lynch and the others pointed out many times, the money was stolen from the people of Malaysia. The assets belong to them.

So the US government will hold all of the seized assets – the real estate, the paintings, the rights to ‘Wolf of Wall Street’, etc – in trust on behalf of the people of Malaysia, from whom the money was stolen.

The assets will not belong to the US government.

(How ironic that the US attorney-general seems to care more about this thievery than the Malaysian attorney-general does…)

1MDB and the US gov’t – what comes next?
John Malott
24 July 2016 – malaysiakini


Lamenting 1MDB

Lamenting 1MDB

The damage from Malaysia’s latest financial scandal runs deep. Here’s how it will impact politics in the long-term.

The beans have been counted, the (foreign) prosecutors have stripped off their gloves, and the convoluted flowcharts have been pasted across the blogosphere.

1 Malaysia Development Berhad, better known as 1MDB, has once again lifted Malaysia to the world’s front pages—as usual, for all the wrong reasons. The saga and spectacle are both terribly disappointing and terribly predictable, after decades of eroding checks and balances.

The sheer scale of malfeasance is daunting. The recent United States Department of Justice (DoJ) indictment was detailed and damning, the “Malaysian Official 1” euphemism notwithstanding. Yet 1MDB is the tip of the iceberg. Even if some losses are recouped and/or some political heads roll, the collateral damage runs far deeper and will be much harder to fix. Four aspects in particular bear attention, as we consider the longer-term political implications of 1MDB.

First, the unfolding facts reveal serious political-economic pathologies. While developmental statehood is not what it once was (or at least, aspired to be), a key legacy is the substantial role of the state in development, particularly via government-linked corporations, sovereign wealth funds like 1MDB, and similar vehicles. For such institutions to function effectively and in the public interest requires consistent, convincing probity. Beyond siphoning away funds, public sector mismanagement and opacity signal more systemic institutional weakness and corrode popular confidence in government decision-making locally, and in Malaysia as a reliable partner globally.

Second, Malaysia’s homegrown media have been sufficiently battered that it has been up to a London-based muckraking website, Sarawak Report, and the US-based Wall Street Journal to do the heavy lifting in investigative journalism. When Malaysian-based media stepped in—most notably, from the Edge Media Group—the state lashed out punitively, though without deterring independent media from continuing their coverage. We might consider this pattern as a novel form of ‘boomerang journalism’ (adapting Keck and Sikkink’s notion of boomerang activism), in which ‘contentious journalists’ outside Malaysia amplify the efforts of those inside (much as anti-corruption initiatives overseas compensate for the lassitude of domestic ones).

But that balance is unfortunate, and speaks poorly to the availability of information essential to any functioning democracy. Revivifying Malaysian mainstream media will require training new cohorts of personnel (in part, to replace those who have resigned in frustration with the constraints under which they work), regenerating a culture of journalistic integrity and vigilance, and cultivating confidence among editors and publishers. Online media play a role, but print, television, and radio are at least as important.

Third, that a financial scandal has been reframed as an ethnic contest—Malay–Muslims versus Chinese—is hardly intuitive, but likewise hardly surprising in Malaysia. Prime Minister Najib and his allies have fought accumulating allegations not by proving them wrong, but by an aggressive game of ‘wag the dog’: forget corruption; Malays have to stick together to secure hudud.

That tactic seems to be working. By all accounts, the Malay-Muslim ‘heartland’ in particular seems willing to give Najib a pass. Even if a substantial proportion rely largely on filtered mainstream news, chances are slim that many remain entirely unaware of the ongoing revelations. Rather, a combination of targeted patronage, Najib and his party’s position as communal saviour, and the abstract distance of a financial scandal render the proffered frame of Islam-under-attack effective. The resultant ethno-religious polarisation could take decades to redress, or could do permanent damage to the framework of Malaysian civic life.

The unfolding scandal has not gone unchallenged, nor are all the critics from the opposition side—although those within Najib’s United Malays National Party (UMNO), and not yet given the boot, must be particularly flummoxed.

Fourth and finally, the overall failure to translate aggravation into action indicates problematic ossification within UMNO, the opposition, and civil society alike. That ex-prime minister Mahathir Mohamad has been reconditioned in his 90s as a reformist hero is startling, and speaks poorly for the availability of younger, newer, less baggage-laden opposition alternatives. That the ‘progressive’-wing civil societal response to the DoJ’s kleptocracy charges is a fifth Bersih leaves one to wonder why this iteration of mass protests should be the charm. (Meanwhile, the right-wing plans yet another Malay-rights rally, reflecting and amplifying the communal bogey.)

Meanwhile, Najib’s government has struck back at detractors, further degrading already-battered freedoms of speech and association and complicating civil societal activism, including with a newly-enacted National Security Act. Should these laws eventually be loosened or lifted, as for the press, it will take the average citizen and voter some time to shake off the sense that speaking out is risky or inappropriate. The longer that process takes, the thinner and more tattered the fabric of social capital will become.

As a parliamentary democracy, at least in form, Malaysia should be able to put the matter to the test, through a vote of confidence in parliament. However, not only does UMNO set the parliamentary agenda, but UMNO’s many branches and their leaders face a collective action problem in coordinating against a party president, the prime minister, who controls campaign-funds and patronage purse-strings.

Meanwhile, the red cape of political Islamisation distracts the opposition as much as it does UMNO’s own mass base, leaving the opposition coalition in disarray when it most needs coordinated resolve and common purpose. The 1MDB debacle has revealed the paucity of political imagination and the frailty of participatory machinery and channels in today’s Malaysia.

At this point, enough countries are investigating 1MDB and its and Malaysia’s leaders that surely (surely?) something has to give. But the sad reality is, at this point, a court case, a criminal conviction, even a full overhaul of political leadership would not fix the problem. 1MDB has both laid bare and made worse deep weaknesses and ruptures in Malaysia’s politics, economy, and society.

As a quasi-neutral observer, my only hope is that we have hit rock-bottom—that the hat-tricks and hate-mongering will no longer work their magic; that the ranks of UMNO leaders will decide it’s worth the risk of a serious probe and full follow-up; that smart minds on both sides of the aisle will be able to revitalise political institutions; that civil society will find new ideas and fresh voices and stores of cleavage-bridging social capital.

At this point, though, optimism is about as hard to find as answers.

Meredith Weiss is Professor of Political Science at the Rockefeller College of Public Affairs and Policy, University at Albany, State University of New York.

Lamenting 1MDB
Meredith L Weiss
4 Aug, 2016 – New Mandala


‘SRC money used for anti-ageing hormones, home renovations’

‘SRC money used for anti-ageing hormones, home renovations’

Funds diverted from former 1MDB subsidiary SRC International had allegedly been used to pay for beauty products and home renovations, claimed Sarawak Report.

The whistleblower, in a statement, said it had obtained leaked documents of the Malaysian investigations into 1MDB, proving these allegations.

It claimed that the alleged expenses in February 2015, including RM1.15 million for what it believed to be anti-aging growth hormones, were made by a high ranking individual purportedly identified in the documents as “B1”, and his wife.

The anti-ageing product was allegedly purchased at US$159,000 each.

“Sarawak Report has not succeeded in tracking on the open market any product that begins to cost as much as US$159,000 each – yet at contemporary exchange rates the price tag described appears to match the RM1,154,000 on the cheque,” it said in the statement.

Besides this, Sarawak Report also claimed that SRC funds were also used for building works, including RM100,000 that was used to construct a police guardroom and amenities at B1’s Kuala Lumpur residence.

Malaysiakini can’t independently verify the claims made by Sarawak Report, and is attempting to get a response from the MACC.

Previously, Prime Minister Najib Abdul Razak had admitted that RM42 million of SRC money had ended up in his personal accounts.

Attorney-general Mohamad Apandi Ali however cleared the premier of any wrongdoing, saying Najib had no knowledge, nor was he informed, that funds from SRC were transferred to him.

According to previous exposes by the Wall Street Journal and Sarawak Report, RM50 million was transferred from SRC to its subsidiary Gandingan Mentari, which in turn channelled the sum to another subsidiary Ihsan Perdana.

From this, RM42 million was transferred to the prime minister’s accounts.

Najib has repeatedly denied abusing public funds for personal gain, and accused those behind the allegations of conspiring to topple him.

Malaysiakini has also contacted the Prime Minister’s Office and SRC for a response.

‘SRC money used for anti-ageing hormones, home renovations’
3 Aug 2016 – malaysiakini


Hundreds of Malaysian protesters call for 1MDB arrest – AlJazeera


Hundreds of Malaysian protesters call for 1MDB arrest

Protesters demand proper investigation into disappearance of millions of dollars from state investment fund.

Hundreds of demonstrators have marched in the streets of the Malaysian capital to protest against alleged government corruption, calling for the arrest of an unnamed high-ranking official after million of dollars went missing from a state-owned investment fund.

The protesters, mostly wearing black and white shirts, gathered on Saturday in several areas of Kuala Lumpur amid tight security.

Ignoring police warnings to disperse, as the rally had no permit and was considered illegal, the protesters rallied agaisnt the alleged misappropriation of funds from Malaysia’s 1MDB investment vehicle.

“We are here to denounce corruption in government,” elections activist Maria Chin Abdullah told protesters. “We want to bring to justice officials … responsible for stealing the funds at 1MDB.”

Last month, US prosecutors filed several lawsuits to recover assets that were allegedly bought with money laundered through the fund.

The lawsuits repeatedly referred to a high ranking official, only identified as “Malaysian Official 1”, who received about $700m of the misappropriated funds – and many Malaysians believe this refers to Prime Minister Najib Razak.

The prime minister, however, denies any wrongdoing and says any attempt to link him to the scandal is part of a smear campaign. Najib has also been cleared by investigations conducted by the attorney general’s chambers and Malaysia’s anti-graft body.

Al Jazeera’s Florence Looi, reporting from Kuala Lumpur, said: “This protest is organised by students and supported by a coalition of NGOs and as well as opposition parties to put pressure on the government to conduct a more thorough investigation into this entire scandal.”

US probe

The 1MDB fund was created in 2009 by the Malaysian government with the goal of promoting economic development projects in the Asian nation.

Instead, officials at the fund diverted more than $3.5bn over the next four years through a web of shell companies and bank accounts in Singapore, Switzerland, Luxembourg and the US, according to the lawsuit filed by the US Justice Department to seize $1bn in assets linked to the fund.

Federal officials said more than $1bn was laundered into the US for the personal benefit of 1MDB officials and their associates.

Hundreds of Malaysian protesters call for 1MDB arrest
28 Aug 2016 – AlJazeera


How to fill RM28 billion hole at 1MDB?

How to fill RM28 billion hole at 1MDB?

QUESTION TIME Desperate people are dangerous people – not just to themselves but to all of those around them. The more powerful you are when you are desperate and the more influence you have, the more dangerous you are to more and more people. What dangerous, despicable things will desperate people do to fill up that RM28 billion hole at 1MDB?

The US Department of Justice (DOJ) civil filings to recover over US$1 billion in assets purportedly belonging to our disgraced “strategic development company” 1Malaysia Development Berhad or 1MDB very comprehensively explained how over US$3.5 billion (US$3.657 billion to be exact or RM14.6 billion at current exchange rates) was allegedly stolen from the country.

The DOJ filings painstakingly detailed the money trail for the over US$3.5 billion purportedly stolen from 1MDB, which is wholly owned by the Minister of Finance Inc, an arm of the Finance Ministry, showing that a total of US$730 million went into Prime Minister Najib Abdul Razak’s bank accounts, of which US$620 million were returned to one of the accounts from where it came.

According to the filings, most of the money went to accounts controlled by Low Taek Jho aka Jho Low, while the other portions went to two senior officials – since dismissed – of Abu Dhabi’s International Petroleum Investment Corp or IPIC and its subsidiary Aabar PJS Investments (their CEOs in fact), and Riza Aziz, the PM’s stepson (Rosmah Mansor’s son).

Some three quarters, amounting to US$2.627 billion or RM10.5 billion of the embezzled 1MDB funds went into the accounts of Jho Low, from which portions were subsequently distributed into other accounts. Over and above this, US$238 million or over RM950 million went to Riza Aziz while nearly US$540 million or some RM2.16 billion went to the accounts of the two senior officials at IPIC and Aabar.

The DOJ filings add on to other reports, including one from our very own auditor-general. News reports quoting the auditor-general’s report on 1MDB say that some US$7 billion (RM28 billion) worth of 1MDB assets could not be verified and accounted for.

That means that between US$3.5 billion and US$7 billion of 1MDB money could have gone missing – a further US$3.5 billion over and above what the US DOJ says could still be missing and misappropriated or stolen. The gaping hole in 1MDB could be as large as RM28 billion but is at least RM14 billion deep. The auditor-general’s report has been classified under the Official Secrets Ac,t which means that there is much information there which the government is suppressing from public view.

1MDB itself admitted that over US$3.5 billion it purportedly paid Aabar has gone missing. Neither IPIC nor Aabar acknowledge the payments. Apparently, 1MDB paid into the account of a British Virgin Islands company with a similar name! And still 1MDB claims that all is well and no police report has been lodged.

IPIC is now claiming from 1MDB not US$3.5 billion but US$6.5 billion under arbitration proceedings filed in London – that’s US$3 billion more than the payment gone missing of US$3.5 billion. It’s not clear why but if the arbitration goes against 1MDB, Malaysia has to pay out US$6.5 billion.

Inflating cost of rail project?

Whichever way one looks at it, there’s going to be a huge hole in 1MDB – US$3.5 billion at least and as high as US$7 billion. 1MDB will be desperately trying to cover that hole but how is it going to do that?

Remember that 1MDB is wholly owned by MOF Inc, remember that its former board, as well as the advisory board which the PM headed, has been disbanded and control is now with MOF Inc. The burden falls on MOF Inc to fill up this hole with minimal damage in terms of public perception – yet another cover-up, in other words.

This raises serious questions as to what 1MDB, its new board and shareholders will do to either fill the hole in a manner which is acceptable or can be passed off as acceptable to the public at large, or continue to deny foolishly that such a hole exists. The former is tough or even impossible to do and the latter cannot be done indefinitely.

It’s been more than a year – 16 months – since 1MDB’s financial year-end of March 31, 2015 and there are no signs of the accounts. In another two months, it will pass the limit of six months given to file the accounts for the year ended March 31, 2016 as well. How long can 1MDB delay the accounts and still say things are A-OK? Already its auditors for its last accounts released (2013 and 2014), Deloitte, has said no one should rely on them anymore.

Speculation is mounting as to how Najib and his government will placate an increasingly sceptical and impatient public who are getting highly upset and restless by irrefutable reports of corruption at the highest levels. If nothing is done, the game will be up.

Sarawak Report – one of the organisations that helped blow open the 1MDB misappropriations when it reported leaked e-mails – is saying that the East Coast Railway project may be used for this purpose, claiming it has seen documents to this effect.

Basically, Sarawak Report alleges that the project, originally expected to cost around RM30 billion, will be awarded to a China company at an inflated price of RM60 billion, the differential of RM30 billion being transferred back eventually to 1MDB to fill the hole. Works Minister Fadillah Yusuf has denied this.

Denial or not, the point is, how is 1MDB going to fill that hole? What will MOF Inc come up with? And if it can’t fill the hole, who will be hauled up? Who will be blamed for all this?

Desperate things will be done during desperate times by desperate people so we have to keep our ears to the ground and eyes wide open.

How to fill RM28 billion hole at 1MDB?
2 Aug 2016 – malaysiakini


Constitutionally, Najib needs to resign

Constitutionally, Najib needs to resign

COMMENT In any democracy, resignation or calling for the government to resign is no big deal. It is indeed part and parcel of the democratic process.

From the citizens’ point of view, they have every right to have a government that is free from any doubts over its legitimacy and fitness to remain in office.

It is therefore strange for Ambiga Sreenivasan to receive brickbats for saying that Prime Minister Najib Abdul Razak should resign in the wake of devastating disclosure of various questionable and illegal dealings made by 1MDB – which is owned by the Malaysian government – in Washington recently.

And perhaps it is only in a kleptocracy that a beleaguered prime minister has the guts to say that he has to remain in office in order to protect the interests of the people. Najib made a statement to that effect in a Raya do in his parliamentary constituency of Pekan over the weekend.

Just compare what Najib has been doing with that of his British counterpart, David Cameron, who resigned from his office following the Brexit vote, which was a rejection of his policy to remain in the European Union (EU). It would be recalled that Cameron assumed the position at No 10 Downing Street in 2010, through a coalition with the Liberal-Democrats in the aftermath of the general election that year.

Somehow, Cameron (photo) managed to lead the Conservatives to form a government on their own in the subsequent 2015 general election. But a mere defeat in a referendum on whether Britain should remain in EU has eventually led to his exit from office.

To most of us in Malaysia that was astounding. But over there – and in fact in other Westminster countries like Australia and even India – such a resignation is normal. Indeed it is part and parcel of their political culture.

From the point of the constitution, such is actually inherent in the notion of responsible government; a system of government where the cabinet is answerable to the House. Where its continuance and survival depends on the support of the majority in the House.

Not only on matters of grave importance such as the 1MDB. Even routine and mundane issues, such as the failure of government agencies or rail accidents, could lead to the resignation of cabinet ministers.

This is the essence and implication of ministerial responsibility. As civil servants are not elected and therefore beyond the reach of the House, it is the minister in charge who has to pay the price.

There is no question of pointing the finger at the civil servants. Or saying that the minister is unaware of the fiasco. From the constitutional perspective, the only question that matters is under whose portfolio or responsibility the problem at hand falls.

The minister may in fact be unaware, but that is not a good defence. What is crucial is the matter is under his or her care and thus, he or she has to pay the price.

We are here dealing with responsibility in the constitutional sense. Not whether the 1MDB scandal, as exposed in Washington, is criminal or civil.

Government must shoulder responsibility

In the aftermath of the Washington expose, the Najib administration has been trying to limit the damage by saying that government is not involved, and that it is a matter for the individuals cited by the claim made by the US government to answer.

Constitutionally, that is not good enough. What is important here is that 1MDB was established by the Najib government and it still owns the entity. As such, the buck does not stop with Jho Low or Riza Aziz or perhaps Arul Kanda Kandasamy.

The responsibility rests with Najib and his government. Some of those characters may have to be charged in court. But that is not the concern of the constitution, which deals with political accountability.

And here lies the reason why Ambiga (photo) was right to call for the resignation. As Najib is the prime minister and the pillar of the government, all the ministers have to go down with him.

From the perspective of the constitution, there is no need to wait until the matter is eventually concluded in the US. Or whether the case remains a civil one.

Najib might not know all the dealings that have been concluded by 1MDB. But that is not the issue. The point is 1MDB is created by Najib’s government and it must should shoulder the responsibility.

Constitutionally, Najib needs to resign
2 Aug 2016 – malaysiakini


1MDB not directly involved in DOJ law suits? Don’t take Malaysians for fools!

Najib should not take Malaysians for fools or simpletons in declaring that 1MDB not directly involved in DOJ law suits as without 1MDB there would be no DOJ legal action for forfeiture of over US$1 billion MDB-linked assets in United States

I am most shocked that the Prime Minister, Datuk Seri Najib Razak had said after the UMNO Supreme Council meeting this evening that 1MDB is not directly involved in the US Department of Justice (DOJ) report, which is probably a a justification for no government or official response to the DOJ legal suits for forfeiture of over US$1 billion assets in United States which the American authorities alleged had been stolen, misappropriated, defrauded or diverted from 1MDB as a result of global embezzlement, money-laundering and corruption crimes.

Najib said the DPJ civil suits did not contain any information or views from the Malaysian government, Attorney-General’s Chambers or 1MDB itself.
He added that “only those specifically named in the report are mentioned in the report” and that 1MDB is not directly involved in the report.

Najib cannot be more wrong.

Najib should not take Malaysians for fools or simpletons in declaring that 1MDB is not directly involved in DOJ law suits as without 1MDB there would be no DOJ legal action for forfeiture of over US$1 billion MDB-linked assets in United States.

In fact, without 1MDB, the DOJ 136-page legal suits would have no legs to stand on and would immediately collapse.

“1MDB” is strewn all over the 136-page report, and in the first 20 pages, there are over 130 references.

How then can Najib say that 1MDB is not directly involved in the DOJ report?

Although the Prime Minister, Datuk Seri Najib Razak has not been named personally in the DOJ legal suits, it is no exaggeration to say that the identity of “MALAYSIAN OFFICIAL 1” mentioned 36 times in the 136-page DOJ report has received remarkable concurrence whether locally or internationally – that it could only refer to Najib and nobody else.

Let me ask Najib a question I had posed in Batu Pahat last night – whether Najib will deny he is “MALAYSIAN OFFICIAL 1” or will he admit he is being referred to in DOJ legal suits and sue the US Attorney-General Loretta Lynch for defamation for implying or insinuating that he was involved in the global multi-billion ringgit theft, embezzlement, misappropriation or money-laundering of 1MDB funds?

Najib should not take Malaysians for fools or simpletons in declaring that 1MDB not directly involved in DOJ law suits as without 1MDB there would be no DOJ legal action for forfeiture of over US$1 billion MDB-linked assets in United States
30 July 2016 – Lim Kit Siang blog


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.

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


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′.

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


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.

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

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