01
Sep
16

What happened to SRC’s RM4 billion loan from KWAP?

The SRC phase – the unsolved piece in the 1MDB jigsaw

FEATURE The US Department of Justice’s (DOJ) announcement last month that it was seizing some US$1 billion in assets acquired through funds allegedly stolen from 1MDB marked a milestone in uncovering the global scandal as for the first time, a complete and detailed money trail of the heist was put on public record.

In its 136-page filing, the DOJ outlined how US$3.657 billion (RM14.7 billion) was stolen from 1MDB in three phases, which it described as the Good Star phase, the Aabar-BVI phase and the Tanore phase.

However, Swiss investigators as early as January this year had alluded to four phases and put the total misappropriated sum at about US$4 billion (RM16 billion).

In a statement asking for Malaysia’s mutual assistance on Jan 29, the Swiss Office of Attorney-General (OAG) described three of the four components as ‘PetroSaudi’, ‘Genting/Tanjong’ and ‘ADMIC’.

These were essentially the same as the phases referred to by the DOJ.

The OAG named the money trail based on companies engaged in business deals with 1MDB but was used as a front for money-laundering whereas the DOJ used the names of the offshore entities in which the money was later diverted to.

The fourth phase, which was absent in the DOJ filing, was referred to by the OAG as ‘SRC’.

This was in reference to SRC International Sdn Bhd, a subsidiary of 1MDB that was later placed under the Finance Ministry in 2012.

The Swiss OAG in an email to Malaysiakini reaffirmed that SRC’s funds are part of its ongoing investigations.

“SRC investments are also investigated in the frame of the criminal proceedings opened in August 2015,” it said.

The SRC phase, like the three other phases detailed in the DOJ filing, started off with a massive fundraising exercise.

In the Good Star (PetroSaudi) phase, it started off with 1MDB (then Terengganu Investment Authority) issuing US$1.426 billion in Islamic medium term notes in 2009, and around US$1.03 billion was later siphoned.

In the Aabar-BVI (Genting/Tanjong) phase, it began with two bonds totalling US$3.5 billion raised by Goldman Sachs for 1MDB for the acquisition of power assets in 2012 after which around US$1.637 billion was siphoned.

In the Tanore (ADMIC) phase, it started with a US$3 billion bond raised for a joint-venture between 1MDB and Abu Dhabi Malaysia Investment Company (ADMIC) in 2013 but US$1.26 billion was later diverted.

RM4b more unaccounted for

The SRC phase started in 2011, when 1MDB obtained a RM4 billion loan from Malaysia’s Retirement Fund Incorporated, the country’s civil service pension fund, also known as KWAP.

MPs have repeatedly raised questions in Parliament about the status of the RM4 billion but the government has been coy about the matter.

The latest answer the Finance Ministry provided was in a parliamentary written reply on April 6 in which it declined to reveal any details, citing that the accounts are still under audit.

The Finance Ministry had previously said US$60 million (RM240 million) was invested in Mongolia.

However, this leaves the bulk of the RM4 billion unaccounted for.

Apparently some of SRC International’s funds likely passed through the Swiss financial system, without which it would not have become a subject of Swiss investigation.

…more
The SRC phase – the unsolved piece in the 1MDB jigsaw
7 Aug 2016 – malaysiakini

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