Behind the 1MDB scandal – Part 7

Behind the 1MDB scandal: How banks missed clues and bowed to pressure

Financial trouble

After Mr Najib’s 2013 election victory, 1MDB had only about $US20 million in cash and more than $US10 billion in liabilities. It was having trouble making interest payments, board minutes show.

Malaysian newspapers began to criticise the fund, effectively scotching an initial public offering that 1MDB had planned for its power assets that would have brought in much-needed funds.

Around that time, Mr Najib opened three new AmBank accounts, which caught the attention of AmBank’s then-chief executive, Ashok Ramamurthy, investigative documents show. He was on assignment from Australia & New Zealand Banking GroupLtd., or ANZ, which has a 23.8 per cent stake in AmBank. ANZ declined to comment.

In 2014 Mr Najib and his wife, Rosmah Mansor, visited the Italian resort island of Sardinia and he used a credit card linked to one of the accounts to buy jewellery worth €750,000, bank records show. A few months later, he drew on the accounts to spend $US130,000 when visiting a Chanel store in Honolulu with his wife, the records show.

AmBank’s Ms Yu messaged Mr Low: “We can’t maintain the accounts … Ashok reporting the status at monthly board meeting.”

“They shouldn’t disclose contents of account. Later leak,” Mr Low replied.

Mr Cheah, who had overseen Mr Najib’s accounts at AmBank, had resigned. “It’s difficult as Mr Cheah no longer around,” Ms Yu messaged, urging Mr Low to close the accounts. He replied the prime minister wanted to keep them open. All three were eventually closed in March 2015.

In all, Mr Najib wrote more than 500 checks totalling about $US400 million from the 1MDB-funded accounts, according to bank documents.

At one point, Mr Najib’s account ran short of funds, prompting fears that a bounced check would attract regulatory attention. Mr Low arranged for more than $US4 million in cash to be deposited at AmBank, according to instant phone messages and bank-transfer information reviewed by the Journal.

In early 2014, Deloitte Touche Tohmatsu Ltd became 1MDB’s third auditor. It approved the fund’s books for its 2014 fiscal year, the latest available. Deloitte declined to comment.

In 2015, after the Journal reported the $US681 million transfer into Mr Najib’s accounts, investigators around the globe stepped up their inquiries.

Last summer, Malaysia’s lawyer general drew up an arrest warrant for Mr Najib, people involved with the matter said. Mr Najib fired him and appointed a new one. The new one declined to act on advice from the central bank to open a criminal case against 1MDB over the missing PetroSaudi investments, saying there was insufficient evidence.

Abu Dhabi’s rulers have fired Mr Al Qubaisi from the sovereign-wealth fund, frozen his assets and arrested him, according to people familiar with the action. Mr Low’s whereabouts is unknown.

Singapore revoked BSI’s banking license and said in June it was setting up an anti-money-laundering department.

Switzerland’s lawyer general has opened criminal proceedings against BSI. The Justice Department is looking into whether Goldman Sachs violated a US law requiring banks to report suspicious transactions, according to people familiar with the probe. Goldman has said it had “no visibility” into what 1MDB did with the money it raised.

In late July, 1MDB said Deloitte, its auditor, had resigned earlier this year. The fund said its financial statements for 2013 and 2014 should no longer be relied on.

Behind the 1MDB scandal: How banks missed clues and bowed to pressure
Tom Wright, Bradley Hope
Wall Street Journal
September 6, 2016 – The Australian


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for the triumph of evil
is for good men
to do nothing.

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fears their government,
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fears the people,
there is LIBERTY.

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