Lying Again: The DOJ has stopped investigating 1MDB?


August 13, 2017

Image result for Sarawak ReportSarawak Report

Proof The DOJ Has Stopped Investigating 1MDB??!

by Najib Razak’s Communications Team

The US Department of Justice’s (DoJ) suspension of its civil suits against 1Malaysia Development Berhad (1MDB) shows there is a lack of evidence of wrongdoing by the state investment fund, says the Barisan Nasional Strategic Communications team.

“Civil suits related to this case which started a year ago, which has essentially gone nowhere without sufficient evidence, are now frozen,” said its deputy director Datuk Eric See-To in a statement on Friday.

He added that the civil action against 1MDB, without sufficient evidence, signalled the political motivation of individuals from the previous US administration.

He stressed that it was important to note that 1MDB “is not a party to the DoJ’s civil suits.”

“As far as 1MDB is concerned, all its funds have been accounted for, in addition to the Malaysia Attorney-General’s statements after the DoJ filings that there has been no evidence of any misappropriation of funds,” he said.

Sarawak Report’s comment

It is not surprising these government spokespeople are lying in the face of mountains of documented evidence, since the Najib adminstration has turned blatant misinformation and rejection of the truth into its trademark. Like most criminals in the dock they will continue to plead not guilty until the judge and jury finds them otherwise.

The DOJ spokespeople have stayed the proceedings of the civil case, because that means they can get on with their active parallel criminal investigation at their leisure with the assets still frozen and out of the reach of Riza, Jho and all the rest.  This is how they put it:

The United States makes this Motion on the ground that proceeding with the case is likely to have an adverse effect on the ability of the government to conduct a related federal criminal investigation… The government seeks a stay pending the resolution of a related federal criminal investigation arising from the same fact alleged in the First Amended Complain on the grounds that proceeding with the instant action is likely to have an adverse effect on the government’s ability to conduct the related criminal investigation.”

Trying to pretend that this means anything other than that criminal investigations are ongoing and that the FBI are happy to keep assets frozen for as long as those take represents no more than a refusal to read the print on the page by Najib’s circle.

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Relying again on insinutations that new law enforcers are friendly to Najib unlike old ones, again merely betrays BN’s fundamental failure to understand the basic principles of modern democratic governance, which demand that the executive keeps its nose and manipulative interferences out of judicial processes.

MACC is serious about combating Corruption in BolehLand?


May 9, 2017

COMMENT: I always enjoy reading TK Chua’s plain speaking articles and have often featured them on my globally read blog. I thank http://www.freemalaysiatoday.com for hosting them and my friend Nelson Fernandez for allowing me to use them. Mr. Chua never fails to call a spade nothing but spade. But this is something elsehttp://www.freemalaysiatoday.com/category/opinion/2017/05/06/hail-to-the-macc-chief-for-being-bold/.

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The last of the Anti-Corruption Mohicans was the late Justice Tan Sri Dato’ Harun Hashim. He was competent, fearless and very professional. He had no regard for politicians because he was a public servant par excellence and an outstanding member of our Judiciary who served King and country with dignity and distinction.

Today, most of our civil servants starting from the top are apple polishers who are out to suck up to politicians in power. The manner in which the 1MDB scandal was handled is my case in point.  The Auditor- General, the Attorney-General and others  let us down. They did not have the conviction and courage to do what is right.

Yes, Mr. Chua, I note you used the word “resolve” in quotes. The present MACC Chief Commissioner is the new broom. I am not optimistic about what the Chief Commissioner can do to refashion the organisation, even with the benefit of the advice and wisdom of  former  UN Kofi Annan’s ethics crusader Tunku Abdul Aziz.

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Remember his predecessor, Tan Sri Abu Kassim.  Abu Kassim promised a lot but failed to do his duty faithfully.  Why? Because  there is no political will to fight corruption. After all, our Prime Minister himself is corrupt and worse still, he is incompetent.–Din Merican

MACC is serious about combating Corruption in BolehLand?

by TK Chua@www.freemalaysiatoday.com

I want to support the Chief of the Malaysian Anti-Corruption Commission (MACC) in his “resolve” to make the anti-graft agency more respectable in combating corruption in the country.

However, I would like to comment on some of his statements. First, one swallow does not a summer make. The arrest of a Tan Sri here and a Datuk Seri there does not signify that the MACC has become bold to “venture” into the turf of the rich and powerful.

I have seen enough of many agencies having the tendency to indulge in the “flash in the pan” syndrome. They do things to impress, not with the enduring objective to solve a problem at hand.

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The New Broom at The Malaysian Anti-Corruption Agency (MACC)

Efforts against corruption must be relentless, imminent and without fear or favour. When too many perceive that the rich and powerful are being protected, usually it is because such a view has some semblance of truth to it.

To prove otherwise requires efforts more than arresting a Tan Sri or a Datuk Seri. A Tan Sri trying to broker a royal title is very different from other Tan Sris in charge of millions in government funds.

Persistence and being resolute are key to curbing corruption. The rich and the powerful have become bold and blatant in their deviant ways because they perceive the likelihood of being hauled up, too slim.

Most of us are creatures of greed. Given an opportunity, many would abuse the law and enrich themselves. But if the consequence of our corrupt practices is clear and imminent, I think many would think twice before committing it.

Another point the MACC chief mentioned was the lack of personnel and funding in combating corruption. According to him, the MACC has only 1,900 enforcement officers whereas there are 1.6 million civil servants to be monitored. Please forgive me for being harsh, I just find this excuse so typical of most government agencies.

No organisation, including the MACC, has unlimited resources to play with. Ultimately it is always the 80-20 rule and the need to prioritise.

Certainly not all the 1.6 million civil servants have the same opportunity to be involved in bribery. The MACC ought to know the departments and the agencies that are more prone to corruption.

This is where priority and concentration come in – MACC’s should focus on the 20% to give them the 80% result.

If the MACC chief knows that RM5 million is paid each month by syndicates to foil enforcement actions, it shows that corruption has become institutionalised and endemic. More than that, it shows that corruption is now a retainer.

If he knows the amount paid each month, he ought to know the personnel and the agencies involved.

By the way, it is quite illogical to assert that MACC’s action against corrupt politicians just prior to the next general election is considered as indulging in politicking. On the contrary, it is the lack of action that has given rise to the impression that the MACC is not above the politicians.

Action should be rightly based on offences committed and evidence adduced, nothing else matters.

TK Chua is an FMT reader.

Looking Back in Time: Malaysia’s Lying Attorney-General cum Cover-Up Artiste


September 25, 2015

Looking Back in Time: Malaysia’s Lying Attorney-General cum Cover-Up Artiste

by John Berthelsen

http://www.asiasentinel.com

Opinion: The Lies of Malaysia’s Attorney General

The Crony Attorney-General Appandi Ali

When a Malaysian Deputy Prosecutor named Kevin Morais disappeared on September 4 last year after leaving his condominium in Kuala Lumpur on his way to work, the rumor spread that the 55-year-old Morais, who was gay, probably had tired of his job with the Malaysian Anti-Corruption Commission and had left with his lover, probably for London. And, newly-minted Attorney- General Mohamed Apandi Ali said, Morais had nothing to do with the controversial MACC probe into Prime Minister Najib Razak’s tangled financial affairs.

It is widely believed that that probe got former Attorney- General Abdul Gani Patail fired from his job in July, to be replaced by Apandi Ali, a UMNO stooge and loyalist who served in a variety of different capacities, including as the judge who ruled that Christians couldn’t use the word “Allah” to describe god.

That has been put to the lie as well. Morais’s brother in Atlanta, Ga. in the US turned up in Kuala Lumpur to issue a statement saying Morais was not only working on the Najib case, but he was either leading or co-leading the prosecution, and that he had sent him a USB drive containing information on the case. That has been corroborated by other sources in Kuala Lumpur.

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Clare Rewcastle Brown–Relentless in Pursuit of 1MDB Scandal

It has since become clear that Morais in addition was one of the sources of deeply detailed information on Najib’s finances that was being fed to Clare Rewcastle Brown, the editor and writer of Sarawak Report. So rather than being killed for revenge by an angry army doctor, it appears that he was killed for being a whistleblower.

 

A lot on his muddled head–Too many lies

 

What nobody expected was that Morais would turn up. The rumor about his disappearance was put to the lie when a CCTV camera, by chance, caught Morais’ car being rammed on a Kuala Lumpur street and him being dragged from it. Morais was later found in an oil drum filled with cement in a river in Subang Jaya, a Kuala Lumpur suburb. His burned car was found in a palm oil plantation in Perak. The Police said it was an open and shut case. Morais had been killed by confederates of an army doctor in revenge for prosecuting a case against him.

So why was Apandi Ali, the country’s chief law enforcement officer, lying about Kevin Morais’s activities? Why was the lie spread that he had left town with a homosexual lover? Why did the Attorney-General’s office say Morais had nothing to do with the Najib case?

Apandi Ali has now denounced a story by Sarawak Report – and a similar Asia Sentinel story quoting Sarawak Report –that the MACC had forwarded 37 criminal charges against Najib for prosecution. He has said he sent the case back to the MACC for further work. Is Apandi also lying about that as well?  Given the clear lies about Morais, who does the reader want to believe? Mohamad Apandi Ali or Asia Sentinel and Sarawak Report

Apandi Ali says he has sent the report back to the MACC for revision. He retires officially in three weeks, meaning he wants to pass the hot potato to his successor, expected to be another UMNO lawyer, Mohamad Shafie Abdullah.(This never happened. Apparently, he is still useful to Prime Minister Najib Razak.)

The story has earned a ban for Asia Sentinel in Malaysia from the Communications Ministry, which has issued a notice saying “This website is not available in Malaysia because it violates the national laws.” The ban has holes in it, but, say sources in Kuala Lumpur, it is likely to tighten.

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Hussain Najadi–Founder AM Bank

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Pascal Najadi seeks Justice for his father

It seems more likely that it is the Malaysian government that violates the national laws, not only in the case involving Kevin Morais but in a long list of other cases. For a second one, try the murder of Hussain Najadi, the retired founder of AMBank Malaysia, who was gunned down in a parking lot in 2013. Although law enforcement officials said he was shot in a dispute over a Hindu temple property matter, Hussain’s son Pascal has charged that his father was assassinated because he said he wouldn’t play along with financial irregularities involving the United Malays National Organization prior to his death, refusing to orchestrate a multi-billion ringgit property deal connected to the Kuala Lumpur City Center. On one occasion, he told his son that Prime Minister Najib Razak was “lining his pockets with billions of ringgit with no consideration for the future of the country.”

A gunman was almost immediately arrested. The property dispute story was widely accepted by everybody but Pascal Najadi. The supposed mastermind, one Lim Yuen Soo, went on the run for two years. But Lim, a Melaka gangster and nightclub owner, appeared to be hiding in plain sight. In fact, he was part owner of the Active Force Security Services Sdn Bhd. with the former Malacca Police Chief Mohd Khasni Mohd Nor.

When Police caught up with Lim at Kuala Lumpur International Airport, arresting him on an Interpol warrant, they held him incognito for eight days before they turned him loose for “lack of evidence.” But that story raised more questions than it answered. If he could be turned loose for lack of evidence, why wasn’t the original case reopened to find out who had actually paid the gunman to kill Hussain?

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As to the probe of Najib’s finances, it is clear from what has emerged in Sarawak Report that he may be a cheap crook as well as a thief of titanic proportions, given the huge amounts of money that apparently have been siphoned from 1Malaysia Development Bhd., the troubled state-backed investment fund.  The MACC, in its probe, found him to be using credit cards from SRC International, a Middle Eastern company supposedly involved in oil exploration that was funded by 1MDB. Najib ran up bills of RM449,000 on an SRC Visa card and another RM2.8 million on an SRC MasterCard in August 2014. That in effect was public money, spent on hotels, meals, jewelry, and other personal items in Italy and Monaco. 

He is already believed to have taken millions in kickbacks on defense contracts and purchases during his years as Defense Minister, particularly on the purchase of two French submarines as well as purchase of Sukhoi jet fighters at vastly inflated costs and other contracts. Yet, despite the tens of millions stolen, he still had to use credit cards from a publicly owned company to fund his wife’s vast needs for jewelry and handbags.
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It was Najib’s years as Defense Minister that ended up in the 2006 death of the Mongolian translator and party girl, Altantuya Shaariibuu, at the hands of two of Najib’s bodyguards. It has long been assumed that Altantuya was attempting to blackmail Najib’s close friend, Abdul Razak Baginda, over what she knew about the purchase of those submarines.

So in the long run, who do you believe about the deaths of Kevin Morais and Hussain Najadi and Altantuya Shaariibuu, and the subsequent statements by Mohamad Apandi Ali over the MACC probe?  The Malaysian government? Or Sarawak Report and Asia Sentinel, both of which are now banned in Malaysia? Neither publication is likely to stop investigating them.

 

Najib in Power:Parliament, Civil Service, Police, Judiciary, and UMNO have failed the Malaysian People


September 20, 2016

Najib in Power:Parliament, Civil Service, Police, Judiciary, and UMNO  have failed the Malaysian People

by  P Gunasegaram

http://www.malaysiakini.com

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After all his failings and lies over his brainchild, 1Malaysia Development Bhd (1MDB), and at least US$3.5 billion (RM14 billion) embezzled from it, and as much as US$7 billion (US$28 billion) unaccounted for, why is it that Prime Minister Najib Abdul Razak remains in power?

How could a nation keep a Prime Minister who is directly and indirectly responsible for the biggest fraud in Malaysian history and perhaps the biggest fraud ever in the world in power? The Minister of Finance Inc (Najib is Finance Minister, too) owns all of 1MDB, he was chairperson of the advisory board and the memorandum and articles of association of 1MDB required him to sign off on all major deals.

In other countries that practice true parliamentary democracy, that would have been enough to nail him and kick him out hard if he had not already resigned by then, but not here. Why?

Just because he was Head of UMNO and Barisan Nasional or BN when the coalition won the last elections in 2013, it does not convey on him an automatic right to remain prime minister until the next elections.

A Prime Minister can be removed if he does wrong under the law but for that to work you need independence of both investigating and prosecuting authorities. Najib circumvented that by removing the previous Attorney-General (Gani Patail) under highly suspicious circumstances. At the same time, the country’s corruption-fighting body saw wrenching changes while central bank officials were questioned by the Police for possible leaks of information over that US$681 million “donation” that went into the accounts of Najib at AmBank.

When dissent within his party began to surface, he took action against senior party officials culminating in the expulsion of his deputy Muhyiddin Yassin who, together with former Prime Minister Dr Mahathir Mohamad, has now formed a new party.

That served as an example for any others who might want to challenge Najib’s leadership of UMNO and resulted in UMNO top guns and other heads of political parties within the BN coalition keeping mum and voicing their support for Najib.

UMNO party elections have been postponed to after the next general elections, preventing would-be contestants from ousting him. It looks like no one within Umno is capable of organising a revolt or rebellion and to force an extraordinary general assembly which could remove him as party chief and hence prime minister.

That Najib remains PM, and UMNO President, is first and foremost a reflection of the poor leadership at the top of UMNO. Except for Muhyiddin, Shafie Apdal and Mukhriz Mahathir, no significant UMNO leader has opposed Najib over 1MDB and other matters. If enough UMNO top leaders join in the clamour against Najib, Najib will have to go – you don’t even have to wait for a grassroots revolt.

Let’s take it from the top. Najib’s current deputy, Ahmad Zahid Hamidi, continues to make noises of support for Najib. This one-time solid Anwar Ibrahim supporter, jailed under the Internal Security Act (ISA) with Anwar in 1998 under Mahathir’s rule, must know that if UMNO goes into the polls with Najib at the top, its chances of winning would be much eroded. But he does not want to make the mistake his former boss did of moving too hastily.

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The UMNO Idiotic Minister of Defence

And then, with the exit of Shafie Apdal, comes Hishammuddin Hussein, Najib’s cousin and son of the Third Prime minister, Hussein Onn. Najib was son of the second. If Hishammuddin had his father’s guts, principles and integrity he would have no choice but to voice his opposition to Najib. But no, he does not but condones Najib.

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Ambitious But Unprincipled 

And then there is UMNO Youth Chief Khairy Jamaluddin – suave, dapper and Oxford educated.  A man in so much of a hurry to get to the top that one can’t expect him to be steadfast and upholding and give up what may, yes, get him to the top.

No ‘scrotal gumption’

For all three of them, does good politics dictate that they must support Najib no matter what, even if he allows Malaysia to be turned into a kleptocracy? Do they all not have the “scrotal gumption” – to borrow two words from former Court of Appeal judge Mahadev Shankar – to at least this once put nation and people above their own personal ambitions, and do what’s right even if it is risky?

Who knows, their political ambitions may be furthered if they do that because a majority of Malays themselves are likely to support their actions. Polls indicate Najib’s support among Malays is at an all-time low of 25 percent.

Remember Mahathir’s meteoric rise after he lost his parliamentary seat way back in 1969, criticised then Prime Minister Tunku Abdul Rahman, got expelled from UMNO and then became Education Minister in 1974 after he was given a seat to contest by Tunku’s successor, Abdul Razak Hussein, Najib’s father?

Clearly they don’t make young UMNO leaders like they did before. And clearly too UMNO politics were rather devious even then. And MCA and MIC, what say you? Does Liow Tiong Lai for a moment think that the ordinary Chinese think his support for Najib is justified? What about the Indians, Dr S Subramaniam, do you think they support Najib right now?

Over in Sabah and Sarawak, do Kadazans and Dusuns and others actually support Najib? And shouldn’t leaders of parties like PBS and PBB be more circumspect of their support for Najib as leader of the coalition? How about it, Joseph Pairin Kitingan and Adenan Satem? Is it not time to make your views felt?

Umno after all had only 88 seats out of 133 seats at the end of the last elections in 2013 in the 222-seat Parliament. UMNO cannot rule without its partners no matter what some of their leaders say.

The combined opposition had one more than UMNO with 89 seats. If all of UMNO’s partners moved over to opposition, the government is toppled. In fact, if only 23 out of 44 defect, down comes Najib’s government. Surely they are collectively in a position to make some threats but why don’t they? Lack of scrotal gumption again?

He could be removed by Parliament – by a vote of no-confidence which will precipitate general elections if enough people vote with their conscience and not along party lines.

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Najib stays in power because not enough elected representatives from the ruling coalition will say a word against him, let alone vote against him. UMNO has failed the people, MCA has failed the people, MIC has, and likewise Gerakan. The East Malaysian parties have also failed the people.

Ultimately, Malaysia’s elected representatives in Parliament collectively failed the people – they let a terribly tainted Prime Minister continue in office. Now all that is left is for the people to pressure the representatives to do their job and if they do not, kick them out unceremoniously when the time comes.  That will teach them to do the right thing the next time around.

1MDB–Malaysia’s Financial Genius at work


July 10, 2016

Damning Summary on 1MDB’s PetroSaudi Ventures by Auditor-General–Malaysia’s Financial Genius at Work

by Sarawak Report

The Auditor General(A-G)’s report into 1MDB is written in professional and dispassionate language.  However, no one could fail to miss the stark criticism and disapproval contained within those paragraphs of factual analysis.

Preceding over 330 pages of tight scrutiny of the evidence made available to him (which he points out was not nearly as much as he would have wished or expected) the A-G provides the usual ‘Executive Summary’ for such reports, focusing on the key information and points to be made.

From this Executive Summary we today translate his analysis of the fate of the original US$1.83 billion investment into the PetroSaudi Joint Venture and the next follow up investment into the 1MDB subsidiary SRC International, using money primarily borrowed from the public pension fund KWAP.

His task was made considerably more difficult he says, owing to the fact that 1MDB failed to provide much of the normal documentation an auditor would expect to perform their task:

“JAN [Auditor’s Department] faced limitations while performing this audit in view of the fact that some original or important documents were either submitted late or were not provided by 1MDB for the purpose of verifying transactions or as evidence for the audit.….

The limitations resulted in a significant impact on the audit process in terms of verification of the actual financial position, operations and related transactions. Among important documents that were not submitted were the 1MDB Group’s Management Account for the year ending March 31, 2015 and bank statements from foreign lenders. [The audit team] was unable to access computers, notebooks and servers at 1MDB in order retrieve data and information for cross reference and analysis…”

Executive Summary

The A-G sets off by laying out his task, required both by the Cabinet and the Public Accounts Committee, to examine the performance of 1MDB. He notes the company was originally set up as a sovereign wealth fund, based on Terengganu’s oil reserves, but that the management under CEO Shahrol Halmi fell out with the shareholders in the Terengganu state government almost immediately, because Halmi went ahead with issuing a RM5 billion Islamic Medium Term loan (ITMN) through AmBank, without gaining the appropriate consent of Terengganu.

On July 31, therefore, the fund was re-launched as 1MDB entirely under the purview of the Ministry of Finance.  The A-G notes [2.1.3.] that the Sultan and MB of Terangganu had complained of “malpractice” and “non-compliance” and had accused AmBank of “unauthorised issuance” of the bonds during its dispute with Halmi.

The A-G also informs [2.1.4.] that the bond appeared to have been raised from its anonymous lenders at a very punishing rate – those lenders only paid RM87.92 for every RM100 in nominal value “to ensure the issuance of the IMTN was fully subscribed”, he said.

He adds that “the coupon rate is 5.75% per annum with effective rate of returns to be 6.68% annually”.  To raise this RM5 billion will cost a total of RM11,90 billion to pay back at these punishing rates the Auditor has noted:<

The IMTN issued in 2009 will mature in 2039 with coupon payments amounting to RM287.50 million per annum. 1MDB Group’s commitment for the IMTN from November 2015 until 2039 amounts to RM11.90 billion – RM5 billion principle and RM6.90 billion in interest.[6.6 – Executive Summary]

These expensive terms for the loan are known to have been a source of controversy at the time and 1MDB has throughout its existence followed a pattern of such apparently unnecessarily expensive borrowing, which has added considerably to its financial problems and has never been properly explained by the Finance Minister.

PetroSaudi Venture

After outlining such an unpromising start Auditor General, Ambrin Buang, proceeds to outline the first venture in 1MDB’s stated “goal of pioneering investment opportunities abroad”, which was the joint venture with PetroSaudi, signed September 28 2009.

The Auditor continues with a withering dismissal of the “valuation” of the company provided by a pal of PetroSaudi Director Patrick Mahony, namely the CitiGroup Executive Ed Morse, who was paid US$100,000 for a few hours work:

“The assets valuation report prepared by Edward L Morse was presented on Sept 29, 2009, which is the same date that he was confirmed in his appointment to perform the job by the 1MDB CEO, and the report was received one day after the JV was signed…. The valuation was conducted on assets owned by PetroSaudi International Ltd although the JV agreement clearly states that the company which owned all rights and interests on the agreed assets for the JV project was PetroSaudi International Cayman.” [2.2.2.]

Wow! They valued the wrong company – how come? The A-G goes straight on to complain that this agreement “includes clauses that insufficiently provide for the interest of the company [1MDB]”.  Among these disadvantageous provisions he names the US$700 million “loan”, which was tagged onto the subsidiary that PetroSaudi injected into the joint venture just a couple of days before the deal was signed, on the understanding that the joint venture would then pay it back!

“The payment of USD700 million to the other company was performed without the approval of the 1MDB Board of Directors” confirms the AG [2.2.3.]

Murabahah Notes

Just six months after all this song and dance the whole investment arrangement was altered, writes the A-G (you can visualise his eyebrows raising). 1MDB jacked in the whole investment in return for US1.2 billion worth of “notes”, guaranteed by PetroSaudi itself.  This was followed by further ‘Murababaha’ (Islam-friendly) borrowing of US$500 million and then US$330 million – a total of US$1.83 billion [2.2.4.].

This arrangement lasted barely two years the A-G continues, before 1MDB altered its investment again. This time it converted its borrowing back into shares directly in PetroSaudi, buying a 49% stake in its subsidiary PetroSaudi Oil Services Ltd (PSOSL):

“The swapping of Murabahah Notes for equity in PSOSL was performed without detailed study to determine (PSOSL’s) liability, ability to generate funds and its past financial performance”, notes the AG with a dry sigh [2.2.5.],

This was despite the fact that knowledge of PSOSL’s operations in Venezuelan waters was subjected to restrictions/sanctions by the US and that the company’s drilling contracts were expiring.  Naturally, the plainly unwise investment was done in advance of any kind of Board approval:

Moreover, the approval by the Board of Directors and 1MDB shareholders to swap the Murabahah Notes for equity in PSOSL was signed on June 20, 2012, but the 1MDB CEO had signed five documents regarding the deal on June 1, 2012. This shows that the 1MDB CEO took action even before seeking the board’s approval” [2.2.6.]

Ooops! change again!

It took only 45 days for 1MDB to change its mind about this investment, continues the A-G.  He details how the fund cashed out its PSOSL shares September 12, 2012 in a deal with the little known fund managers Bridge Partners.

Bridge Partners were supposed to pay a handsome price of US$2.3 billion for these shares, according to the ‘sale purchase agreement’, which was advertised by 1MDB as a successful profit on its original US$1.83 billion investment into this series of PetroSaudi related enterprises.

But in the end the expectation of much needed cash (1MDB’s other investments were causing major cash flow issues by this stage) was replaced by ‘notes’.  An “Investment Management Agreement” made on the same day with Bridge Partners allowed for its ‘payment’ to 1MDB to be converted into an investment into its own Segregated Portfolio Company (SPC) in the Cayman Islands.  This, says the AG, “was funded through promissory notes in lieu of cash”.

Given that the advertised material relating to this Cayman Island Fund warns investors that they could easily lose all of their investment, these “promissory notes” would appear to be a very poor bargain for the hard currency profit boasted of in 1MDB press releases and Ministry of Finance statements.  The AG adds with a note of utter exasperation:

“This Investment was made through Bridge Global Absolute Return Fund SPC (Bridge Global SPC), which was a month-old company, without a fund managing license and without experience in managing large sum of funds” [2.2.8.].

The words criminally irresponsible come to mind, although they would not be uttered by any auditor in such a context, and indeed the chaps in charge of the fund’s ultimate controllers Avestra, were soon facing criminal charges over the management of this fund in Australia.

Credibility Crisis

By this stage of his synopsis the A-G records that 1MDB’s own Board had concluded that they had a massive PR problem on their hands, owing to such a lamentable investment history at the fund.  The Board wanted the cash brought back to Malaysia says the A-G, but the management (as usual) refused to play ball:

“[2.2.8.] The Board of Directors on May 20, 2013 agreed that the investment be redeemed in stages in order to improve public perception on the credibility of 1MDB’s investments. The Board of Directors had issued nine instructions between May 2013 and August 2014 to the management to prepare a plan, schedule and redemption of portfolio funds from the SPC either through stages or as a whole. However, no immediate action was taken by the 1MDB management.

Eventually, on December 20, 2014, A-G (Buang) confirms the Board were told at a meeting that  USD1.392 billion had been redeemed from this Cayman SPC.  The remainder, they were informed (US$993 million) would be used to ‘terminate options with Aabar’.  But, again, says the A-G, the management did not do what they had agreed to with the money:

“In reality, all of those remaining funds from the SPC portfolio were used as collateral for Beutsche Bank for a loan amounting to USD975 million, for which an approval from the Board of Directors was not obtained. Apart from this, the USD1.392 billion which had been transferred to the account of Brazen Sky Ltd was forwarded to 1MDB Global Investment Limited (1MDB GIL). This act contravened the instructions of the Board of Directors who demanded that the SPC portfolio funds be brought back to Malaysia.” [2.2.9]

It really is as breath-taking stuff as you are likely to read from a crusty A-G’s Report into a government owned company.  Najib for one had plainly expected a bland whitewash, along the lines of 1MDB’s own purchased audits.

As we all know by now, the A-G has also pointed out in related papers that no proof was ever produced by the rogue management of the company that any hard cash in reality ever returned from the Caymans. There were simply no bank accounts or documents produced by 1MDB to substantiate its various claims. To the contrary, it is already known that most of the money (US$1.03 billion) “invested” in PetroSaudi disappeared on Day 1 into Jho Low’s outfit, Good Star Limited. and a further US$260 million went into the buy out of UBG, so how could US$2.3 billion have been realised.  And don’t forget the interest payments.

SRC International

The A-G had the same experience of negligent behaviour when he examined the controversial SRC International, he said, a company that was rapidly pulled out of 1MDB and place under the Ministry of Finance, away from the scope of this enquiry:

For example:

“The SRCI board approved USD45.50 million for investment in the coal industry in Mongolia without providing a feasibility study on the matter ..” [3.3]

In conclusion, writes the exasperated A-G [2.2.12] “for the period of four years since 1MDB was established…this investment instrument was changed four times.”  He sums up the present situation:

An analysis of the cash flow on the financial statements from year 2010 to 2014 have shown that 1MDB’s paid-up capital was only RM1 million. This small amount showed that the company was not (financially) stable because it required to borrow for its activities. Throughout financial year 2010 until 2014, 1MDB obtained 17 loans (not inclusive of inherited loans) at a nominal value of RM42.88 billion but received cash amounting to RM39.17 billion.However, (the company’s) activities which were funded by loans did not generate the necessary cash flow to repay the loans…

“1MDB needs to prepare large sums to fulfil its obligations – RM4.88 billion in 2016, RM14.74 in 2023 and RM5.14 billion in 2039. 1MDB also requires to have at least RM1.52 billion annually from Nov 2015 to May 2024 to repay its loans.”

In short the Auditor General’s report confirms, after a professional and objective examination, all the criticisms that have been made of 1MDB’s financial mayhem and worse.

For this outrageous situation the AG blames the management, whose controls were “less than satisfactory” and which operated “without due process”. “Several important  investment decisions involving large sums were made .. without any discussion and proper detailed valuation. Several investments were decided on short notice and were high risk.”

The decision to make it an official secret can therefore only be described as a disgraceful cover-up to protect the criminal negligence and misappropriations of the parties concerned.

See excerpts from the EXECUTIVE SUMMARY

1MDB Buck passes on to Malaysian Taxpayers


May 5, 2016

MALAYSIA: Irresponsible Prime Minister Najib Razak passes 1MDB Buck to Malaysian Taxpayers

by Dr. Mahathir Mohamad

1MDB is not a wealth fund as it is touted to be. Except for the one million Ringgit contributed by the Government, the rest of the RM 42,000,000,000 (forty-two thousand million) is borrowed money. Borrowed money cannot be regarded or classified a wealth. It is a liability which imposes on 1MDB or in case of its failure the Government to repay the interest and the principal. The sum is so huge that if the Government cannot pay them it could be bankrupted. This has happened to Greece.

The possibility of this happening imposes a heavy responsibility on the management of 1MDB and oversight by the Government. And very quickly it became clear that the executives and Board of 1MDB did not take their responsibilities seriously.

Shahrol, the CEO of 1MDB, borrowed five billion Ringgit from the banks without the knowledge and approval of the Board of Directors. The borrowings were at high interest rates. In one case Goldman Sachs was paid a 10% commission for raising a loan with a 5.9% interest. This means that 1MDB gets only 90% of the loan but has to pay interest on 100%. It is the same with the principal.

The Former CEO of 1MDB– The Probable Scapegoat

The money was apparently used to buy power plants at well over the market price. The licences for some of the plants were due to expire. If the purchases were delayed until the expiration of the licences the prices would be for less than market price. But the management seemed not to care about getting the best prices. As a result when the plants were sold to the Chinese, 1MDB suffered a loss of more than one billion Ringgit. This is the 1MDB style of doing business.

There are two other cases where the CEO Shahrol had acted without the approval of the Directors of 1MDB. He entered into a joint venture (JV) with Petro Saudi before a proper and intensive due diligence was carried out. Then he invested USD 1 billion in the JV also without approval of the Board.

The investment was so big that it demands for thorough and extensive due diligence before it could request for approval by the Board of Directors. The CEO really has no authority to invest such a huge amount. But this was what he did.

It is unthinkable that on three occasions the CEO, Shahrol, would act without following the rules of the company. In the memorandum of the company Section 117 states that all the affairs of the company must be approved by the Advisor of 1MDB, i.e. by Dato’ Seri Najib, the Prime Minister and Minister of Finance.

While Shahrol may be brave enough to act without the Board’s approval, it is unthinkable that he would act without Najib’s approval. The responsibility for the three actions by Shahrol must have been made after, or on the instruction of Najib, the company’s Advisor. If not he would have been scolded and probably sacked by Najib.

Then 1MDB was unable to pay interest of two billion Ringgit on the loans. It had to borrow in order to pay. The borrowings have thus increased to RM 50 billion due probably to subsequent borrowings. This increase in the amount of borrowings is recorded in the PAC report.

Then it was reported that Najib had 681 million USD, equal to 2.6 billion Malaysian Ringgit in his personal and secret account in Ambank. No Prime Minister of Malaysia should have so much money in his own account. He should reject any such gift. If it is not a crime, it is morally wrong.

At first Dato’ Seri Najib denied the truth of the report. He said he could not be so stupid as to put the money in his account. His stooges all echoed his words.Then he admitted that he did have the 2.6 billion Ringgit in his account but it was a gift. Then he explained that it was a donation from an Arab for his actions against I.S. and his interest in Islam.Then the Arab became a prince and subsequently the late King of Saudi Arabia. What is next, only God knows.

None of his explanation can be believed. No one would give this huge amount to anyone even if he had done something for Islam or for any other cause. The belief is that the money came from 1MDB, the only source of such sums accessible to Najib. He denies, of course, but he has no documentary evidence to prove the money is not from 1MDB.

Then IPIC which was appointed as guarantor for the loans for 1MDB made a statement to the authorities in London that a sum of 1.7 billion USD which was due to it had not been paid by 1MDB. It therefore refused to pay the USD50 million interests due on the loan taken by 1MDB.

The Penang Born Crook Extraordinaire

1MDB said it had paid the money to a subsidiary of IPIC named Aabar PJS Ltd (British Virgin Islands)..IPIC says that Aabar PJS(BVI) is not an IPIC company although it has a company by almost the same name i.e. Aabar PJS Ltd. This company had received no payment from 1MDB. IPIC implied that the company the 1MDB paid to was a false company.

Attorney for the Southern District of New York, who is investigating 1MDB money laundering activities

There was a suggestion of fraud and Arul the CEO of 1MDB admitted that it may have paid to the wrong company. But 1MDB insist that IPIC should pay the USD50 million interests as it was the guarantor of the loan. 1MDB would not pay.

A guarantor could be obliged to pay if 1MDB was really incapable of paying. But a guarantor is not obliged to pay simply because 1MDB refused to pay. Besides IPIC as guarantor had not been paid the USD1.7 billion which was due.

As both 1MDB and IPIC would not pay the interest on the loans, there would be a default. This will cross default other loans taken by 1MDB. Since 1MDB is a fully-owned Government company the defaults will affect the Government’s credit-worthiness. The Government may not be able to borrow any more in the market.

The Government will have financial deficits which may lead to bankruptcy if the loans are not serviced and the principal paid.In the meantime the 2.6 billion Ringgit in Najib’s account were said to be moved into Singapore banks. Singapore was said to have frozen accounts of several people pending investigations for money laundering. Though no mention was made that the frozen accounts belong to Najib, as a financial center Singapore cannot be seen to cover up an obvious case of money laundering.

Bank Negara had made a report to the Attorney General presumably on Najib’s money in Ambank. But the Attorney-General (AG). dismissed the report, claiming that there was no wrongdoing by the Prime Minister. Similarly the report by MACC was also dismissed by the AG. The contents of those reports were made official secrets to prevent public scrutiny. But the OSA is not meant to cover up possible crimes.

RM42 Billion is no Peanuts