March 9, 2015
COMMENT: The 1MDB plot thickens and the Malaysian public is being given both fact and fiction. I am for one confused. At the end of the day, as it has been in the past, we are exhausted and become frustrated with promises from the Prime Minister that he would leave no stones unturned. He has since ordered the Auditor-General to take action.
It may be recalled that the Auditor-General, who claims the late Tan Sri Ahmad Nordin as his role model, had has previously said that there was no need for his department to audit 1MDB since the financial statements and activities have been audited by an international firm of accountants.
Read this by AH Manaf:
With this frame of mind, will the Auditor-General be able to do so without political interference?
I would like to quote here what Frankly Speaking in Edge Malaysia wrote in the March 9–March 15 issue:
Last week, Prime Minister Datuk Seri Najib Razak issues at a statement saying has instructed the Auditor-General (AG) to “independently verify (1Malaysia Development Berhad (1MDB)’s accounts.” When completed, the AG’s report will be passed to the Public Accounts Committee for transparent inspection…
To do this once and for all, the AG should conduct a forensic audit on 1MDB accounts. Also, the outcome of the audit should be released for public viewing.
The forensic audit should go back to 1MDB’s first business venture in 2009- a joint venture (JV) with PetroSaudi Holdings (Cayman) Ltd. 1MDB pumped US1 billion into the JV, of which US700 million was immediately used to settle a debt owed by the newly formed JV.
…The forensic audit must address the following: What happened to the JV with PetroSaudi? Why couldn’t 1MDB repay the RM2 billion loan on time? Has it overpaid for its power assets? How else to explain the mismatch between its cash flow and debts?. Is 1MDB fit to remain fit to remain an ongoing entity?
I endorse the views expressed above. 1MDB has become a national problem and requires urgent action. All available financial expertise should be utilized to get to the bottom of it. More importantly, we should learn from 1MDB about how not to do business and ensure that investment and financing decisions are made with due diligence.
Money invested must produce returns with commensurate risk. It must be clear to all managers that they cannot mix politics with business and must always protect direct and indirect stakeholders in their dealings. There is a message to bankers too. They should know that they are lending depositors’ money, not their own. It is, therefore, important that they exercise prudence and be guided by established guidelines from Bank Negara when they on lend the money to finance “development”.
As the Prime Minister has eloquently said with regard to 1MDB audit, “if any wrongdoing is proved, the law will be enforced without exception”. So can we expect some heads will roll on grounds of accountability? – Din Merican
Jho Low Claimed The “PM/ FM” Gave Approval To Keep Bank Negara In The Dark On 1MDB Loan
The lawyers for Jho Low, the London firm Schillings have now finally issued a statement on behalf of the tycoon, in response to questions from the news agency AFP.
The widely reported response acknowledges that Low was “consulted” on the PetroSaudi joint venture deal with Malaysia’s 1MDB development fund, “but has never been involved in criminal acts with respect to this transaction”.
This latest statement contrasts with earlier claims by Jho Low’s spokespeople Edlemen in New York, who announced last year on his behalf:
“Mr. Low has never held any position in 1MDB or in the Malaysian government. Mr. Low was appointed as one of the many advisors invited by the stakeholders of Terengganu Investment Authority (TIA) to provide advice from Jan 2009 to mid-May 2009 given his market-based knowledge. Mr. Low has not been involved in TIA since mid-May 2009.“[Statement by Low’s PR company Edleman in May]
The PetroSaudi joint venture deal took place between September 8th and September 29th of 2009.
Crucially, Low repeatedly informed PetroSaudi Director Patrick Mahony, who was anxious for confirmation that the Central Bank had indeed authorised the loan, that this was not needed because only:
” Mof approval is required for the loan which we have signed by pm who is also FM”
It also appears to confirm that Jho Low was acting as the interface between the Prime Minister/ Finance Minister on such matters with PetroSaudi.
Of even more concern is an apparent decision by Jho Low together with the “FM who is also PM” to leave the Bank Negara in the dark about the loan. This was despite the anxious and repeated requests by PetroSaudi’s own lawyers for a “letter of comfort” to confirm that the bank had given its approval, which they insisted was legally required.
As PetroSaudi boss Patrick Mahony put it to Low in the course of the correspondence:
“I know you know my guys are freaking out”
Yet, Low continued to insist that because the loan was “off-shore to off-shore” there was no need to declare the transaction to the bank and the legal advisors could be ignored. As he put it “Bank Negara consent not required”:
JL: Bank Negara consent not required.
JL: As its foreign borrowings.
JL: So we arw sending offshore to offshore.
JL: Or else we’ll have unnecessary delays.
Patrick: According to your lawyers it is.
JL: Take it out pls.
Patrick: We had it last time.
Patrick: We need comfort we are getting this money in an approved manner.
JL: Last time local borrowings.
JL: This is foreign.
JL: Just don’t want bnm [Bank Negara Malaysia] to delay it.
Experts linked to Bank Negara have confirmed to Sarawak Report that this is not the case and that because a loan was involved, which 1MDB a public body was ultimately responsible for, the bank should have been informed.
Jho Low was wrong.
How half a billion dollar loan was fixed via BBM
These revealing exchanges between Mahony and Jho Low took place through Blackberry messenger between Wednesday 21st July and Tuesday 27th July 2010, according to Mahony.
He then sent the entire transcript by email to his fellow Director Tarek Obaid to put him in the picture about the situation.It places the conversations in the days running up to a planned loan deal to PetroSaudi of USD$500 million dated 26th July 2010.
Mahony refers to “Monday” as the date decided, which was indeed the 26th and corresponds to papers acquired by Sarawak Report, which relate to a USD$500 million Murabaha loan agreement between 1MDB and PetroSaudi, dated on that day.
From: Patrick Mahony
To: Tarek Obaid
Date: Tue, 27 Jul 2010 14:11:33 +0200
Subject: Bbm transcript
This is my conversation with jho – it is between last wednesday and today…
Another key aspect of this significant exchange is the casual acknowledgement by Jho Low that responsibility and liability for the loan would lie with 1MDB:
JL: Just insert “any required regulatory approvals” so its
mdb’s [1MDB’s] liability n responsibility
JL: That covers all rather than specific bnm [Bank Negara Malaysia]
But, yet again 1MDB appears barely to be engaged in this negotiation.
As with the previous joint venture loan agreement the preceding year, the executives of 1MDB seem to be virtual by-standers in the affair, with the UBG bank place-man, Nik Faisal receiving documents from PetroSaudi as agreed with Jho Low.
In the event, it appears that because of Mahony’s protests the original loan plan may have indeed eventually have been reported to the Bank Negara, an outcome which was described by Jho Low as “worst case”.
Low confirms that he had already got Ministry of Finance and 1MDB Board approval for the loan, but because Mahony had flagged up the issue over getting Bank Negara approval as well he might have to fly to KL to sit down with the lawyers and work things out, a worst case scenario.
It begs the question as to why the Minister of Finance and Board had signed without checking the matter with the Central Bank, since this was required?
The entire exchange once again destroys any suggestions that Jho Low was merely engaged in a distant consultative role when it came to the negotiations between PetroSaudi and 1MDB.
USD$160 million went to Jho Low’s company
Jho Low’s interest in the loan deal was plain to see from the documents that eventually covered the distribution of the money.
As Sarawak Report has previously demonstrated $160 million out of the $500 million loan was sent to the RBS Coutts Zurich account of the company Good Star, which was controlled by the tycoon.
The remaining $340 million went to the PetroSaudi operating account held by JP Morgan in Geneva.
Whether there were two identical loans that went through on July 23rd and then September 8th, or whether the Central Bank was indeed informed, resulting in the “worst case scenario” envisaged by Low – a delay till September – is something that merits further research by the official Audit Office investigators, who are now being tasked with examining what happened at 1MDB.
Given the close links to the UBG bank buy out by many of the players in these 1MDB loan negotiations, it is worth noting that PetroSaudi’s offer for UBG was announced in January 2010, but that the buy out was not completed until September 29th.
Meanwhile, a USD$500 million transfer was made to PetroSaudi from 1MDB on September 8th. Then, on September 16th, Tarek Obaid, as Director of PetroSaudi International (Seychelles), paid USD$260 million into its subsidiary Jarvace Sdn Bhd, which bought UBG.
Yachts in the South of France
The revelations about Jho Low’s role in these dealings, while actively a Director on the UBG board, throws inevitable scrutiny onto his personal relationship with the Prime Minister/Finance Minister/ Chairman of the Board of Advisors of 1MDB.
Jho Low, far from acting as a mere advisor, was clearly heavily involved in the deal and in directing it with the avowed support of the Malaysian Prime Minister.
His close relations with the PM and his family can not be in doubt over this entire period and this socialising also connected closely with the Taib family, the majority owners of UBG.
In the August of 2010, in the middle of these transactions, the Prime Minister and his wife were the honoured guests in Monaco of Prince Albert.Here Rosmah played sponsor to the first of a series of Islamic Fashion Shows, designed to raise money for the Prince’s Environment Foundation.
The Taibs, the Geneids, the Hii family and Rosmah and Najib joined Prince Albert’s entourage at the extravagant fashion event after having reportedly spent time on Jho Low’s hired yacht off the South of France.
Rosmah then presented a $100,000 cheque to Prince Albert’s Foundation, which Sarawak Report has already reported was in fact funded by the Sarawak timber tycoons, the Hii family, who are cronies of the one of the world’s worst destroyers of the environment, Taib Mahmud.
Low is believed to have told his guests that the yacht (which rents out at around half a million dollars a week) belonged to the owner of PetroSauid, Prince Turki bin Abdullah, the son of the King of Saudi Arabia.
Earlier, in late 2009, there had clearly been another such gathering in the South of France. According to the correspondence, Jho Low contacted the PM’s office for photographs:
From: Low Jho
To: firstname.lastname@example.org, Tarek Al-Obaid
Date: Sun, 27 Dec 2009 03:29:32 +0000
Subject: Re: Pictures from South of France (PM Najib & HRH Prince Turki)
Thanks so much Wan!
To: Tarek Al-Obaid
Subject: Re: Pictures from South of France (PM Najib & HRH Prince Turki)
Sent: Dec 26, 2009 11:25 PM
Dear Jho and Mr. Tarek Al Obeid,
It would be a pleasure to email you the photos of HRH. Unfortunately I am away with the Prime Minister at the moment whereas the photos are back in Malaysia and is not immediately accessible. I will send it through as soon as I return. Hope that’s alright.
May I take this opportunity to extend to you the season’s greetings and wish you a Happy New Year.
From: Low, Jho
Cc: Tarek Al-Obaid
Subject: Pictures from South of France (PM Najib & HRH Prince Turki)
Sent: Dec 27, 2009 9:08 AM
Dear Mr. Wan Shihab,
Would you pls kindly email the pictures you have of The Hon PM Mohd Najib Razak with HRH Prince Turki Al-Saud and Sheikh Tarek Obaid asap? They wld like it strictly for their private records. I have cced Tarek on this email so you can email him and cc me asap.
This may have been a private meeting, but it appears to have related to matters of public interest.