Emails Blow Malaysia’s 1MDB Fund Wide Open

By admin-s On Mar 2, 2015

(Asia Sentinel) – Whether the fund earned money or not, the extent to which a private citizen and friend of the Prime Minister used 1MDB’s influence and apparently in his own business deals is highly irregular.

In December of last year, the controversial investment fund 1Malaysia Development Bhd abruptly called in all of its computers, employee laptops and servers and wiped them clean of all emails.
(Read: Controversial Malaysian Investment Fund’s Computer Records Wiped Off)

It was too late. The reason has come embarrassingly clear with a report by Clare Rewcastle Brown, the indefatigable blogger who edits The Sarawak Report. Rewcastle Brown had already obtained thousands of emails and documents before the shutdown, detailing that transactions by the fund were actually run by Taek Jho Low, a close friend of the family of Prime Minister Najib Tun Razak. There were times when the CEO of 1MDB, Shahrol Halmi, and his Malaysian colleagues had no idea what was going on.

Jho Low has repeatedly told the media that he has had nothing to do with 1MDB’s investment activities, and that he has received no money or benefits. But the emails allegedly show that he orchestrated a 2009 joint venture between 1MDB, as the fund is known, and a fledgling oil exploration firm called PetroSaudi International, which was little more than a shell.

Although money provided by 1MDB was putatively going into oil exploration, Sarawak Report’s emails indicate that Jho Low siphoned off US$700 million and channeled the money to a firm he owned called Good Star Ltd. The emails and other documents show that money was then used to purchase UBG bank in Sarawak, owned by the former Chief Minister, Abdul Taib Mahmud, “at a very advantageous price for the chief minister and his family, who had been failing to get a deal on the open market.”

1MDB has denied any money has been lost and in fact on Feb. 21 it claimed that the PetroSaudi JV had turned a profit of US$488 million. 1MDB president Arul Kanda Kandasamy said on 1MDB’s website that that the money it had invested in the venture had been converted into Murabaha notes, an Islamic financing structure.

That assertion remains to be proven. But whether the fund earned money or not, the extent to which a private citizen and friend of the Prime Minister used 1MDB’s influence and apparently in his own business deals is highly irregular.

PetroSaudi, for instance, agreed to act as a “front” for Jho Low on such deals, according to the documents, and it was a subsidiary of PetroSaudi International registered in the Seychelles, which bought UBG, using money siphoned from 1MDB.

The extent to which Jho Low was using 1MD for his own purposes may go beyond just the PetroSaudi deal. Documents on file in London indicate that the young tycoon attempted to use Malaysia’s sovereign credit via 1MDB in his vain attempt to buy three exclusive London hotels including Claridge’s. Lawyers in Los Angeles have charged that money to fund the film The Wolf of Wall Street also may have been guaranteed by 1MDB. That deal was ultimately settled out of court and the lawyers refuse comment.