Sarawak Report awaits 1MDB Arul Kanda’s suit for libel over our allegedly ‘unsubstantiated’ reports.
In his latest press release
he claims that our PetroSaudi evidence is ‘unfounded’ and ‘possibly
doctored’, while admitting that our copies of 1MDB Board minutes were
accurate.
Forced to admit to the 1MDB minutes, but still claiming our PetroSaudi documents are ‘unfounded’ and possibly doctored?!
If
any of the documents which we have produced about the joint venture
deal between 1MDB and PetroSaudi are “possibly doctored” as he ventures
to suggest, it would, of course, be the easiest thing in the world for
Mr Kanda to produce the evidence from his own records and explain the
truth to a UK court.
Likewise,
if our allegations were “unfounded”, why has the only remaining
institution in Malaysia that retains a shred of credibility in the eyes
of the world, Bank Negara Malaysia, backed our findings down to the very
last dollar?
We
have detailed how US$1 billion + US$500 million + US$330 million (=
US$1.83 billion) were channelled from 1MDB into a fraudulent deal with
PetroSaudi, where most of the money was diverted into the Zurich account
of the company Good Star Limited belonging to its official ‘Advisor’
Jho Low.
See
for the first time the document (which Mr Kanda is welcome to dispute)
that proves the official nature of Jho Low’s role at the Terengganu/1MDB Development Fund, which he has so emphatically denied for so long:
The
Terengganu Investment Authority changed its name to 1MDB half way
through the Petro-Saudi deal on September 18th 2009, which Jho Low
managed from beginning to end, despite his repeated claims that he had
nothing to do with 1MDB after May 2009.
PetroSaudi’s lawyer from White & Case noted the date in an email (which Mr Kanda is welcome to dispute)
Last
week, of course, Bank Negara confirmed our findings on the purloined
US$1.83 billion by demanding this exact sum of money back and baldly
stating that it had recommended criminal proceedings against 1MDB for allowing the PetroSaudi scam to proceed:
“The Bank concluded that permissions required under the ECA [Exchange Control Act] for 1MDB’s investments abroad were obtained based on inaccurate or without complete disclosure of material information relevant to the Bank’s assessment of 1MDB’s applications.
Therefore, the Bank has revoked three permissions granted to 1MDB under the ECA for investments abroad totalling USD1.83 billion and also issued a direction under the Financial Services Act 2013 to 1MDB to repatriate the amount of USD1.83 billion to Malaysia and submit a plan to the Bank for this purpose”.[Bank Negara Statement]
Despite
this plain speaking by Bank Negara, Arul Kanda still attempts to say
that our allegations are “unfounded” and that our evidence is “possibly
doctored” — whilst not suing us.
He
also refers to one our several cross-referenced sources as a “convicted
criminal”, whilst conveniently neglecting to mention that this Swiss
national, Xavier Justo, was a former senior director of 1MDB’s own joint
venture partner PetroSaudi and that he was convicted (in Thailand) for
attempting to blackmail his fellow PetroSaudi directors, using evidence
about their role in the 1MDB billion dollar scam.
Mr
Arul Kanda is welcome to sue Sarawak Report on the basis that Justo was
convicted of blackmail using a trove of fictitious evidence that just
happens to tie up with a mass of other proven information from numerous
other sources.
Meanwhile,
we are are happy to concur with the opposition MP Tony Pua that Kanda,
through his string of conflicting statements and changing stories, has
proved himself to be a serial, if highly unconvincing, liar.
How 1MDB Cheated Bank Negara
Through
PetroSaudi’s own emails Sarawak Report has obtained the Letter of
Permission from Bank Negara to 1MDB’s initial request to export a
billion dollars into the alleged joint venture in September 2009.
PetroSaudi,
1MDB and Bank Negara are welcome to contest the authenticity of this
and other documents, which we are now releasing.
Meanwhile,
we suggest that this letter shows exactly why the bank is now saying
that it was seriously and deliberately mislead by 1MDB and why it is
demanding the money back and wants to issue criminal proceedings.
The letter was originally written in Malay, then PetroSaudi received a certified English translation.
If
our reproduction here has been “tampered” or “doctored” in any way,
then of course anyone from the Bank Negara, 1MDB or PetroSaudi itself
will be very well-placed to sue Sarawak Report for misrepresentation and
publish the correct version in the meantime:
[For the full Malay and English versions of the BNM letter see the base of this story].
This
letter of authorisation, which was sent by the Director of the Foreign
Exchange Administration Department to 1MDB’s then Executive Director, Mr
Tang Keng Chee, grants permission for the payment of the initial US$1
billion on the basis that amongst other provisions:
“PetroJV will utilize the equity funds totaling USD 2.5 billion from its shareholders to fund the investment in the energy, agriculture, real estate and tourism sectors in Malaysia and overseas;
The said funds in the sum of USD 2.5 billion will be placed in PetroJV’s account with Banca della Svizzera Italiana SA, Geneva pending investments in future projects;
In
other words, the letter makes plain that BMN was of the clear
understanding that 1MDB was providing 40% of a cash injection into a
joint fund, which would be combined with a US$1.5 billion cash investment by PetroSaudi, designed to fund a variety of projects, including investments in Malaysia.
That understanding reflected 1MDB’s own press releases of the time (since noticeably removed from its site):
As
is now known, PetroSaudi in the event contributed no cash to the deal
and the majority of the billion dollars injected by 1MDB was not paid
into the joint venture account, but into Jho Low’s own company Good
Star’s account at RBS Coutts in Zurich. Bank Negara Malaysia was
therefore misled, just like the public.
Investigation
documents produced by Bank Negara (below) show that repeated later
queries about how the money was being invested were ignored and put off
by 1MDB, which instead went on to borrow a further US$500 million and
US$330 million on similar false pretences, which likewise disappeared
mainly into Jho Low’s account at Good Star.
Bank
Negara’s investigation shows when it tried to follow up on the payments
they were given the brush-off by 1MDB or faced extraordinary delays and
partial responses.
It
is plainly for this reason that BMN wants all the 1MDB PetroSaudi money
returned and has requested for criminal proceedings to be opened. The
previous Attorney General Gani Patail had started drawing up charge
sheets for prosecutions related to 1MDB.
However, as Malaysia knows, Najib responded with an executive coup — he replaced the Head of Special Branch,
who then sent a team of officers to apprehend Gani Patail as he arrived
at his office on Monday 27th July. Patail was informed that he was to
retire immediately on ‘health grounds’ without entering his office to
collect his things.
It
is unconstitutional for the Prime Minister to fire an Attorney General
and it is unconstitutional for him to personally hand-pick a successor.
However,
this is exactly what Najib has done and new his hand-picked AG, Apandi
Ali, is now refusing to act upon Bank Negara’s recommendation to
prosecute 1MDB.
So,
when Arul Kanda continues to issue sanctimonious press releases saying
all is well with 1MDB and that Sarawak Report is ‘doctoring’ documents.
Is he relying on the facts or just the strong arm tactics of his boss?
Fraudulent valuation of PetroSaudi
A
key element of the criminal case against 1MDB is the astonishing and
wilfully negligent failure of the board and directors of this public
company to obtain an independent valuation of its proposed joint venture
partner PetroSaudi, introduced by the PM’s appointed ‘advisor’ Jho Low.
Instead
of placing cash as advertised to BNM and the public into the so-called
joint venture, it emerged during the course of the two week lightening
negotiation period that PetroSaudi was merely injecting ‘assets’ in the
form of a subsidiary company (PetroSaudi International (Cayman) that
allegedly owned valuable oil concessions in Turkemenistan.
However,
PetroSaudi did not own the Turkmenistan oil field, it belonged to a
Canadian company called Buried Hill instead. Furthermore, the concession
was valueless to the extent that it is located in a disputed region of
the Caspian Sea, making it currently impossible to legalise the
ownership.
That
didn’t stop PetroSaudi claiming the ownership and issuing a fictitious
$700 million ‘shareholder loan’ as part of the supposed asset transfer
to the joint venture company, which two days later it would demand back
in hard cash!
To
supposedly cover its obligations during the checking period on the deal
(conducted at lightening speed) the 1MDB Board, directed by Shahrol
Halmi, agreed to accept a valuation of this PetroSaudi International
(Cayman) subsidiary from an American banker, who was recommended by none
other than PetroSaudi Director Patrick Mahony himself, a banker called
Ed Morse.
Morse
was a prominent former politician and is currently Commodities Head of
Citigroup, but in 2009 he was out of work, having lost his job with
Lehman Brothers. He was also a close contact of Patrick Mahony and Tarek
Obaid and the men were in regular touch before and after the 1MDB deal.
It
was Mahony who hired Morse to value PetroSaudi International
(Cayman) — he then passed it on to Shahrol Halmi as if it were an
independent valuation!
The
fact that this was only a window dressing exercise to please the
auditors is further made clear by the fact that the Malaysian end of
this dodgy deal only received Ed Morse’s document the day AFTER the deal
had already been signed on 29th September 2009.
Further correspondence shows that Morse derived all of his information for his “independent report” from a document sent to him by Mahony himself just before he wrote it up.
He admits as much in his own report:
“The analyses, opinions and conclusions presented in this report are based on our best economic judgments on the data that were made available to us by the managements of PetroSaudi International Limited and 1MDB PetroSaudi Limited” [Ed Morse report]
If
Morse had checked out any of the data provided by PetroSaudi, he would
have realised that they did not own the Turkmenistan oil field and that
an Argentine concession was mainly funded with borrowed funds. Instead
he summarised after the event:
Morse
was offered US$50,000 for this re-jigged version of PetroSaudi’s own
figures, which was in the event bumped up to double by Patrick Mahony,
presumably as a thanks for getting such a massive evaluation job done in
just two days!
Laughably,
the 1MDB Board and management accepted this so-called ‘injection of
assets’ purely in the form of the transfer of PetroSaudi’s subsidiary
company in the Caymans. There was no legal transfer of any genuine
ownership of that company’s supposed assets, for example the alleged
Turkmenistan oil concession.
Fraudulent transfer
As
if such blatant and wilful negligence by the Board and management of a
public company were not enough to prompt Bank Negara’s criminal case
against 1MDB, the matter of course gets worse.
Bank
Negara was specifically informed that all the US$1 billion being paid
into the PetroSaudi venture was going to the joint venture company
itself. Instead, the conspirators behind the deal injected a fictitious
US$700 million ‘shareholder’ paper ‘loan’ into the equation on the 25th
of September, just 3 days before the signing of the deal.
They
then requested the money be paid directly back to PetroSaudi by 1MDB in
cold hard cash on the day of the loan. This ‘repayment’ was dressed up
as a consideration for the huge extra value of the supposed assets of
the injected Cayman subsidiary, which Morse had put at US$3 billion, but
were actually fictitious, unchecked and legally unsecured.
It
gets worse, because of course as we all know the US$700 million did not
even get paid to PetroSauidi, it got paid directly to a company owned
by Jho Low called Good Star Limited, incorporated in the Seychelles.
There
is a mound of evidence to show that PetroSaudi, in particular Patrick
Mahony, deliberately lied to 1MDB on this point, claiming that Good Star
was a PetroSaudi subsidiary.
The
company has continued to make this claim and lie in recent weeks in
various statements seeking to imply that the money went to PetroSaudi
instead of Jho Low:
“In a statement to The New York Times this week, 1MDB said that Good Star was owned by PetroSaudi and noted that PetroSaudi had confirmed that 1MDB said it had provided information about these transactions to the Malaysian authorities that are investigating the sovereign fund.”[NYT 18/6/15]
Shahrol
Halmi also knew full well that the money was being ‘paid back’ not to
PetroSaudi but to Good Star, as his emails make plain. If he had checked
the beneficial ownership of Good Star he would have realised it
belonged to Jho Low and that the company was not part of the ownership
structure of PetroSaudi.
Mr
Arul Kanda is of course welcome to say that these documents, which are
also in the hands of international regulators and other news
organisations have been ‘doctored’ and ‘tampered’ by Sarawak Report.
He
should take us to court and compare his copies with ours and explain
why it is that all the surrounding evidence about the 1MDB PetroSaudi
affair ties in nicely with our allegations, while for his part he cannot
stick to the same answer two days running.
Malay Version of the Bank Negara Letter of Permission:
Page 2
English translation:
Confidential
BANK NEGARA MALAYSIA CENTRAL BANK OF MALAYSIA
29 September 2009
Mr
Tang Keng Chee
Executive Director
1Malaysia Development Berhad
(848230V)
Level 8, Menara IMC,
No.8, Jalan Sultan Ismail,
50250 Kuala
Lumpur.
Sir,
OFF-SHORE INVESTMENT
We refer to the 1Malaysia Development Berhad application (1MDB).
2. Permission
is given to 1MDB to remit funds in the sum of USD1 billion for the
purpose of obtaining 40% shareholding in 1MDB Petrosaudi Limited,
British Virgin Islands (PetroJV). The reference number of the said
investment is IO95174.
3. For the purpose of simplifying the statistical compilation of the balance payments by the Central Bank of Malaysia-
(a)
1MDB has to disclose the information required by the local licensed
bank (commercial bank, Islamic bank or local investment bank) for
convenience in remitting the investment funds which is in excess of RM
200, 000 on behalf of 1MDB; and
(b)
The Malaysian Central Bank’s Department of Statistics will contact 1MDB
with regard to a quarterly report in respect of 1MDB’s assets and
liabilities to be submitted to the Central Bank of Malaysia.
4. We take note that:
(a)
PetroJV is a joint venture company held 40:60 by 1MDB and its joint
venture partner, Petrosaudi Holdings (Cayman) Ltd, Cayman Islands;
(b)
PetroJV will utilize the equity funds totaling USD 2.5 billion from its
shareholders to fund the investment in the energy, agriculture, real
estate and tourism sectors in Malaysia and overseas;
(c)
The said funds in the sum of USD 2.5 billion will be placed in
PetroJV’s account with Banca della Svizzera Italiana SA, Geneva pending
investments in future projects;
(d)
1MDB will fund the investment in the sum of USD 1 billion with the
acquisition of “Islamic Medium Term Notes” which were issued in May
2009; and
(e)
The remittance of such funds for the said investment will be done via a
foreign exchange of the funds in Ringgit to the relevant foreign
currency with a local licensed bank. In this connection, 1MDB will make
the exchanges in stages to ensure order and smoothness in the local
foreign currency market.
5. In
the event that 1MDB does not make any remittance of funds for its
investment in the period of 12 months from the date of this letter, this
approval will be rendered cancelled and 1MDB would be required to obtain permission from us prior to the remittance of such funds.
6. In
the event that 1MDB is bound by any value protection contract to manage
currency exposure risks for its investments, the contract has to be:-
(a) executed with a local licensed bank; and
(b) terminated by 1MDB when the said investment is sold or has come to
an end.
Yours faithfully,
On behalf of Foreign Exchange Officer
(Wan Hanisah Wan Ibrahim)
Director Foreign Exchange Administration
Originally published at www.sarawakreport.org.
Sarawak Report
The official home of Sarawak Report on Medium
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Grateful ffor sharing this
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