How The Culprits Split The Loot From 1MDB

Raking In The Profits From Malaysia!

12 Oct 2015

Reproduced with permission

Mahony flew to Thailand to stage Justo’s arrest

In May of this year an angry and desperate strategy was put into play by the conspirators who had taken billions out of Malaysia’s 1MDB development fund.

Patrick Mahony, a Director of PetroSaudi International, flew over to Bangkok to lay accusations of blackmail against a former fellow Director, Xavier Justo, who had moved to Thailand.

It was the first step in a carefully executed plan to try to seize back the initiative in response to exposures based on evidence provided by Justo, which had opened up a dangerous series of official investigations against PetroSaudi and 1MDB.

We will bring more of what Mahony then did to his former colleague below.

Meanwhile, Sarawak Report has obtained further evidence showing exactly how Mr Mahony himself had benefitted to the tune of tens of millions of dollars within days of helping his collaborator Jho Low siphon US$700 million out of 1MDB.

And we can show how three days after that he became the secret buyer of a large and expensive house in one of the swankiest parts of London.

 

27 Ladbroke Square

No 27 – bought with 1MDB development money!

According to public records, 27 Ladbroke Square in Notting Hill Gate, a five story house with a large back garden looking out over one of the capital’s most sought after private gardens, was purchased for a publicly undisclosed sum in early January 2010.

The Land Register informs us that it belongs to an anonymous company in the British Virgin Islands with a Post Box address.

In this respect it forms part of a recent and growing phenomenon.

London has started to team with anonymous foreign property concerns, as wealthy off-shore entities have started to buy up great chunks of the capital for prices that have driven ordinary British buyers out of the London market.

Malaysians may be interested to know that the biggest investors in London in the year preceding the 2013 election were in fact Malaysians themselves, followed by Singaporeans, who spent more than the British themselves on property in their own capital city.

The BVI company Mika 1 is the “owner” of 27 Ladbroke Square

However, thanks to Xavier Justo’s evidence from the PetroSaudi database, Sarawak Report is able to identify the person who had bought 27 Ladbroke Square and exactly how much it cost – a whopping £6.15 million (RM39 million).

The buyer was indeed Patrick Mahony and he had put down his offer on the super-expensive new home with the posh agent Savills exactly three days after receiving his cut from 1MDB’s US$700 million payment into Jho Low’s company Good Star Limited.

29th September 1MDB pays US$700 million into Jho Low’s Good Star account – 

23rd October Patrick is putting down on a house… what passed in between?

In a number of communications reviewed by Sarawak Report Patrick Mahony confirmed his beneficial interest in 27 Ladbroke Square, dealing with lawyers (on the subject of minimising tax on the property); estate agents (whom he needed to prove his hidden ownership to); his Swiss bankers (of course); accountants and off-shore trust advisors and a variety of designers and decorators whom he brought in to upgrade the property further once he had purchased it.

His correspondence shows that he finally acquired the property on 18th December 2009 through a complex arrangement, using a series of off-shore trusts, plainly in order to minimise his tax liabilities on the Malaysian millions he had acquired.

An off-shore company in Guernsey, named Mika 2 purchased and then sub-sold the property to a related company in BVI named Mika 1, which became the registered owner through a trust, whilst Mahony engaged with a string of lawyers and accountants to battle hated stamp duties and an income tax bill, which he feared could cost him £2.48 million.

One of these advisors warned that planned tactics to avoid disclosure to the revenue could produce a high risk of incurring discovery and severe legal penalties:

“It seems to me that this course has a high risk of challenge …. disclosure effectively would mean risking liability…. 
From my perspective,  I would be concerned that were you to do so there would be a significant risk of discovery and of greater liability on your part and of that of the trust…. I am also conscious that GT had a liability cap of £2 million… I know the Income Tax liability exceeds that as it is but further costs on enquiry would compound the issue. … the advice GT [Grant Thornton London Accountants] were providing was in relation to a SDLT [Stamp Duty Land Tax] scheme to save some £250000 whereas their actions have given rise to a potential liability of £2.5 million.” [Advice to Mahony from his Jersey accountant at Rawlinson-Hunter]

So much unwanted tax to pay for London’s prized vistas like Ladbroke Square … 

unless you can avoid it! 

This was how Mahony later explained the complicated nature of 

his ownership in a frank exchange with a third party agent,

who needed confirmation that he was indeed the owner of the property:

“the property I own on Ladbroke Square belongs to a company, which in turn belongs to a trust. I am the beneficiary of that trust but I am not the direct owner of the property for reasons I’m sure you’ll be familiar with” [Patrick Mahony]

Indeed!

So handy to distance your ownership through an off-shore trust!

So where did the money come from to fund Mahony’s sudden London property splash just days after the 1MDB PetroSaudi deal?

 

Money trail – how US$33m from 1MDB went to Patrick Mahony

Sarawak Report and Malaysia’s business paper The Edge have separately documented how on the day of the signing of the joint venture between 1MDB and PetroSaudi, the vast majority of the investment -$700 million of Malaysia’s public money – was passed into Jho Low’s company Good Star Limited’s Zurich account, under the guise of a ‘loan repayment’ to PetroSaudi’s parent company.

We have also documented how on the following day Good Star issued an US$85 million “broker fee” to the PetroSaudi Director Tarek Obaid through Obaid’s JP Morgan account in Zurich.

“Brokering services”

Ironically, the “brokering service” Tarek Obaid is alleged to have performed by Jho Low was supposedly for raising money from Saudi Arabia to invest in Malaysia.

Yet, as everyone now knows, not one ringgit was raised from Saudi Arabia for this scheme: the only money raised was from 1MDB and that had gone straight out of Malaysia with not a shred of local investment – and into the clutches of Jho Low.

The Edge Newspaper has provided a handy chart to illustrate where this money went next.

It shows that the US$85 million “broker fee” arrived in Tarek’s JP Morgan Swisse account on October 5th; then on 20th October US$33 million (RM140 million) was transferred from the same account to Tarek’s friend and collaborator at PetroSaudi, Patrick Mahony, who also had an account at the same Swiss branch of this major American bank.

 

Mahony’s share of the “broker fee” – nice 

Three days later Mahoney committed to buy the new house at 27 

Ladbroke Square – his undoubted reward for his part in the 

successful heist of Malaysia’s public money.

Follow the green line – $85 million went to Tarek then US$33 million on to Mahony

Given that JP Morgan Suisse were also handling the account for the 1MDB Joint Venture, which received US$300 million in the same week, might one have not thought eyebrows would have been raised sufficiently to provoke an investigation?

After all, more than a quarter of that amount was paid in brokerage fees to two connected individuals, using accounts in their very same bank. It is understood that Swiss and US financial regulators are indeed investigating the matter with JP Morgan as part of on-going investigations into 1MDB.

Prince Turki subsequently achieved the lucrative post of Governor of Riyadh. However, the new King side-lined him from the post the day he took over in January this year.

Meanwhile, another beneficiary of the deal was Tarek Obaid’s key partner and the actual owner of PetroSaudi, Prince Turki, who was the 7th son of the then King of Saudi Arabia.  The connection had facilitated the project to be dressed up as a state to state joint investment venture by Jho Low, which it was not.

Turki got US$10 million for lending his name to the deal in that initial October pay out, followed by later payments adding up to a total of US$67 million.

Despite the image of a rich Saudi Prince, Sarawak Report has been reliably informed that Turki, prior to this windfall, had lacked the freedom of personal wealth and was reliant on family funds.

He was therefore very pleased to have benefitted from Malaysia’s development money with so much independent spending income and we have learnt that there was much subsequent partying at Las Vegas for all the young men concerned.

Crooks line up – Tarek (2nd right), Prince Turki (2nd left) and Jho Low line up with the Minister of Finance and his family as the joint venture plan is hatched in July 2009

 

Mahony’s revenge

The complex nature of Patrick Mahony’s off-shore house purchase is meanwhile made plain through the 1MDB money trail by the transfers that floated between the various companies designed to distance Mr Mahony from the property and the tax man.

Circular ownership to dodge the tax issue!

This is how ordinary home-owners get tax clobbered, whilst those who have got rich by stealing the money of poor countries are able to lord it up in London and pretend they don’t officially own the properties they do.

Patrick Mahony is a UK citizen and yet he poses as an off-shore, non-domicile concern when it comes to declaring the house he owns.

No wonder he was fuming at Xavier Justo for spilling the beans about the PetroSaudi deal and the delicate situation regarding his fancy new house!

It is not hard to imagine how he was ready for revenge as he stormed out to Bangkok (naturally first class) to nail Justo and ‘discredit’ the evidence provided by Sarawak Report, The Edge and the Sunday Times about the crime that had benefitted him so royally.

After all, he too had been caught acting unwisely on the party circuit as he celebrated on his ill-gotten gains.

Given Jho Low a run for his money over Paris Hilton? – Mahony was reported to be shacking up with ‘Hollywood wildchild’ Lindsay Lohan by gossip columns last year

 

Criminalising Justo – PetroSaudi’s plan for getting off the hook

When Mahony got to Bangkok he reported to the police that Justo had taken company documents and demanded money in return for not publishing the contents.

He was able to provide three year old emails containing threats of exposure by Justo, who claimed he had not been paid the full severance he had been promised (by then Justo would have learnt just how much fellow directors Mahony and Tarek as well as Prince Turki had all received from Malaysia’s money).

Mahony also told police that there had been a further meeting in a Bangkok hotel last October, during which he alleged Justo had repeated blackmail threats and demands.  Sources close to Justo’s family have said these elaborations were not true, because Justo did not leave his home in Kho Samui that month.

Staged arrest as Justo is presented to UMNO’s photographers

However, Mahony was clearly bent on bringing a case and he evidently possessed unusual clout and influence in Thailand over this distant spat between foreigners regarding a foreign company.

This was, of course, thanks to the powerful and vocal support of Thailand’s bordering neighbour, the Prime Minister of Malaysia, who has also betrayed a strong desire to criminalise Justo and suppress the evidence over 1MDB.

From the moment of Justo’s arrest, therefore, the next stage in this desperate strategy immediately came into play.

Reporters and photographers from UMNO controlled New Straits Times had been flown into Bangkok to record the event and then informed the Malaysian public that because of Justo’s arrest none of the documents retrieved from PetroSaudi could be considered trustworthy.

After over three months of total silence and zero rebuttal, this move against Justo signalled the first attempt to try to deny the truth of the allegations over 1MDB.

Why Patrick Mahony had not simply immediately sued Sarawak Report and printed the genuine documents, instead of adopting this complex strategy, can perhaps be surmised.

Instead, the coordinated if belated PR plan went full steam ahead through June; first to criminalise Justo, then discredit his evidence by virtue of a controlled media within Malaysia.

In this way PetroSaudi and 1MDB plainly hoped to change the climate of local opinion and start to counter-attack politically, without the danger of bringing matters to court.

And there was a further plank to the strategy, which has involved a number of expensive western companies for hire.

PGI’s Bryan Lord – Another paid operator of Patrick Mahony’s is treated as an independent voice by 1MDB!

Mahony had brought with him to Bangkok a team of so-called ‘cyber experts’ from a UK surveillance company called PGI (Protection Group International).

These paid up British operatives were on hand to brief the UMNO newspaper journalists who had been flown over to cover the story of Justo’s arrest and they made unsubstantiated claims that there was evidence of potential ‘tampering’ by Sarawak Report of the documents.

We debunked those claims.

However the accusations were trumpeted as if they were independent analysis by Malaysian government ministers and, of course, 1MDB, whose CEO Arul Kanda was still relying on the slur last week, without providing the slightest evidence.

 

Scotland Yard Detectives!

Sarawak Report has also gained powerful evidence that the carefully coordinated and executed plan against Justo contained another extraordinary element.

People close to Justo told this blog during the very first days of the Swiss national’s detention in Bangkok that he had been visited in his prison cell by two men introduced to him as ‘Scotland Yard detectives‘.

Plain clothes UK officers allegedly visited Justo in jail!

Friends and family of Justo were told that these British ‘officials’ had offered to help him turn “Queen’s Evidence” against PetroSaudi, so long as he provided them with the all information he had and was willing to make a “small confession” about his angry emails to Patrick Mahony.

The UK team could not get him off completely, Justo’s family were told, but the confession would secure a minimal punishment, just a few days more in the jail.

It turned out to be a trap, of course.

There were no British detectives in Bangkok, only Patrick Mahony and his hired team from PGI. Once Justo had directed investigators to his hidden files and had made a confession without lawyers present, he fell increasingly into the clutches of the very people who had denounced him.

Several more ‘confessions’ were soon extracted (all without a lawyer) from Justo over the coming days, based on the material now in the hands of the Thai police.

Justo was told, according to people close to his family, that at least with this cooperation – his confessions and some all important allegations against those he had passed the material to – he would soon be out of jail.

In the event, he was shocked to receive a three year sentence from the court, based on his own confessions made without a lawyer on the advice of his detective friends.

Tarek Obaid – Mahony’s key collaborator with Jho Low on the 1MDB PetroSaudi heist – broker fee US$85 million

Sarawak Report has learnt that Patrick Mahony then visited Justo in jail and staged a ‘reunion between old friends’ with the man he had thus outwitted.

Justo was left with just one option, now he was convicted and behind bars, he was told, which was to accept PetroSaudi’s help and to work with them to get a successful appeal.

The prisoner, who had been running out of money in the months before his arrest, has now obtained the services of a highly expensive legal team in Switzerland and Thailand and has also a western public relations company, which is managing the publicity around the case.

That publicity has been focused on allowing selected media limited interviews with Justo, during which the Swiss former Director of PetroSaudi has taken to suggesting that Sarawak Report ‘might have tampered’ with his documents and that he had never intended to be ‘part of a conspiracy to topple a democratically elected Malaysian Prime Minister’, etc etc.

Sadly, Justo looks unlikely to receive freedom soon through such cooperation. PetroSaudi and the Malaysian Government can hardly risk the release of this key witness, unless they are convinced he will accept their price for silence.

Like Sirul and others who have taken the fall for incidents close to the Prime Minister of Malaysia, he is far safer for them locked up in jail.

Sarawak Report