1. -
MALAYSIA
US
SINGAPORE
THAILAND
HONG KONG
MIDDLE EAST
SWITZERLAND
MALAYSIA
Where it all began
■ Originally called
Terengganu
Investment Authority,
the firm was set up in
February 2009 to tap
the state’s bountiful oil
royalty. Cracks
appeared soon after it
raised RM5 billion via
bonds and within just
seven months, it
was moved to MOF
and renamed 1MDB.
■ The strategic invest
ment vehicle came
armed with lofty goals
of wooing FDI and
catalysing sustainable
development. It would
eventually buckle
under insurmountable
debt, losses and deals
with poor commercial
value, compelling a
restructuring that is
now under way.
■ Allegations of
egregious wrongdoing
at 1MDB have
triggered a sweeping
probe by multiple
agencies, assisted
by foreign regulators.
■ The allegations have
also roiled the country’s
highest office − Prime
Minister Najib Razak,
who has denied the
allegations.
SINGAPORE
Not too close for
comfort
■ An international
financial hub known
for its tough laws
against “dirty” money.
Singapore Police have
launched a probe into
possible money
laundering offences
and has frozen two
bank accounts
related to the 1MDB
money trail. It is not
clear which banks
and whose accounts
are involved.
■ Bank accounts in
Singapore belonging
to Jho Low, an
individual at the
centre of the
controversy who was
TIA’s special adviser
and owns luxury
condo units here, are
also reportedly under
scrutiny.
■ The Monetary
Authority of Singapore
has said it was
committed to provide
assistance “within
the full ambit” of its
laws to Malaysian
authorities.
■ Swiss wealth manager
BSI’s Singapore branch
is where 1MDB CEO
Arul Kanda said the
firm was keeping
US$1.1 billion worth of
‘units’, a portion of its
US$2.318 billion
controversial
investment
in Cayman-
registered
funds
redeemed
last year.
HONG KONG
Water under
the Bridge
■ One of the biggest
sore points among
critics was that 1MDB
had ploughed
US$2.318 billion into
Cayman Islands-
registered investments.
The funds,which arose
from a convoluted deal
with PetroSaudi
International (PSI) −
its first and most
scutinised deal −
was managed by Hong
Kong-based fund
manager Bridge
Partners, a little-known
firm, deemed too
modestly sized to
manage funds of a
state-backed entity.
■ Following a BT report
last year that the funds
were managed by
Bridge Partners −
1MDB had not
disclosed the identity
of the fund managers
prior to that although it
was urged to do so by
critics − the fund
manager removed
details of its key
executives from the
website and it remains
so till today.
■ HK is also the base
of Jynwel Capital, a
private equity firm
helmed by Mr Low.
THAILAND
The X-avier factor
■ The plot thickened
when Thai police in
June arrested a
former PSI executive
Xavier Justo in his
posh home in Koh
Samui for allegedly
blackmailing his
former employer PSI
on information related
to the 1MDB-PSI deal.
He has also confessed
to leaking the
information to some
media outlets and
politicians from
UMNO and the
opposition.
Following Mr Justo’s
arrest, PSI said it has
been a victim of “a
regrettable crime that
has unfortunately
been politicised in
Malaysia”.
■ The Malaysian police
is seeking permission
from Thai authorities
to interrogate the
49-year-old Swiss
national on matters
related to 1MDB.
■ Justo has not been
formally charged but
according to Thai
police, has admitted
to committing
blackmail. According
to a report by The
Straits Times, Mr Justo
has given a “full
confession” and has
identified 10
individuals who
bought the
documents from
him which were
used to attack
Mr Najib.
MIDDLE EAST
In the middle
of the storm
■ At the heart of the
scrutiny is 1MDB’s
pact in 2009 with PSI
which is owned by
Saudi businessman
Tarek Obaid and
Prince Turki Abdullah
Al Saud, the seventh
son of Saudi Arabia’s
King Abdullah who
died earlier this year.
This pact was inked
under Shahrol Halmi,
1MDB’s first chief
executive who left
the firm in 2013.
■ 1MDB’s investments
with Abu Dhabi’s
Aabar Investments
whose parent is
International
Petroleum
Investment Co (IPIC)
has also raised
eyebrows.
■ Last month, IPIC
provided 1MDB with
US$1 billion cash to
help repay a US$975
million loan and also
agreed to assume a
portion of its debt, in
exchange for assets
that have not been
disclosed.
SWITZERLAND
Where the monied
elite keep their stash
■ The 1MDB money
trail reportedly
involves several
accounts in Zurich-
based banks which
has prompted
Swiss authorities to
share information
with authorities in
the 1MDB probe.
■ The Wall Street
Journal reported that
US$681 million was
moved from a
bank account
in Aabar-owned
Swiss bank Falcon’s
Singapore branch
into accounts in a KL
bank allegedly held
by Mr Najib in 2013,
damning allegations
that the leader has
rebuffed as lies.
■ WSJ also reported
that US$529 million
was deposited into a
business account in
Singapore allegedly
held by Mr Low
between 2011 and
2013 from a Swiss
bank account.
UK
Of botched deals &
police reports
■ In 2010/2011, 1MDB
was invited by Aabar
to bid for three hotel
properties in London.
The bid fell through
but it piqued interest
as Mr Low, who has
consistently denied
having any
involvement with
1MDB, was also a
co-investor in the bid.
■ One of the main
offices of PSI which,
according to its
website is an oil
exploration and
production firm,
is in the UK.
■ In March, PSI
reportedly lodged a
report with London’s
Police Action Fraud
Unit at the National
Fraud and Cyber
Crime Reporting
Centre over an article
in Sarawak Report
which alleged that
the firm was used as
a front to siphon
money from 1MDB.
US
The stuff of
Hollywood movies
■ US bank Goldman
Sachs has suffered a
reputational hit in
Malaysia’s corporate
scene after it
arranged a US$3 billion
bond issue for 1MDB in
2013 and pocketed
profits of US$300
million, an amount
deemed unusually
large and has raised
the ire of 1MDB’s
critics. With the fallout
involving 1MDB, many
Malaysian corporates
have shunned the bank.
■ Of 1MDB’s many
ambitious projects, its
solar power aspirations
are relatively less
widely known. BT
reported in June last
year that it tied up with
Washington-based
private equity firm
DuSable Capital
Management. Dusable
was co-founded by
Frank White, Jr, a top
individual fundraiser
for Mr Obama, and
another of the
president’s backers,
Shomik Dutta. The tie-
up fell through for
reasons not known.
■ The New York Times
reported in February
that wheeler-dealer
Jho Low bought prime
real estate in the US
that he later sold to
pal and Hollywood
producer Riza Aziz
who funded The Wolf of
Wall Street, for healthy
profits. Mr Riza is
Mr Najib’s stepson.
UK
BT Design: Ludwig Ilio & Simon Ang
US$2.318 billion
controversial
investment
in Cayman-
registered
funds
redeemed
last year.
Najib
Razak
Jho
Low
Arul
Kanda
Shahrol
Halmi
Tarek
Obaid
BTExplains
1MDB
‘Tentacles’
The big fallout of Malaysia’s troubled
1Malaysia Development Berhad (1MDB),
a state-owned strategic investment
firm saddled with over RM42 billion
debt, may appear to be largely a local
dilemma but its tentacles extend to
organisations and personalities
across the globe which
underscores the extraordinary
reach of the scandal.
BY ANITA GABRIEL
Continued from Page 1
And it’s tricky. “Whatever the outcome, there will probably be equal number of
people unhappy with PAC’s conclusion. I am preparing myself to lose the next
general election, whatever the result.”
Asfar aslack ofpublic faith is concerned, PAC may have it relatively easyas
muchof it is mostly directed at the concurrent probe that is being led bya spe-
cial task force headed by Attorney-General Abdul Gani Patail and comprising
officersfromtheAttorney-General’sChambers,centralbank, anti-graft agency
and police.
The task force is probing allegations raised in a report in The Wall Street
Journal that US$700 million was moved from firms and government agencies
linked to 1MDB to personal bank accounts allegedly belonging to Mr Najib
back in 2013 as the country was preparing for its most hotly contested general
election.
MrJazlan isquick to makethedistinction betweenPAC andthismulti-agen-
cy force. “The task force can be deemed as not independent as they report to
the executive. Their investigations are done in-house and can be deemed as
not transparent.”
“But they do have the resources to conduct forensic audits and have the au-
thority to procure data from their foreign counterparts which the PAC doesn’t
have,” he said, adding that ultimately, the probes are meant to complement
one another.
Events in recent days have fuelled some hope that things may be cranking
upin whatearlier appearedto bea probewhose pacewas fartoo languid given
the seriousness of the allegations.
Two board members of firms linked to 1MDB have been nabbed this week
to assist the task force in its probe. One of them is the managing director of a
firm which, according to the WSJ report, was allegedly involved in the transfer
of funds to Mr Najib’s accounts, an allegation that the firm had earlier denied
as baseless and untrue.
It was also reported by a Malaysian newspaper that more than 10 people
from the business and financial sectors as well as politicians are on the “watch
list” of the task force and may be arrested.
In Singapore, the investigation into 1MDB’s money trail to assist Malaysian
authorities has led the police to launch a probe into possible money launder-
ing offences, with freeze orders issued on two accounts in banks here on July
15. The banks and owner(s) of the accounts were not disclosed.
Over two weeks ago, the Auditor-General’s office presented its initial find-
ings in an interim audit report to PAC for further action. Since then, there have
been calls for the report, which insiders say had flagged key oversights by the
board and management, to be made public but that hasn’t happened.
“The Auditor-General’s report is his property and it is up to him to release
to the public,” said Mr Jazlan. “We will incorporate his findings in our report. It
is dangerous to derive conclusions from interim reports as its substance may
change depending on new information.
“The A-G (Auditor-General) reported to us that he hasn’t received some in-
formationfrom 1MDB to complete his report. PAC can help him by demanding
and persuading 1MDB to forward the documents.”
All the testimonies during PAC’s interview sessions are written down in the
Hansard in verbatim which will be public statements that can be used in a
court of law for legal proceedings.
“That is a powerful weapon to get our witnesses to tell the truth. Those who
are summoned have a great deal to lose in reputation, be it the auditors, civil
servants or businessmen like Jho Low,” he added.
Lack of corporate
governance the cause
of 1MDB’s troubles
The task force is probing allegations raised in a report in The Wall Street
Journal that US$700 million was moved from firms and government
agencies linked to 1MDB to personal bank accounts allegedly belonging
to Mr Najib back in 2013 as the country was preparing for its most hotly
contested general election. PHOTO: BLOOMBERG
2 | TOP STORIES The Business Times | Thursday, July 23, 2015