The 1MDB Chronicles

The largest ever corruption charge from USA levelled against companies and individuals linked to 1MDB including seizure of assets. Various other countries including Singapore have taken action against individuals linked to 1MDB.

Updated: May 23, 2018

 

1MDB-Loretta-Lynch

US AG Loretta Lynch statement that 1MDB funds were misappropriated.

 

The Charge from US
This is a civil action in rem to forfeit assets involved in & traceable to an international conspiracy to launder money misappropriated from 1Malaysia Development Berhad (“1MDB”), a strategic investment and development company wholly-owned by the government of Malaysia
Plaintiff: USA
Defendent: “The Wolf of Wall Street” Motion Picture held by Red Granite Pictures, Inc

Kleptocracy Asset Recovery Initiative (KARI)

#kleptocracy: A government or state in which those in power exploit national resources and steal; rule by a thief or thieves.
KARI memang pedas!

Seeking civil forfeiture assets:

  1. L’Ermitage Property
  2. L’Ermitage Business Assets
  3. Hillcrest Property
  4. Park Laurel Condominium
  5. Bombardier Jet
  6. Time Warner Penthouse
  7. Oriole Mansion
  8. Green Condominium
  9. EMI Assets
  10. Symphony CP (Park Lane) LLC Assets
  11. Walker Tower Penthouse
  12. Laurel Beverly Hills Mansion
  13. Hillcrest Property 2
  14. Van Gogh Artwork
  15. Saint Georges Painting
  16. Nymphaes Painting
  17. The Qentas Townhouse

red-granite

Alleged Criminal Conduct (3 Phases)
1. The “Good Star” Phase (2009-2011)
Fraudulent transfers > $1b from 1MDB to a Swiss bank account held in the name of Good Star Limited
(“Good Star Account”) under the pretense of investing in a joint venture between 1MDB and PetroSaudi International.

2. The “Aabar-BVI” Phase (2012)
1MDB officials & others misappropriated & fraudulently diverted a substantial portion ($1.3b >40%) of the proceeds that 1MDB raised through 2 separate bond offerings arranged & underwritten by Goldman Sachs International (“Goldman”) to a Swiss bank account belonging to a British Virgin Islands entity called Aabar Investments PJS Limited (“Aabar-BVI”).

3. The “Tanore” Phase (2013)
Several individuals, including 1MDB officials, diverted more than $1.26 billion out of a total of $3 billion in principal that 1MDB raised through a third bond offering arranged by Goldman in March. Days after the bond sale, a significant portion of the proceeds was instead diverted to a bank account in Singapore held by Tanore Finance Corporation (“Tanore Account”), for which TAN was the recorded beneficial owner. Although the Tanore Account had no legitimate connection to 1MDB, the then-Executive Director of 1MDB was an authorized signatory on the account. 1MDB funds transferred into the Tanore Account were used for the personal benefit of LOW & his associates

aziz-jholow-qubaisi
From L-R: Aziz, Low, Qubaisi

Relevant Individuals

  1. 1Malaysia Development Berhad (1MDB)
  2. PetroSaudi International Ltd (PetroSaudi OR PSI)
  3. 1MDB PetroSaudi, Ltd.
  4. International Petroleum Investment Company (IPIC)
  5. Aabar Investments PJS (Aabar)
  6. Aabar Investments PJS Ltd. (Aabar BVI)
  7. Abu Dhabi Malaysia Investment Company (ADMIC)
  8. LOW Taek Jho (aka Jho Low)
  9. 1MDB Officer 1 (Executive Director from creation – Mar 2011)
  10. 1MDB Officer 2 (CEO 2009-2013)
  11. 1MDB Officer 3 (General Counsel & Executive Director of Group Strategy 2012-2013)
  12. Malaysian Official 1 (high-ranking official in the Malaysian govt who also held a position of authority w 1MDB)
  13. Riza Shahriz Bin Abdul AZIZ (co founder of Granite Pictures, step-son of Malaysian PM)
  14. “Eric” TAN Kim Loong (stated beneficial owner of bank acs where misappropriated 1MDB funds transferred)
  15. Khadem Abdulla Al QUBAISI (U.A.E. national, IPIC MD 2007-2015 & Aabar chairman 2012-2013)
  16. Mohamed Ahmed Badawy Al-HUSSEINY (Aabar CEO 2010-2015 & Aabar-BVI director)

 

good-star

The “Good Star” Phase (2009-2011)
– False representation to banks casuing $700 million diversion from 1MDB to the Good Star Account
– 1MDB Officers 1 & 2 conceal misappropriation of funds from 1MDB board of directors
– An additional $330m in 1MDB funds was diverted to Low’s Good Star Account in 2011
table1
– Funds misappropriated from 1MDB were transferred to the co-founder of PetroSaudi & thereafter to Malaysian Official 1
table2
– Low laundered approx $368m in funds diverted from the 1MDB JV into USA
– Low transferred approx $389m in 1MDB funds to another account controlled by him but held in the name of Abu-Dhabi Kuwait Malaysia Investment Corporation (ADKMIC)

 

Aabar BVI named to similarly to the actual Aabar company

The “Aabar-BVI” Phase (2012)
– A substantial portion of the proceeds of the 2012 bond sales was divreted to & through the Aabar-BVI Swiss ac.
Auditors working at the direction of the PAC concluded that the $1.367b “security deposit” payments made to Aabar-BVI in 2012 were “made without the approval of the 1MDB Board of Directors.”
– Aabar-BVI transferred approx $1.1b to the Blackstone ac, beginning within days of receiving funds from 1MDB
table5
– After receiving funds from Aabar-BVI, Blackstone distributed approx $574m to officers of IPIC, Aabar & 1MDB
– Aabar-BVI sent approx $238m to an ac controlled by AZIZ
table8
– Money spent at Las Vegas Sands owned Venetian Casino

venetian

The “Tanore” Phase (2013)
– Funds from the 2013 bond sale were diverted to the Tanore ac
table9

table10
– $681m was transferred from the Tanore ac to an ac belonging to Malaysian Official 1
– From approx May – Sep 2013, the Tanore ac was used to purchase art for the personal benefit of TAN & LOW

Foreign Law Bases for Forfeiture
Misappropriating public funds by a public official is a criminal offense under Malaysian law, as enumerated by the Penal Code of Malaysia, including but not limited to sections 403 (dishonest misappropriation of property), 405 (criminal breach of trust), 409 (criminal breach of trust by public servant or agent), 166 (Public servant disobeying a direction of the law, with intent to cause injury to any person (including a company)), 415 (cheating), 418 (cheating with knowledge that wrongful loss may be thereby caused to a person whose interest the offender is bound to protect), and 420 (cheating and dishonestly inducing delivery of property); and the Malaysian Anti-Corruption Act 2009, including sections 16, 17, and 23.

Bank fraud is a criminal offense under Malaysian law, as enumerated by the Penal Code of Malaysia, including but not limited to section 415 (cheating), 418 (cheating with knowledge that wrongful loss may be thereby caused to a person whose interest the offender is bound to protect), and 420 (cheating and dishonestly inducing delivery of property).

Misappropriating public funds by a public official is a criminal offense under U.A.E. law, as enumerated in Federal Law No. (3) of 1987 on Issuance of the Penal Code, including but not limited to Articles 224, 225, 227, 228, 229, and 399.

 

john-malott

Why a Civil not a Criminal Case? And what’s going to happen next?

John Malott, former US ambassador to Malaysia, in his commentary lists down the next steps the US DoJ will take especially as it is a foreign policy doctrine that the US will not prosecute a sitting leader, except for extremely serious crimes against humanity such as genocide:

Some people were surprised when I said that the US government’s seizure of assets – condos, mansions, hotels, and art work – all of which were purchased with money stolen from 1MDB and the Malaysian people – was only the beginning.

It’s true. There’s lots more to come.

There will be criminal indictments coming, most likely including Riza Aziz and Jho Low, who both are very closely connected to Prime Minister Najib Razak.

There will be a mention in a future criminal prosecution of an “unindicted co-conspirator,” who now is widely known as ‘Malaysian Official 1’. When he no longer is in office, he will be indicted in the US.

Here are some thoughts about what happens next on the US side. The US government already has seized these assets, or asked other governments, such as Switzerland and the UK, to seize them.

So now Najib’s stepson Riza and his close advisor Jho Low cannot sell anything or try to get their money out of the US or other countries. They have been blocked.

Under US law, the next step is for Aziz, Jho Low, and others to try and prove in a court of law that the assets that were seized from them truly were purchased with their own money – and not from funds stolen from 1MDB.

Of course, they cannot prove that. The Federal Bureau of Investigation (FBI) and the Department of Justice (DOJ) filing was meticulous, thorough, and totally professional. The evidence is all there. It even includes the transcripts of wiretapped phone calls of a panicked Jho Low talking to his bankers.

Thanks to the FBI and DOJ, it is so clear. We know where the money came from. It was stolen from the Malaysian people, through 1MDB.

Your money, not ours

As US Attorney General Loretta Lynch and the others pointed out many times, the money was stolen from the people of Malaysia. The assets belong to them.

So the US government will hold all of the seized assets – the real estate, the paintings, the rights to ‘Wolf of Wall Street’, etc – in trust on behalf of the people of Malaysia, from whom the money was stolen.

The assets will not belong to the US government.

In the meantime, the US government will rent out Aziz’s condo in New York and his Beverly Hills house. It will take over the management of the hotels in New York and Beverly Hills that were purchased by Jho Low with the stolen money.

The US government will collect the profits from all future sales of the DVDs and TV rights of ‘The Wolf of Wall Street’. The Monet and Van Gogh paintings will go on exhibition somewhere, so everyone can enjoy. And so on.

And all of the profit that is earned will be held in trust by the US government on behalf of the Malaysian people. It is your money, not ours.

What about Rosmah’s son, Riza?

Young Riza will soon be homeless. The US government has seized his homes.

In order to save itself and the films it has in production (including a new film about George Washington, starring Leonardo DiCaprio), I predict that Red Granite Pictures will get rid of Aziz.

So Aziz will be jobless, too.

When the US government files criminal charges against Aziz (and I am sure they will), they will ask the court to seize his passport so he cannot leave the US.

The Malaysian Embassy in Washington may try to defraud the US government and issue a new passport to Aziz, with a new number, so he can leave the country. At that point, we will see how efficient the US government is at catching this.

If the Malaysian government asks for the seized assets to be transferred back to them, the US government will do so.

But will Najib do that? No. If Najib asks for the money back, it means that he is admitting that the money was stolen from the development fund that he headed, that the stolen money went to his stepson and his “advisor” Jho Low, and that he has been lying about this to the Malaysian people for years.

So, of course he will never do that.

Asking for the money back will have to wait for a future prime minister.

And why would Najib want to ask “for the money back,” when he and his family and cronies already have it – or have spent it?

An international pariah

From an international viewpoint, this is the end of Najib. He is an international pariah. The world now thinks he is a crook. He is a fraud. The world will want nothing to do with him. He will not be welcomed anywhere. When he speaks to the United Nations General Assembly next fall, there will be only 30 or so people in the room, mostly Malaysians.

Other leaders will be embarrassed to be seen with him, to shake his hand, to be photographed with him.

As for Rosmah, her credit at Hermes and Tiffany’s and elsewhere is now cut off. Those luxury stores now know the money was not hers. It was stolen from the Malaysian people. They do not want to be complicit in international money laundering. They have their own reputations to protect.

That is how the world will react. But how will the Malaysian people react? Will Najib get away with this, back in Malaysia?

I fear that the answer is yes. If so, it means that Malaysia is now in Mugabe-Land.

The inspector-general of police (IGP) says that the US government never asked for cooperation from the Malaysian government in their investigation. Yet both the Malaysian Anti-Corruption Commission (MACC) and the FBI have said that they cooperated with each other in this investigation. The IGP knows the truth, so why did he say otherwise? Why did he lie?

The Malaysian AG says that this is all speculation and innuendo, and that there is no proof of the US government’s charges. Yet the US government has issued a very thorough, professional, and detailed 136-page filing of evidence with the court. It is there for the AG to read. Instead, why did he choose to insult the integrity of the US government?

Why did he lie?

As long as Malaysia’s IGP and AG continue to deny the truth in the face of the overwhelming facts, we know where this is going.

How ironic it is, that is the US government – the FBI and the US attorney general – who are doing the job that the IGP and Malaysian AG should be doing.

As US AG Lynch said, this is the Malaysian people’s money. It is not America’s.

We want to give it back to you.

 

The Responses (since the date of the US AG’s charges)

  • Jul 20, 2016: Not a party to civil suit. No assets in USA. Not benefitted. Not contacted by USA DoJ. Will fully cooperate. (1MDB)
  • Jul 20, 2016: Multiple investigations in Malaysia by MACC, AG & PAC. No crime committed. Will fully cooperate any investigations. (PM Press Sec, Datuk Seri Tengku Sharifuddin)
  • Jul 20, 2016: No comment as it is a civil proceeding (Police IGP, Khalid Abu Bakar)
  • Jul 20, 2016: little news/printed denials of wrongdoing in most mainstream media
  • Jul 21, 2016: Singapore seizes S$240m (US$177m) assets related to 1MDB in 4 banks
  • Jul 21, 2016: Swiss authorities sieze 3 paintings
  • Jul 21, 2016: Call for Royal Commission of Inquiry (RCI) (opposition)
  • Jul 22, 2016: The Edge newspaper suspended for previously reporting same facts (Nazir Razak)
  • Jul 22, 2016: Malaysian Official 1 = 1 Najib (@TomWrightAsia WSJ Asia Economics Editor)
  • Jul 22, 2016: #bestrongPM & red-shirts movement planning rally
  • Jul 24, 2016: Those named in case must clear their name (Najib Razak, Malaysian PM)
  • Jul 25, 2016: Singapore pledges tougher regulatory action. Also to name & shame. (Ravi Menon, MAS MD)
  • Jul 27, 2016: Y2013-2014 1MDB audited reports not valid & resigns as auditor (Deloitte Malaysia)
  • Jul 28, 2016: GLCs credit rating downgraded after govt bonds downgrade – Petronas, Etiqa, MAHB (Fitch Ratings, Moody’s Ratings)
  • Jul 29, 2016: 1MDB Officer 3 identified as Jasmine Loo Ai Swan – a Malaysian who studied law in the UK & worked for a Malaysian developer and an oil firm before joining 1MDB (Bloomberg)
  • Sep 1, 2016: Abdul Rahman Dahlan confirms that MO1 is Najib Razak but clarifies that MO1 is not named as subject of investigations
  • Oct 5, 2016: Swiss AG requests for info on 1MDB stating that previous request from Jan is still pending
  • Oct 10, 2016: 2 private bankers linked with 1MDB & Jho Low charged in SG for failing to disclose suspicious transactions. Court hearing on Nov 24
  • Oct 11, 2016: Singapore closes Falcon Bank for money laundering. UBS & DBS fined.
  • Nov 20, 2016: US President Obama’s outgoing speech says “There are limits to our reach into other countries if they’re determined to oppress their people, or not provide with education, or siphon all development funds into Swiss bank accounts because they are corrupt. We’re not going to be able to handle every problem.”
  • Dec 1, 2016: Standard Chartered Bank and Coutts & Co Ltd fined S$5.2m and S$2.4m breaching anti-money laundering (AML) requirements by  Monetary Authority of Singapore (MAS) in 1MDB related transactions.
  • Dec 6, 2016: Myanmar criticises Malaysian PM and stops sending workers in response to rally led by Najib in believe the rally is a political agenda.
  • Dec 7, 2016: China reported by Financial Times to help make repayment to Abu Dhabi’s International Petroleum Investment Company owed $6.5b (refuted by 1MDB the next day)
  • Dec 9, 2016: Jho Low’s family fail in bid to delay 1MBD hearing request in US
  • Mar 14, 2017: Singapore’s MAS lifetime bans ex-1MDB bankers (link)
  • Mar 22, 2017: Jho Low to be charged in the US (link)
  • Mar 30, 2017: 1MDB cashed out RM10.97b in Y2015-2016 (link)
  • Jun 13, 2017: Misappropriated 1MDB funds used to finance $2.2b acquisition of Coastal Energy in Houston, USA (link)
  • Aug 1, 2017: 1MDB missed payment to Abu Dhabi (link)
  • Dec 19, 2017: Singapore’s MAS issues more financial bans (link)
  • Mar 4, 2018: 1MDB closure a business decision (link)
  • May 13, 2018: 3rd task force to investigate 1MDB financial affairs led by Daim (link)
  • May 15, 2018: Swiss prosecutors seek quick talks with Malaysia on 1MDB (link)
  • May 22, 2018 MACC chief gives emotional account of 1MDB probe (link)
  • May 22, 2018: Ministry of Finance was bailing out 1MDB debt service obligations (link)
  • May 23, 2018: 1MDB president Arul Kanda questioned and RM9.8b “units” no longer exist (link)
  • May 23, 2018: 1MDB insolvent and unable to repay debt. PwC appointed to conduct special audit (link)

 

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