Saturday, 5 March 2016

“Dude – on doit fermer avec eux, jho ma reveiller la, et ils sont prets a verser un milliard…………. D ici la fin du mois appelle quand tu te treveille je suis a londres This translates: “Dude . we have to close this with them, jho just woke me up , and they are ready to transfer one billion…… before the end of the month. Call when you wake up I am in London”

The PetroSaudi Files - Fact or 'Fraud'?

The PetroSaudi Files - Fact or 'Fraud'?

4 Mar 2016

It is exactly a year since Sarawak Report detailed the information provided by the company PetroSaudi’s database, which exposed the fraud behind the so-called 1MDB PetroSaudi joint venture, through which US$1.83 billion dollars were removed from Malaysia’s public purse.

This is now corroborated by Malaysia’s own Central Bank Negara, which recently issued a formal demand that 1MDB repatriate the cash.

Our expose was based on a number of sources, besides the database, which covers the years 2009-11 and consists of over 330,000 emails, attachments and documents, many of them relating to deals with 1MDB.

We published a several of the most significant documents at that time, which is why the major scandal over 1MDB erupted and went on to spark a number of further official investigations into this and later deals by 1MDB, which in turn threw up more damning information over ensuing months – including the US$681 million that went into the PM’s personal account in 2013.

Unlike the changing stories coming out from 1MDB and their boss the Finance Minister, the narrative unveiled by all these separate sources and investigations has been glaringly consistent.

It all points to the conclusion that the so-called development fund has been used to pillage billions of public money from the state – the Swiss Attorney General last month said to his knowledge at least $4 billion had been nicked.

So, how have the actors in this matter responded? Predictably, they have accused Sarawak Report of having stolen and then forged or ‘tampered’ with all these thousands of documents, in order to provide the coherent and corroborated narrative that so far no one has managed to disprove in any way.

A mentally ill, hired bankrupt, Lester Melanyi, was paraded by the new UMNO communications boss, the housing minister Rahman Dahlan, to say that he knew this to be the case.  Lester was soon spectacularly de-bunked, however the Malaysian Government used this episode to block Sarawak Report and so it remains.

Meanwhile, the Malaysian Government, together with PetroSaudi, had placed enormous pressure on the Thai authorities to arrest the former director of PetroSaudi who had supplied the material.  He is now in a Bangkok prison for supposedly trying to extort cash from poor old PetroSaudi and has now issued statements saying he thinks that Sarawak Report is ‘tampering’ with what he now alleges were in fact innocent documents he was supposedly using to extort money with.

PetroSaudi, in their coup de gras even hired a struggling UK “cyber intelligence” firm called Protection Group International to send their flagship employee out to Bangkok (a retired chap from GCHQ called Brian Lord) who went on the record to the UMNO rag New Straits Times saying that his ‘expert’ team of cyber-sleuths had identified clear signs of tampering in the documents we had placed on line. 

What the so-called “meta-data” Lord was referring to revealed (just right click and check) was merely that Xavier Justo had earlier opened one of the documents we had featured.  How does this amount to ‘tampering’ by Sarawak Report we asked?

Lord then went on to say in July of last year that his ‘expert teams’, employing the most advanced of cyber technologies would, under special ‘laboratory conditions’, examine the data they had retrieved from the arrested Mr Justo in order to prove how Sarawak Report had nefariously tampered with it in order, presumably, to give a false impression of wrong-doing in what his paymasters at PetroSaudi had informed him was a snow white deal.

Mr Lord explained to journalists that this process might take up to six months before his report could be produced.  In the meantime he delivered a lecture to Sarawak Report on what constituted good journalism in his professional view as a cyber intelligence spook – and committed several gross libels in the process.

As it is now well over the six months cited, what has Mr Lord’s lab team come up with?
So far, nothing.  Not one example of forgery, fraud or tampering has been produced as the 1MDB furore has raged explosively around the Prime Minister of Malaysia and the company of his employers PetroSaudi International.

Sarawak Report has been told by genuine cyber-experts that Protection Group International does not have a laboratory and is not considered to be technically particularly advanced in the field of data retrieval, being they are mainly ex-marines who specialise in bodyguard/surveillance activities.
However, nine months is a long time. Enough time to create a new parallel database that transforms a dodgy deal into an innocent affair?  That should not be too technically tricky, although with those 330,000 emails it would take some effort.

Indeed, Sarawak Report has found itself suddenly approached by a number of news organisations who are interested in seeing our raw material… it appears that PetroSaudi has been contacting certain senior news figures to say that they can now prove our own material is fraudulent.

How interesting.  Why has PetroSaudi not taken us to court, if this were the case, many months ago?
We have in fact always been willing to share this material and have done so.  Most news organisations however do not have the leisure to tackle raw source material… they generally prefer stories that take a couple of hours to write.

This may have changed now that PetroSaudi appears to be throwing down the gauntlet.  So SR is indeed making the material available to selected journalists and we are also now making our own 1st anniversary review of the Justo Files to lay out exactly how the deal worked out in detail.

The Justo Files – Day 1

Today, we are pulling out from the PetroSaudi database the unfolding detail of just how the company got together with Jho Low, who was plainly working with his side-kick Seet Li Lin and legal Girl Friday Tiffany Heah, for a ‘Big Boss” back in Malaysia.

These are the email trails available from August 2009 on the file, dating from just after the meeting on a hired yacht between Jho Low, Najib and the two PSI Directors, Prince Turki and Tarek Obaid, up until mid-September, when the deal started to get fully underway with the alerting of the staff at 1MDB (under CEO Shahrol Halmi) that there was an investment cooking, which they were expect to engage in.

This photo of the line up on the Tatoosh came from the PetroSaudi database - Jho Low left, Prince Turki 2nd left and Tarek Obaid 2nd right - on the yacht they hired and pretended belonged to the Sauid Prince!

This photo of the line up on the Tatoosh came from the PetroSaudi database – Jho Low left, Prince Turki 2nd left and Tarek Obaid 2nd right – on the yacht they hired and pretended belonged to the Sauid Prince!

Halmi was given just two weeks, from 15th September to the end of the month to get cracking and comply his end with the US$1 billion dollar ‘investment’.

He plainly had no trouble with this, although the 1MDB Board did – one good reason why the Auditor General’s report this week into the whole farce has been classified as an Official Secret by the Prime Minister!

From the database it is easy to tease out a relatively small number of email trails between the five main actors at PetroSaudi and 1MDB, which detail in plain black and white what they were up to.
One in particular, sent excitedly by Tarek Obaid (who at the time was dealing with threats from the bank to block his Amex Card) to Patrick Mahony early in the morning on September 14th seems to sum up the nature of the proceedings:
“Dude – on doit fermer avec eux, jho ma reveiller la, et ils sont prets a verser un milliard…………. D ici la fin du mois appelle quand tu te treveille je suis a londres
This translates: 
“Dude  .  we have to close this with them, jho just woke me up , and they are ready to transfer one billion…… before the end of the month. Call when you wake up I am in London”
Sarawak Report defies PetroSaudi’s denials that this and the rest of our material is correct and we challenge them to take us to court to test the evidence.  Meanwhile, we invite readers to look in detail at the emails and documents of those first few days of the deal below:

Email trail 1 – Subject “Our Discussion”

The first set of emails relating to the PetroSaudi joint venture with 1MDB pops up on the database just days after that meeting on the hired yacht Tatoosh in August 2009.  Clearly Jho Low and Tarek Obaid had had a discussion and Tarek, who is not regarded as a great business brain by those around him, proceeded to introduce the British businessman Patrick Mahony to his contact, who is regarded as an astute deal-maker.

Mahony was a long-standing pal of Tarek’s by this time.  Clearly Tarek was a good contact in the Middle East, given his friendship with the fun-loving Prince Turki, a retired Saudi pilot.  He was at that time still working with the investment fund Ashmore (which had put some seed money into PetroSaudi’s only current venture, an oil well in Argentina), but had opened up an email account at PetroSaudi, to which he would soon move formally as a director, after apparently moonlighting from Ashmore over setting up this deal with 1MDB.

As this email trail shows, Tarek was introducing Patrick to Jho Low in order to move ahead with plans that had been discussed – the meeting took place in September 2009 in New York’s Time Warner Tower, where Jho Low had his mega apartment.

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Email trail 2 – “Proposed timeline for joint venture with PetroSaudi”

After this New York meeting a second email trail pops up in the database, the subject being ‘Proposed timeline for joint venture with PetroSaudi’.

It is kicked off by Seet Li Lin, who was the side-kick for Jho Low in his companies of the time with an email written the day after the New York meeting, and continues over the next couple of days until Mahony starts to send back a set of documents and proposals about PetroSaudi and how the company’s ventures might be presented on 11th September.
The email trail (which reads backwards in terms of timeline) shows exactly what happened after the meeting and also what Jho Low was aiming to achieve and who he was answering to.  The first communication from Seet on 9th September says:
“Dear Patrick,
Jho has spoken to the top boss and received the following guidance:
1) Target to close a deal by 20th Sept where all agreements are signed and monies can be paid to PetroSaudi before end of Sept.
2) Arrange for official signing and meeting of dignitaries by end Sept
The key thing is the list of assets currently in PetroSaudi, their valuation and descriptions in order for us to proceed and drill down to the numbers.
Readers are invited to reach their conclusions as to whom Jho Low’s “top boss” in this instance might be. Sarawak Report believes the only person he could be referring to is Najib Razak – legally the sole beneficial shareholder and signatory to 1MDB.

What was clear was that Low wanted to fix some kind of deal by the end of the very same month – money was apparently burning in his pocket:
“We need to move fast n we need as much detailed info u have as fast as possible. We want to sign and pay by sept 09. Wil be emailing out a timeline.”
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Subject: Re: Proposed timeline for JV with PetroSaudi
Message-Id: <887803087 .5294037.1252637957618.javamail.rim="" bda203.bisx.produk.on.blackberry="">
The requirement in this trail above was for PetroSaudi to come up sharpish with some data that showed what the company was apparently worth and the various things they were looking for joint investors in.

There was a waste management venture apparently, with a company called GEMS, whose online presence does not immediately provide clues as to the ownership of.  Jho had seemed enthusiastic about promoting this idea, however Mahony rather backed off in the correspondence.
In fact, it was taking Mahony more than a day or so to come up with the data about PetroSaudi, which is not surprising, because the information which Sarawak Report has gathered on the company at that time indicates that it was a very small operation, working out of hired office space in Victoria and borrowing a phone and address in an office run by one of Tarek’s friends in Geneva, Xavier Justo.
Nevertheless, by 11th September Mahony started responding to the evidently hurried requests of the guys in New York – Jho, Seet and Tiffany Heah.

Email trail 3 – Subject “Cover Email Read First”

This trail shows quite a lot of encrypted data slipping into the communications… however the attachments were not encrypted and are plain to read.  The first of these emails was sent September 11th from Mahony to the New York team, copied as agreed to Tarek, and it contains a revealing note on the September 8th meeting, dated by Mahony as being written on 9th September.
In this note, Mahony writes that PetroSaudi would be happy to “act as a front” for Jho Low’s further deals.  He also introduces a fascinating theme, which indicates that Petronas had clearly been mooted by Jho Low as being a potential investor in these plans, as well as 1MDB.
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Attached to the email was a document named Jho Email (09.09.09)

Screen Shot 2016-03-04 at 12.53.15

The content of the document is below:
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This email from Mahony makes very clear what his suggested plan is.  1MDB should insert money to the joint venture (without any strings attached) and PSI should insert its alleged assets and that some of the 1MDB money should go to PSI to cover alleged costs:
“I think what would make sense is that we set up a joint venture where we contribute our assets and you can contribute cash to match our asset base. We can then decide where that cash goes. Some of it may go to paying us back for some cost and some should stay in the JV for new acquisitions. We can discuss how those acquisitions will work and how money should flow once we do the deals through the JV.”
Mahony goes on to suggest the long-term plan should be that Petronas should be brought in to buy out the whole junket with a fat profit anticipated for 1MDB and PSI – how handy to have a state oil firm on hand to direct to ones own ends!
“I am assuming here that 1MDB will be our partner first and that Petronas will come in later. If this is the case, we can have Petronas either come into the JV or partner with us directly at the asset level and fund the development costs. I somewhat favour the latter as this would guarantee funding for the assets for development and it is also very standard in the industry to have farm-ins by technical partners. Over time, Petronas could buy the JV and both PSI and 1MDB would have made a big return on the initial investment.”
Finally, he makes a kind gesture saying that he is happy for Jho Low in return to use PetroSaudi “as a front” for his other deals. Just let him know where, he asks.
“Lastly, we know there are deals you are looking at where you may want to use PSI as a front, we would be happy to do that. You need to let us know where.”

Email trail 4 – Subject “PSI Presentations”

The next set of emails were follow ups from Patrick entitled “PSI Presentations”.  These supposedly addressed the more detailed information that Jho had been asking for about his company, which Malaysia appeared so keen on investing in.
By the middle of September Jho Low still had no information on PetroSaudi, the company he was due to channel US$1 billion of 1MDB money into by the end of the same month.. but did he care?  Was it not just a cover story he was after?

By the middle of September Jho Low still had no information on PetroSaudi, the company he was due to channel US$1 billion of 1MDB money into by the end of the same month.. but did he care? Was it not just a cover story he was after?

First came the “PSI Story”, as explained by Mahony – and what a story it was.  According to this narrative sent to Jho Low and his partners on 11th September 2009 PSI was occupying a unique position as a “quasi Saudi state company” because it was owned by Prince Turki.
“Governments have been very welcoming to PSI because they feel they are working with a quasi-sovereign entity (given that it is a vehicle of the Saudi Royal Family) and one that understands them. So PSI has had privileged access to many hydrocarbon regions in the world (the Caspian, Africa, Latin America) and is currently acquiring assets in these regions…….Furthermore PSI has full support from the Kingdom’s diplomatic corps when entering and operating in these countries.”
Given so much of all this is fluffed up fantasy and that PSI was at that time little more than a paper entity, one starts to wonder to what extent the boys from PetroSaudi had gulled their new Malaysian friends – or to what extent Jho Low really cared.
Certainly, if Low knew he was being lied to he didn’t say, but rather pressed on with a plan that involved using PetroSaudi as a front to siphon US$700 million from 1MDB into his own bank account at Good Star Limited, a Seychelles company
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The power point presentation on PSI that Mahony also provided Jho Low is equally informative in that it makes it clear that the later claim that PSI owned as an “anchor asset”, an oil field in Turkmenistan worth over a billion dollars was false.  This presentation  and subsequent email conversations with Low make clear that the proposal was to use the injection of cash from 1MDB to acquire the Serdar field and not the other way around.

PSI claimed in its presentation that the Serdar oil field in Turkmenistan was an asset of the company. It was a lie

PSI claimed in its presentation that the Serdar oil field in Turkmenistan was an asset of the company. It was a lie

Other emails being sent from PSI at the very same time also make perfectly clear that PSI was at that very time still trying to find out if it was worth making some sort of investment with the company which did own Serdar, the Cypriot registered Buried Hill Energy.

This did not stop Mahony from suggesting (as we have seen) that PSI be granted some ‘costs’ for injecting its virtually non-existent assets into the joint venture… later this concept morphed into the concept of a loan injected by the PSI holding company into the subsidiary it created to enter into the joint venture, which 1MDB would then commit to paying back!

One statement Jho Low was to make in a later email trail summed the attitude of these negotiators up perfectly.  He suggested they needed to “work backwards” ie to work out their objectives and then come up with valuations to fit those purposes!
“Valuation figure. We need to work backwards, with the objectives above in mind to produce the right valuation”.

Email trail 5 – Setting up The Turkmenistan PSI subsidiary Sept 11th 2009

Meanwhile, on the very same day that Mahony was sending out this presentation, 11th September, another branch of PSI was setting up in the Jersey tax haven the subsidiary company PSI Turkmenistan under Tarek Obaid that would just a few days later be claiming to 1MDB and its Board Members that it already owned the oil field!

According to the emails there were major concerns about the regulators given the failure of Obaid to provide proper details about the shareholding Prince in the venture. These concerns were overcome by a reference letter produced by the PSI Swiss Bank, JP Morgan
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Email trail 6 – Subject “Proposed Conference Call”
Having received Patrick Mahony’s key presentations (above) along with a couple of other suggestions for investing in a waste management project and real estate in London, the boys in New York got back early on 14th September with plans for a conference call to push things forward.
Attached was a highly informative series of documents prepared by Jho Low’s team, showing how they envisaged getting into business with PSI.  Meanwhile, Jho had plainly rung Tarek and advised him a billion dollars was on hand to invest:
“Dude – on doit fermer avec eux, jho ma reveiller la, et ils sont prets a verser un milliard…………. D ici la fin du mois appelle quand tu te treveille je suis a londres” he emailed Patrick. WOW!
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The attached internal presentation provided by Jho Low’s team to provide a background for the upcoming conference call gives a clear indication of what is already being planned for the proposed US$1 billion.
Only US$300 million is illustrated in this power point presentation as being planned for the joint venture company between 1MDB and PetroSaudi – there is no mention of the balance of US$700 million out of the projected billion dollars to be ‘invested’.

Only US$300 million for PSI JV?

Only US$300 million for PSI JV?
The presentation also shows the quite staggering breakneck speed with which Jho Low was planning to put 1MDB’s money into a company, about which just the previous day he had still been sending enquiries as to what it actually owned or did:
This has to be wrapped by the end of the month!

This has to be wrapped by the end of the month!


Particularly fascinating is the minuscule role in all this assigned to the team at 1MDB and their CEO Sharhol Halmi, whose one and only job was to get the matter past the board between 26th September and the end of the month.

It was for Jho Low’s New York team, according to the document sent to PSI on September 14th, to draw up and finalise the agreement and sort out the necessary valuation of PetroSaudi.  PetroSaudi didn’t need to do much either, except agree, according to the presentation.

Later, in the course of the same day, Seet came up with an updated an elaborated plan, which showed more insight into the conspirators’ breakneck thinking.

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Total "over pay US$700 million"

Total over pay US$700 million – Cash left US$300 million

In this up-date Seet makes abundantly clear that this is indeed a procedure whereby the valuations are being planned backwards to achieve the objectives.  It also makes clear that the process is geared around explaining the exit of the balance of US$700 million from the billion dollar deal.
In this scenario Seet refers to an “overpay”.  As the project was later refined, the exit of the money was to be re-framed as a “loan repayment”.

The objective was consistent, however, which was to exit the US$700 million from the joint venture.  It was to be paid into an anonymous account at Coutts Zurich, which turned out to belong to Good Star Limited (Seychelles) – the sole shareholder of which was Jho Low.

Sarawak Report has now made available these individual files to selected journalists worldwide.  We will be continuing our examination of the Justo Data in coming articles, in the hope of explaining to readers in fuller detail exactly what the Heist of the Century, which we exposed exactly a year ago, was all about.

Meanwhile, following this conference call, the ever-eager Seet provided this feedback to his  four fellow game-players:

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There were some adjustments to be seen in this plan – Jho Low narrowed down his margin by US$20 million for some reason and PSI’s sharp London lawyers, White & Case, were soon injecting their own legal strategies.

But, in the end, just a fortnight later, this extraordinary game-plan had been achieved and Jho Low had carried off his heist.  US$700 million safely deposited into his account.

What does this say for the robustness of Malaysia’s institution against public theft and for the conduct of a series of supposedly trustworthy international banking institutions?

Sarawak Report will be continuing its series of minute investigations into the 1MDB deal.