4 September 2017
The Department of Justice of the United States is reported to be ‘bemused’, according to US press contacts, by the decision of the Trump administration to receive Prime Minister Najib Razak in Washington on September 12th.
The timing of the visit appears to have been requested in order to coincide with the run-up to a planned re-election bid in October/November, which has been imperilled by the fact that Najib has been identified as the prime mover (and beneficiary) of the world’s largest recorded kleptocracy case.
Unsurprisingly, the announcement of the visit has sparked a deluge of negative coverage in the US mainstream media, already exasperated at their President’s maverick approach. The question they have been asking is ‘why on earth’?
Since the story had originally emerged as a leak, via the Wall Street Journal, one concludes that this was an event designed to be sprung on the public at the last minute, probably to prevent the inevitable furore that has already taken place.
More controversy is the last thing that Donald Trump presently needs. On the other hand, a visit to Washington undoubtedly presents the icing on the cake for Najib, who has spent the last three months trying to bury the devastating details of corruption revealed by the DOJ as he positions himself for GE 14.
The machinations behind this meeting to one side, it is clearly possible that given we are now in September and the DOJ’s latest filing on 1MDB was in June, memories may very well have been clouded as to the detail of these indictments.
It may also be that US officials have been bluffed or blindsided by other events and by sugered arguments about Najib’s merits within the larger geo-political scene – leaving them to conclude he is worth a handshake.
But, it’s a handshake that Najib obviously plans to spin, via his government controlled media and via his internet ‘army of cyber-troopers,’ as a vital valediction by Malaysia’s friendly super-power in advance of his planned election.
So, in order to remind and inform both Malaysians and interested parties in the US, Sarawak Report has worked to provide a small digest of the DOJ’s latest devastating court submission, with a view to summarising in particular of the role of Najib Razak, in plundering his country through this corrupted development fund.
The DOJ document consists of a challenging 251 pages. Few have had time to read it all or linger beyond the main points. It has not yet even been translated into Malay (a job that ought to be done). So, perhaps the following selected excerpts can a start to provide Malaysians with a fully authorititative, evidenced and unbiased insight into what their PM has been up to. It will explain many of their present economic difficulties at the same time.
Likewise, this is US adminstration, not noted for being bookish, might want a quick summary as to why the DOJ investigation into 1MDB has made Malaysia’s Prime Minister Najib Razak (and his wife) into a more than awkward prospective guest for their controversial President:
[PARAGRAPH 6] This is a civil action in rem to forfeit assets involved in and 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. The United States seeks forfeiture of property located in the United States and abroad, including in the United Kingdom and Switzerland..on the ground that it was derived from violations of U.S. law, and .. on the ground that it is property involved in one or more money laundering offenses…
[P 7]…..Over the course of an approximately five-year period, between approximately 2009 and at least 2014, multiple individuals, including public officials and their associates, conspired to fraudulently divert billions of dollars from 1MDB through various means, including by defrauding foreign banks and by sending foreign wire communications in furtherance of the scheme, and thereafter, to launder the proceeds of that criminal conduct, including in and through U.S. financial institutions. The funds diverted from 1MDB were used for the personal benefit of the co-conspirators and their relatives and associates, including to purchase luxury real estate in the United States and overseas, pay gambling expenses at Las Vegas casinos, acquire more than $200 million in artwork, purchase lavish gifts for family members and associates, invest in a major New York real estate development project, and fund the production of major Hollywood films. 1MDB maintained no interest in these assets and saw no returns on these investments.
[P 9] Good Star/PetroSaudi:
Contrary to representations made by 1MDB officials, the Good Star Account was beneficially owned not by PetroSaudi or the joint venture, but by LOW Taek Jho, a/k/a Jho Low (“LOW”), a Malaysian national who had no formal position with 1MDB but who was involved in its creation and exercised significant control over its dealings.
[P 10] Aabar:In 2012, 1MDB officials and others misappropriated and fraudulently diverted a substantial portion of the proceeds that 1MDB raised through two separate bond offerings arranged and underwritten by Goldman Sachs International (“Goldman”).
Beginning almost immediately after 1MDB received the proceeds of each of these two bond issues, 1MDB officials caused a substantial portion of the proceeds – approximately $1.367 billion, a sum equivalent to more than forty percent of the total net proceeds raised – to be wire transferred to a Swiss bank account belonging to a British Virgin Islands entity called Aabar Investments PJS Limited (“Aabar-BVI”).
Aabar-BVI was created and named to give the impression that it was associated with Aabar Investments PJS (“Aabar”), a subsidiary of IPIC incorporated in Abu Dhabi. In reality, Aabar-BVI has no genuine affiliation with Aabar or IPIC, and the Swiss bank account belonging to Aabar-BVI was used to siphon off proceeds of the 2012 bond sales for the personal benefit of officials at IPIC, Aabar, and 1MDB and their associates.
[P 12] Tanore:In 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 2013…beginning days after the bond sale, a significant portion of the proceeds was ..diverted to a bank account in Singapore held by Tanore Finance Corporation...1MDB funds transferred into the Tanore Account were used for the personal benefit of LOW and his associates, including officials at 1MDB, rather than for the benefit of 1MDB or ADMIC.
[P 13] The Options Buyback Phase:In 2014, an additional roughly $850 million in 1MDB funds was misappropriated under the guise of paying Aabar to relinquish certain options it had been given in consideration of IPIC’s guarantee of the 2012 bonds….the funds were used, among other things, to purchase a luxury yacht for LOW’s personal benefit. A portion of the diverted loan proceeds was also used in an elaborate, Ponzi-like scheme to create the false appearance that 1MDB’s earlier investment in the PetroSaudi joint venture had been profitable…
[P 14] The proceeds of each of these four phases of criminal conduct were laundered through a complex series of transactions, including through bank accounts in Singapore, Switzerland, Luxembourg, and the United States. Use of the U.S. financial system was an essential feature of both the fraudulent diversion of 1MDB funds and of the subsequent movement of ill-gotten proceeds around the world...
[P 32]….MALAYSIAN OFFICIAL 1 is a high-ranking official in the Malaysian government who also held a position of authority with 1MDB. During all times relevant to the Complaint, MALAYSIAN OFFICIAL 1 was a “public official” as that term is used in 18 U.S.C. § 1956(c)(7)(B)(iv) and a “public servant” as that term is used in Section 21 of the Malaysian Penal Code.
[P 33] Riza Shahriz Bin Abdul AZIZ (“AZIZ”), a Malaysian national, is a relative of MALAYSIAN OFFICIAL 1 and a friend of LOW. He co-founded Red Granite Pictures, a Hollywood movie production and distribution studio, in 2010.
[P 37] The DEFENDANT ASSET represents a portion of the proceeds of roughly $4.5 billion misappropriated from 1MDB. [EDITOR’S NOTE – i.e.NOT ALL THAT WAS STOLEN HAS BEEN SEIZED, JUST $4.5bn OF THE TOTAL ] That misappropriation occurred in multiple phases over the course of several years. The misappropriated funds were then used to purchase the DEFENDANT ASSET, as well as to fund the co-conspirators’ lavish lifestyles, including purchases of artwork and jewelry, the acquisition of luxury real estate and luxury yachts, the payment of gambling expenses, and the hiring of musicians and celebrities to attend parties.
Background on formation of 1MDB:[P 38] …Upon its formation, MALAYSIAN OFFICIAL 1 assumed a position of authority with 1MDB. MALAYSIAN OFFICIAL 1 had the authority to approve all appointments to, and removals from, 1MDB’s Board of Directors and 1MDB’s Senior Management Team. In addition, any financial commitmentsby 1MDB, including investments, that were likely to affect a guarantee given by the government of Malaysia for the benefit of 1MDB or any policy of the Malaysian government, required the approval of MALAYSIAN OFFICIAL 1. [EDITOR’S NOTE – SECTION117 WAS ADDED TO 1MDB’S CONSTITUTION TO GIVE THE FINANCE MINISTER (NAJIB RAZAK) THE ABOVE CONTROLS]
THE GOOD STAR PHASE: MORE THAN $1 BILLION IS MISAPPROPRIATED FROM 1MDB:[P 44] …As one of its first investment projects, 1MDB entered into an agreement in September 2009 with PetroSaudi International (“PetroSaudi” or “PSI”), a private Saudi Arabia-based oil services company, to form a joint venture called 1MDB PetroSaudi Ltd… LOW and his associates caused $700 million of the $1 billion that was to be invested in the Joint Venture to be sent to an account at RBS Coutts Bank in Zurich (“RBS Coutts”) held in the name of Good Star Limited (“Good Star Account”).
[P 46] …. 2011, approximately $330 million in additional funds were wired at the direction of 1MDB officials to the Good Star Account purportedly in connection with a financing agreement executed between 1MDB and the 1MDB-Petrosaudi JV.
[P 51] The idea for a joint venture between PetroSaudi and 1MDB was discussed in late summer of 2009, including during a meeting that LOW arranged between MALAYSIAN OFFICIAL 1 and the co-founders of PetroSaudi aboard a yacht off the coast of Monaco. Although LOW had no official position with 1MDB, he had significant involvement in setting up the 1MDB-PetroSaudi joint venture. On or about September 7, 2009, LOW emailed his parents, brother, and sister: “Just closed the deal with petrosaudi. Looks like we may have hit a goldmin[e].”
[Para 61] The JVA also required that by September 30, 2009 (within two days of the JVA’s execution), the 1MDB-PetroSaudi JV pay to PetroSaudi $700 million, purportedly as repayment for a loan PetroSaudi made to the 1MDB-PetroSaudi JV. According to the JVA, PetroSaudi agreed to make this loan to the Joint Venture just three days prior to execution of the JVA, that is, on or about September 25, 2009.[Para 62] Notwithstanding the reference in the JVA to a “loan” from PetroSaudi to the Joint Venture, PetroSaudi made no such loan
[Para 63] …e. As detailed below, the $700 million went to an account controlled by LOW, not by PetroSaudi.
[Para 63]…the Position Paper that was presented to the 1MDB Board did not disclose the existence of any loan, or any anticipated loan, from PetroSaudi to the Joint Venture… Indeed, at the time that the 1MDB Board authorized the $1 billion investment in the 1MDB-PetroSaudi JV on September 26, 2009, the Board was not told that any portion of the $1 billion investment in 1MDB-PetroSaudi JV would be transferred to any entity other than the Joint Venture…the Board did not approve the use of 1MDB’s investment in the Joint Venture to repay PetroSaudi for a loan, let alone to pay an entity unaffiliated with PetroSaudi.
[P 91] Even after the $700 million wire transfer was made into the Good Star Account, 1MDB OFFICERS 1 [Casey Tan] and 2 [Shahrol Halmi] continued to make material misrepresentations to the 1MDB Board relating to the true identity of the beneficiary of the $700 million wire transfer…. For example, 1MDB OFFICER 2 informed the Board that, “ . . . US$700 million was remitted to PSI [PetroSaudi] directly as settlement of all the amounts owed by the JVCo. to PSI.” This statement is false and misleading..
[P 111] In total, 1MDB purported to invest a total of $1.83 billion in the 1MDB- PetroSaudi Joint Venture through a combination of equity and debt investments. Of this amount, $1.03 billion was fraudulently diverted to the Good Star Account.
FUNDS MISAPPROPRIATED FROM 1MDB WERE TRANSFERRED THROUGH AN INTERMEDIARY TO MALAYSIAN OFFICIAL 1
[P 112] ….According to J.P. Morgan Chase and RBS Coutts banking records, between February and June of 2011, approximately $24,500,000 of these funds was transferred to an account at Riyad Bank maintained in the name of two Saudi nationals who were associates of LOW and TAN (“SAUDI ASSOCIATE 1” AND “SAUDI ASSOCIATE 2”). From those funds, $20,000,000 was then transferred, within days, to an account belonging to MALAYSIAN OFFICIAL 1 [PM NAJIB RAZAK]
[P 115] ……The AMPRIVATE BANKING.. Account is the same account that later received certain payments totaling approximately $681 million in March 2013. As set forth in Paragraph 347 below, the Attorney General of Malaysia has publicly stated that the account into which these $681 million payments were made belonged to MALAYSIAN OFFICIAL 1.
[P 347]. ….. In a press release issued on January 26, 2016, the Malaysian Attorney General confirmed that, “the sum of USD681 million (RM2.08 billion) [was] transferred into the personal account of [MALAYSIAN OFFICIAL 1] between 22.03.2013 and 10.04.2013,” and that, “in August 2013, a sum of USD620 million (RM2.03 billion) was returned by [MALAYSIAN OFFICIAL 1]. . . .” The Malaysian Attorney General ultimately characterized the payment of $681 million as a “personal donation to [MALAYSIAN OFFICIAL 1] from the Saudi royal family which was given to him without any consideration.”
[P 348] In fact, as explained above, official bank records for the Tanore Account confirm that (a) the payment of $681 million came from the Tanore Account; (b) TAN [JHO LOW’S ASSOCIATE ERIC TAN] was the recorded beneficial owner of the Tanore Account, (c) TAN (or someone using his email address) directed the payment; and (d) Falcon Bank was told that the payment represented an investment in SRC International. As described above, the only funds in the Tanore Account at the time of the $681 million payment originated from 1MDB.
[P 253] Blackstone [EDITOR’S NOTE – BLACKSTONE WAS A JHO LOW ACCOUNT WHICH RECEIVED STOLEN MONEY FROM 1MDB] also transferred at least $30,000,000 to an account belonging to MALAYSIAN OFFICIAL 1 shortly after receiving funds from Aabar-BVI.
[P 254] On or about October 30, 2012 – roughly seven days after Blackstone received $75,000,000 directly from Aabar-BVI and roughly six days after it received $360,000,000 indirectly from Aabar-BVI via Enterprise and Cistenique – Blackstone transferred $5,000,000 into an account at AmBank in Malaysia held in the name of “AMPRIVATE BANKING MR.”[P 255] That bank account belongs to MALAYSIAN OFFICIAL 1 and is the same account that received $20,000,000 from the Saudi Account in 2011,within days of the receipt by the Saudi Account of funds from Good Star, as set forth in Section II.G.
[P 256] On or about November 19, 2012 ….Blackstone transferred $25,000,000 to the same AMPRIVATE BANKING-MR Account belonging to MALAYSIAN OFFICIAL 1.
[P 262] Between June 18, 2012, and November 4, 2012, $238,000,000 was transferred directly from the Aabar-BVI Swiss Account to an account controlled by AZIZ, a relative of MALAYSIAN OFFICIAL 1. From there, the funds were used to acquire nearly $100 million in real property for the personal benefit of AZIZ and to fund Red Granite Pictures, AZIZ’s movie production company.
[P 312] The offering circular [FOR THE GOLDMAN SACHS 1MDB BOND ISSUE] also omitted material facts necessary to make it representations regarding the use of the bond proceeds not misleading, in that it failed to disclose that certain individuals related to 1MDB, including MALAYSIAN OFFICIAL 1, would receive hundreds of millions of dollars from the proceeds of the bond sale within days of its closing. This fact would have been material to the bond transaction, as it would have alerted investors to the possibility of conflicts of interest and related-party transactions.
[P 346] …A portion of the $620 million that MALAYSIAN OFFICIAL 1 “returned” to the Tanore Account was passed through various additional accounts controlled by TAN and LOW and was ultimately used to purchase a 22-carat pink diamond pendant and necklace for the wife of MALAYSIAN OFFICIAL 1. The necklace was commissioned in July 2013, after the jeweler met with LOW, HUSSEINY, and the wife of MALAYSIAN OFFICIAL 1 in Monaco. The purchase price of $27,300,000 was paid on or about September 10, 2013, using funds traceable to the $620 million payment from MALAYSIAN OFFICIAL 1 to Tanore.
[P 389] As described below, the bulk of the proceeds of the $250 million Deutsche Bank loan were almost immediately diverted to the Aabar-BVI Account. Thereafter, the loan proceeds were used for the personal benefit of LOW, MALAYSIAN OFFICIAL 1, and LOO, among others.
[P 396] On or about May 30, 2014, Aabar-BVI transferred $155,000,000 of the $175,000,000 it received from 1MEHL to an account at DBS Bank Ltd. in Singapore held in the name of Affinity Equity International Partners Limited (“Affinity Equity Account”). Affinity Equity International Partners Limited (“Affinity Equity”) was a shell company, and it had no affiliation with the similarly-named Affinity Equity Partners, a major private equity firm in Asia.
[P 400] As set forth in greater detail in Section T below, LOW used almost the full amount of funds he received from the Deutsche Bank loan proceeds to purchase a 300- foot luxury yacht.
[P 849] On or about July 5, 2013, Schwartz traveled to Monaco and met LOW aboard the Topaz, one of the largest private yachts in the world. LOW and TAN had chartered the 147-meter yacht for seven days in early July 2013, and according to an invoice submitted to Falcon Bank, they paid €3.5 million for the rental, using proceeds of the 2013 bonds.
[P 850] Aboard the Topaz, Schwartz showed the pink diamond to a group of people that included LOW, HUSSEINY, the wife of MALAYSIAN OFFICIAL 1, and one of her friends (“Malaysian Friend”). The group discussed the design of the necklace to hold the 22-carat pink diamond, which itself would be made of smaller diamonds.
[P 851] On or about September 10, 2013, an email from TAN’s account, with the subject “22 CARAT PINK DIAMOND,” was sent to Schwartz Inc. advising: “pls ensure design, stone, etc. is ready for the VVIP Lorraine met (without stating names) as the VVIP will be in nyc on 23 sept.”
LOW ARRANGED TO PURCHASE 27 ASSORTED GOLD NECKLACES FOR THE WIFE OF MALAYSIAN OFFICIAL 1 USING MISAPPROPRAITED DEUSCHE BANK LOAN PROCEEDS
[P 864] In October 2014, $1,300,000 in funds traceable to misappropriated Deutsche Bank loan proceeds were used to purchase 27 different 18-carat gold necklaces and bracelets ….from Schwartz Inc. in New York. LOW arranged for the purchase and payment of this jewelry on behalf of the wife of MALAYSIAN OFFICIAL 1.
[P 865] Schwartz was invited to show MALAYSIAN OFFICIAL 1 jewelry at the Hotel Bel-Air in Los Angeles on or about January 3, 2014. LOW texted Schwartz that day to confirm that she was there. At the Bel Air Hotel, Schwartz had dinner with MALAYSIAN OFFICIAL 1 and others, and thereafter was invited to a suite to show jewelry to her. She selected 27 different necklaces and bracelets…..
[P 873] …the funds sent to Schwartz Inc. from World Merit [BY ERIC TAN] were traceable to misappropriated Deutsche Bank loan proceeds… at 1MDB’s direction, Deutsche Bank wired $457,984,607 in proceeds from the $975 million loan to the Aabar-Seychelles Account at UBS Bank in Singapore on or about September 29, 2014, with the understanding that the funds were being sent to a legitimate subsidiary of IPIC……[P 874] a portion of these misappropriated funds was thereafter laundered through a series of pass-through accounts, and ultimately to the World Merit Account, within a two-week period…..[P 879] Aabar- Seychelles wire transferred $39,750,000 to the World Merit Account. These funds were then used to make payment on the 27 ASSORTED GOLD NECKLACES AND BRACELETS that the wife of MALAYSIAN OFFICIAL 1 had ordered in Los Angeles earlier that year.
FOREIGN LAW BASES FOR FORFEITURE
[P 942] 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. Copies of these laws are set forth in Attachment B.
[P 943] Bank fraud is a criminal offense under Malaysian law, as enumerated by the Penal Code of Malaysia,…
[P 944] Misappropriating public funds by a public official is a criminal offense under U.A.E. law…[P 945] Forgery, including the production of a false document and the false certification of a fact of legal significance, is a criminal offense under Swiss law..[P 946] Bank fraud is a criminal offense under Singapore law, as enumerated by the Penal Code of Singapore…[P 948] The DEFENDANT ASSET is property that constitutes, and is derived from, proceeds traceable to one or more violations of: (i) a foreign offense involving the misappropriation of public funds by or for the benefit of a public official …wire fraud .. and/or .. international transportation or receipt of stolen or fraudulently obtained property… and receipt of stolen money… each of which is a specified unlawful activity…
[P 949] The DEFENDANT ASSET is therefore subject to forfeiture to the United States…..
|
No comments:
Post a Comment