AFP raid homes over Malaysian property scheme

Australian Federal Police officers seize evidence from a Vermont South residence as part of a probe into corruption linked to properties purchased by foreigners.
Australian Federal Police officers have launched raids in Melbourne as part of an international bribery and money-laundering investigation involving high-ranking Malaysian officials, businessmen and the purchase of Melbourne property.

Federal agents seized computers and files on Thursday morning from a home in Vermont South and it's believed several other properties were targeted across Melbourne.

Australian Federal Police conduct a raid on a house in Vermont South on Thursday.
Australian Federal Police conduct a raid on a house in Vermont South on Thursday. Photo: Wayne Taylor
The AFP's Operation Carambola was launched in response to an investigation by Fairfax Media into a scheme involving Malaysians using multimillion-dollar Australian properties to launder funds and return "kickbacks" to Asia.

While corruption links to property purchases in Australia by foreign nationals have generated significant political interest from Treasurer Joe Hockey and senior cabinet members, this is the first time that police have launched a full-blown operation.

On Tuesday morning, Fairfax Media reported a fraud that inflated the price of a Melbourne student accommodation block, Dudley House, by $4.75 million to provide kickbacks to a group of Malaysian officials, but which drove about 150 small Australian tradesmen to the wall.

The student accommodation block Dudley House, in Caulfield East, is at the centre of alleged transactions.
The student accommodation block Dudley House, in Caulfield East, is at the centre of alleged transactions.

Window maker John Bond said: "This deal has ripped off Australians and involves serious corruption but no one has been held to account."

About $80 million worth of Australian property, including office or apartment blocks in Swanston, Queen and Exhibition streets in Melbourne's CBD, are also implicated in dealings by the same group of high-ranking Malaysians.

Overnight, authorities in Malaysia launched their own investigations in connection with the Fairfax Media investigations, with Prime Minister Najib Abdul Razak calling for a full probe.
On Wednesday night, Mr Najib confirmed pointed comments by the chairman of the allegedly corrupted agency, Mara, that all of its investment decisions are approved by the a body which Mr Najib chairs. But the Malaysian Prime Minister said the economic council made decisions by "consensus," and it may have been misled over the Australian property deal.

"If it is found that any parties have cheated or tried to deceive the members of the National Economic Council by supplying inaccurate or incomplete information, legal action will be taken against them," the Prime Minister said.

But the Australian police raids are likely to generate external evidence, beyond the control of Malaysian officials, which add pressure inside Malaysia to probe more deeply inside the country's elaborate political patronage system. The chairman of an important parliamentary oversight body, the Public Accounts Committee, told Fairfax that the Melbourne raids could be invaluable.

"PAC will urge the Malaysian Police and Anti Corruption agency ... to consult with the Australian police and investigate now," said Nur Jazlan Mohamed, an establishment political figure known for his independent views.

Malaysian politicians and activists have told Fairfax that concerns about corruption in their country may be reaching a tipping point: "The issue has brought to light the integrity of persons involved with government funds being used to purchase foreign assets," Mr Jazlan said.

"We thank The Age for its responsible reporting to uncover such malpractices for the Malaysian public."
Fairfax Media uncovered the alleged criminal scheme by tracing the purchase of tens of millions of dollars of Australian properties via tax-haven shelf companies in the British Virgin Islands and Singapore.

The Dudley House apartment block in the Melbourne suburb of Caulfield is at the centre of the transactions. It was bought in 2013 by a Malaysian government agency called MARA. Those allegedly involved include top Malaysian government officials and Chinese-Malay businessmen.

According to property records and confidential emails, the Malaysian group demanded a $4.75 million bribe in return for guaranteeing that the funds would flow from the Malaysian government to buy the building.

An Australian property developer involved, Peter Mills, last year conceded before a civil court that the $4.75 million was "paid to grease palms to get the deal done".
Another developer, Chris Dimitriou, described the artificial inflation of the property price to $22.5 million as "overcharging".

The bribe was paid via sham invoices issued to the Australian developers from Malaysian companies. The invoices demanded payment for non-existent services, including "professional advice" and "consultancy and advisory fees".

In administration proceedings in the Victorian Supreme Court last year, Mr Dimitriou said his Malaysian business partners were of "high rank" and "likely to be well connected".

When quizzed directly about the $4.75 million "kickback", Mr Dimitriou said he believed it "went to Malaysian parties" but said he "asked no specific questions" about the funds as he "was more concerned about getting the sale over the line".

Another figure involved in the deal, dual Malaysian and Australian citizen Dennis Teen, told the court that: "We are not saints ... we just want a deal done."

Mr Hockey has recently highlighted federal government moves, including investigations by the Tax Office and Foreign Investment Review Board, to crack down on foreign property owners breaching Australian laws and helping to ramp up property prices.

The Chinese government has also launched an aggressive campaign against allegedly corrupt Communist Party officials it claims have invested corrupt funds in Australian property.