Friday 19 February 2016

ANZ partner and other Australian links in Najib Razak scandal

The Australian

When talk turned to the crisis engulfing ANZ’s Malaysian banking partner AmBank, the Aussie giant’s outgoing Asiaphile chief executive Mike Smith had two words of warning for his replacement, Shayne Elliott.

It was October 29 and the pair were taking analysts’ questions about ANZ’s latest profit when they were asked about AmBank, part-owned by ANZ and at the centre of an international storm over more than $US680 million that flowed through AmBank accounts owned by Malaysian Prime Minister Najib Razak.

Najib and his associates stand accused of looting hundreds of millions of dollars from the country’s sovereign wealth fund, 1MDB. ANZ stands accused of staying silent.

As Elliott opened his mouth to answer, Smith leaned over and whispered: “Be careful.”
These are words Pascal Najadi — whose father, AmBank founder Hussain Najadi, was shot dead in 2013 — thinks ANZ should heed.

He insists his father was assassinated after discovering corruption and money-laundering at AmBank involving Najib and 1MDB, the fund Najib founded.

Malaysian authorities dismiss the theory.

“The truth will come out, and ANZ is, unfortunately, totally implicated, being a major shareholder — they should be very careful,” Najadi tells The Australian from Switzerland, where he moved after no longer feeling safe in Malaysia.

Najib vehemently denies the allegation and a fortnight ago ­Malaysia’s Attorney-General cleared the Prime Minister of any wrongdoing over the funds.

But investigations continue in Switzerland, the US and Singapore. With the scandal rolling on, it’s not only faith in the governance of AmBank that has been shaken.

Malaysia is building Kuala Lumpur up as an alternative regional financial centre to Hong Kong and Singapore, depicting it as the ideal conduit between the Middle East’s oil money and capital-hungry Asia, thanks to its strength in coupling Islamic ­finance with an English common law-based justice system well understood by the business world.

But the image of a reliable ­financial centre is undermined by the muzzling of the Malaysian Anti-Corruption Commission, which was ordered by the ­Attorney-General to drop its investigations, and the ongoing international probes.

The murder of deputy public prosecutor Kevin Morais, whose body was found in a concrete-filled drum in September, rattled onlookers, even though Malaysian authorities say there’s no link with the 1MDB case.

In another Australian link, former Najib bodyguard Sirul Azhar Umar, who is held in the Villawood Immigration Detention Centre in Sydney, has recanted his sensational allegations linking his murder of Mongolian socialite ­Altantuya Shaariibuu with Najib.

Shaariibuu allegedly worked as a translator during a $US2 billion submarine deal with the French, put together while Najib was defence minister. It’s now the subject of a corruption prosecution in France. Sirul, who shot Shaariibuu and blew up her body in 2006, is reportedly ready to pin blame for his earlier allegations on Najib’s political opponents, including those pursuing him over 1MDB.

It’s perhaps little wonder ANZ, which holds a 24 per cent stake in AmBank, wants to avoid being dragged into the drama, with a spokesman telling The Australian the bank “does not direct or control the operations of AmBank”.

But with ANZ executives on secondment in three key AmBank management positions — chief ­financial officer, chief risk officer and head of transactional banking — ANZ is more than just a passive shareholder.

And when former AmBank chief executive Ashok Ramamurthy quit a year ago after his contract expired, he returned to ANZ’s Melbourne headquarters, where he works on “special projects”.

ANZ has three AmBank board seats, including deputy chief executive Graham Hodges, who replaced Elliott when he got the top job at ANZ.

“ANZ employees on the board of AmBank are not able to discuss either customer or board matters,” the ANZ spokesman says. He ­directs all queries to AmBank, which has not responded to The Australian’s emails since October.

Meanwhile, the global investigation has spread far from the money plonked into Najib’s AmBank account in 2013 and 2014.

The saga involves a global cast of characters, including a Saudi prince, and takes in territory from the Middle East to Caribbean tax havens — including a curious detour via the Gold Coast.

The key player is financier and Razak family friend Jho Low, who, until the scandal broke wide open last year, had a reputation as a playboy with a penchant for expensive things — and being photographed hobnobbing with stars such as Leonardo DiCaprio and snuggling up to the likes of Paris Hilton.

A fortnight ago, Singaporeans got a glimpse inside the investigation when Yak Yew Chee, a senior — and extremely highly paid — executive at Swiss bank BSI’s operation in Singapore, asked that country’s High Court to release his personal bank accounts, which had been frozen under “proceeds of crime” laws.

Yak believes his money was frozen because of Singapore police’s “ongoing investigations” into Low.

Also before the court was a statutory declaration Yak signed last April after an internal investigation by his bank. He pledged he had not paid any person an ­inducement “for obtaining or retaining the finds and transactions held with the BSI group by Brazen Sky Ltd, Low Taek Jho (Jho Low), ­1Malaysia Development Berhad (1MDB) and/or their respective ­affiliates”.

His statement links the players in one of the biggest alleged rip-offs in the 1MDB saga: the pillaging of a joint venture between the sovereign wealth fund and PetroSaudi, a company co-founded by Saudi Arabia’s Prince Turki bin Abdullah.

The money trail is complex, the picture is incomplete, but at its centre are Brazen Sky, a 1MDB company registered in tax haven the British Virgin Islands, and Low.
The amounts at stake are mind-boggling.

But missing from this complex saga is a money trail that links to Najib and his AmBank accounts.

Between June 2011 and September 2013, almost $US530m flowed from an account in the name of Seychelles company Good Star Limited, which has links to Low, held at RBS Coutts’ Zurich branch, to the extravagantly named Abu Dhabi-Kuwait-Malaysia Investment Corporation, a Low company with an account at BSI. This is according to documents from Singapore police, which told Malaysia’s central bank, Bank Negara Malaysia, last March that Low held 55 accounts at BSI Singapore — one of which, in his own name, contained $S11.5m.

Through its lawyers, Carter-Ruck, PetroSaudi denied it was under investigation by the Swiss and said it was “not correct” to ­describe Turki as a shareholder. However, documents obtained by The Australian show that when PetroSaudi’s Saudi Arabian arm was incorporated in 2007, Turki owned half the company.

In response to questions from The Australian, Carter-Ruck has confirmed the Saudi royal “was a joint shareholder in the PetroSaudi group until 31 January 2013”.

The PetroSaudi-1MDB joint venture was unveiled in 2009.

1MDB tipped in $US1 billion in cash, while PetroSaudi’s contribution was an option to invest in an oilfield on the Caspian Sea in Turkmenistan, valued at $US2.7bn. This valuation has been heavily attacked by 1MDB’s critics, who say it was worthless.

By 2012, after a series of complex Islamic debt deals, the joint venture owed 1MDB about $US2.2bn. The debt was repaid by 1MDB effectively swapping it for half of a PetroSaudi subsidiary, which it then sold to Cayman ­Islands-based Bridge Partners International.

The proceeds of that sale were then invested in Brazen Sky — the company at the centre of the Singaporean money laundering probe — which in turn invested in Bridge Global Absolute Return Fund.

However, it is alleged no actual cash flowed into BGARF and the investment instead was in the form of promissory notes, a type of corporate IOU.

It’s BGARF that provides the Gold Coast connection. It owns almost 10 per cent of the Australian Securities Exchange-listed Bridge Global Capital Management, making it the second biggest shareholder behind another offshore mystery company, the United Arab Emirates-registered Merrill Capital. Despite its name, Merrill is not linked to US finance giant Merrill Lynch. Instead, it is associated with Singaporean businessman Samuel Goh, the Australian Securities & Investments Commission told the Federal Court.

BGARF is a “segregated portfolio company”, meaning it is a collection of separate investment funds, each with its own individual assets and liabilities.

It’s not clear who was in direct control of the portfolios involved in the 1MDB transaction, although one source suggests Gold Coast businessman Rizwan Alikhan may have been involved in setting them up. There is no suggestion Alikhan, who could not be located, has done anything wrong.

However, ASIC has told the court at least one other BGARF portfolio, Bridge Global CMC, was managed by Caymans company Bridge Global Asset Management.

It said Bridge Global Asset Management was run by Goh and Australian businessman Paul Rowles, who could not be located, and part-owned owned by a Gold Coast-based company where Rowles was a key executive, Avestra Asset Management.

BGAM also had an agreement to pay half of its income to an ASX-listed company with a confusingly similar name, Bridge Global Capital Management.

ASIC’s Federal Court action is aimed at winding up Avestra over mismanagement of its Australian operations, but the watchdog is not believed to be interested in pursuing any Malaysian connections.

According to one of Najib’s fiercest critics, London journalist Clare Rewcastle-Brown, long before the BGARF transaction Low had siphoned about $US700m from the PetroSaudi joint venture to Good Star — the same Low company whose account in Singapore police allege saw flows of almost $US530m.

But while Rewcastle-Brown — who expects to be named by Sirul as one of the people who encouraged him to finger Najib — has been able to point to $US680m flowing into the Prime Minister’s AmBank account in March 2013, just before a general election, so far critics have been unable to show the money came from Low or 1MDB. The money came in two ­tranches: about $US620m from the Singapore branch of Swiss bank Falcon Private, which belongs to Abu Dhabi’s state-owned International Petroleum Investment Corporation, and another $US61m from British Virgin Islands company Tanore Finance Corp.

It is this gap in the money trail that allowed Malaysian Attorney-General Apandi Ali to declare the money was a donation to Najib from the Saudi royal family — and that $US620m had been returned unused.

It appears another alleged transfer, of 42m ringgit (about $14m at the current exchange rate), from 1MDB subsidiary SRC International to Najib’s AmBank account in 2014 and last year is yet to be explained.

Last November, AmBank paid a 53.7m ringgit fine after Bank Negara Malaysia found it had breached its anti-money-laundering and counter-terrorism finance obligations in relation to “politically ­exposed persons” — believed to be a reference to Najib’s accounts.
Najadi thinks there’s more to come.

“This huge money that has been flowing through Najib’s accounts at AmBank will have, and must have, regulatory conseq­uences for the shareholders and the senior management of the bank because money laundering is a crime punishable in Malaysia,” he tells The Australian.

And he pushes back against suggestions his father could not have known about what was going on at AmBank because he had not been directly involved in its management since 1981, when he sold his remaining stake to bank chairman Azman Hashim.

“He indeed kept in touch with senior advisers to the bank and its chairman and he had what he believed was a good relationship with central bank governor Zeti (Akhtar Aziz),” Najadi says.

He calls on ANZ as a “responsible large shareholder” to “at least make a statement, in view of where they stand on such fraudulent stuff going on”, and he queries the lack of public response to the crisis from AmBank and Hashim.

Najadi’s father was shot dead in a Kuala Lumpur carpark on July 29, 2013. Malaysian police insisted the murder was over a land deal gone wrong and in September, tow-truck driver Koong Swee Kwan was sentenced to death for the murder.

But Najadi believes the mastermind is still at large after fleeing to Australia and on to Shanghai.

He has given up on pursuing the case in Malaysia and instead has hired an English lawyer to file a case with the Office of the UN High Commissioner for Human Rights.

“I’m taking the case to the United Nations in Geneva because justice is dead in Malaysia — you cannot rely on it,” he says.


September 2009
Malaysian sovereign wealth fund 1MDB invests $US1 billion in joint venture with PetroSaudi, a company co-founded by Saudi Arabia’s Prince Turki bin Abdullah

October 2009
$US700 million allegedly pilfered from the joint venture

September 2012
1MDB sells stake in JV, invests proceeds in Cayman Islands fund through subsidiary Brazen Sky
March 2013 
Malaysian investigators reveal $US680m transferred from unknown source to AmBank account of Malaysian Prime ­Minister Najib Razak

May 2013 
Najib wins Malaysian election

July 2013
AmBank founder Hussain Najadi shot dead in a Kuala Lumpur ­carpark

July 2015
The Wall Street Journal reports Malaysian investigators found links between transfers to Najib’s account and 1MDB

November 2015
AmBank pays a 53.7m ringgit ($17.6m) fine after central bank finds it breached its anti-money- laundering and counter- terrorism ­finance ­obligations in relation to “politically exposed ­persons”

January 2016
Malaysia’s Attorney-General clears Najib, saying deposits were donations from Saudi royals

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