In 1MDB, DoJ vs Dodgy Minister

PM Najib Razak, whom several Malaysian leaders say bears no resemblance to Malaysian Official 1. – Pic from the Internet

“Better to remain silent and be thought a fool than to speak out and remove all doubt.” – Abraham Lincoln

No truer words have ever been spoken, and today the proof of that saying can be found in Malaysia where the local pro-government media continues to report the government’s insistence that all is well with 1MDB despite the US Department of Justice saying the Malaysian state fund’s money has been used as a personal kitty by several people.

One of the leading lights on the government side has been newly-anointed economic minister Abdul Rahman Dahlan, who also wears his hat as the ruling Barisan Nasional strategic communications director.

The state news agency Bernama report on his comments appeared in the Umno-controlled New Straits Times today under the headline “DOJ should have listened to 1MDB’s side of the story before making announcement”.

While criticising the DoJ for not contacting 1MDB over alleged pilfering of its monies, Rahman took the opportunity to link the US investigations to reports carried by whistleblower site Sarawak Report – which is blocked in Malaysia.

But the best bits was Rahman repeating that Prime Minister Najib Razak is not Malaysian Official 1, insisting that his name has not appeared in the DoJ’s 136-page complaint.

“What happens now is an allegation. Several individuals have been alleged to have taken or stolen 1MDB funds. It is an allegation by the DOJ,” he said, adding that the DOJ was taking the opportunity to hit the country, government, prime minister by using very rude language.

On the group linking Najib to the DOJ allegation, Abdul Rahman said if the DOJ had any proof to drag the prime minister, then his name would be stated in the DOJ document.

“Try and show where Najib’s name had appeared…whereas several other names had been stated in the document,” he said.

Perhaps the minister had not had time to read the DoJ’s report which referred extensively to some of the findings of Malaysian investigators to come up with 31 instances where Malaysian Official 1 was named that bore striking similarities to Najib.

The full list of references to Malaysian Official 1 and the paragraph it appears are as follows:-

28. 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.

29. 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.

39. Upon its formation (1MDB), 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 commitments by 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.

50. A special meeting of the 1MDB Board was held on September 26, 2009, which was attended by 1MDB Officers 1 and 2 and members of the Board. Low (Jho Low) also attended this meeting. Just prior to the meeting, Low spoke by telephone with Malaysian Official 1.

(Section title): Funds misappropriated from 1MDB were transferred to the co-founder of PetroSaudi and thereafter to Malaysian Official 1

After the title above, a chart named Table 2 at page 34 of the document showing funds of RM20 million entering into Malaysian Official 1’s account was also displayed.

99.  As set forth above, between September and October 2009, $700 million was fraudulently diverted from 1MDB to the Good Star Account. An additional $330 million  was fraudulently diverted from 1MDB to the Good Star Account between May and October 2011. According to J.P. Morgan Chase 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 a Saudi prince who, together with the  PETROSAUDI CEO, co-founded PetroSaudi (“PETROSAUDI CO-FOUNDER”).

From those funds, $20,000,000 was then transferred, within days, to an account belonging to Malaysian Official 1.

102. Plaintiff alleges on information and belief that Malaysian Official 1 is the ultimate beneficiary of the AmPrivate Banking-MR account. The AmPrivate Banking-MR account is the same account that later received certain payments totalling approximately US$681 million in March 2013. As set forth in Paragraph 263 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.

119. Funds transferred to the Blackstone Account by Aabar-BVI were subsequently distributed to officials of IPIC, Aabar, and 1MDB. Between approximately May and November 2012, shortly after Blackstone’s receipt of funds from the AabarBVI Swiss Account, Blackstone transferred $472,750,000 into a Luxembourg account beneficially owned by Qubaisi.

During roughly the same time period, Blackstone transferred $66,600,000 into two different accounts beneficially owned by Husseiny. In October and November 2012, Blackstone transferred $30,000,000 to an account belonging to Malaysian Official 1. Finally in December 2012, Blackstone transferred $5 million to a Swiss account beneficially owned by 1MDB Officer 3, who was then 1MDB’s General Counsel and Executive Director of Group Strategy.

120. Shortly after receiving proceeds of the two 2012 bond sales from 1MDB, Aabar-BVI also transferred $238,000,000 to a Singapore bank account belonging to Red Granite Capital, an entity owned by Riza Shahriz Bin Abdul Aziz (“Aziz”). Aziz is a relative of Malaysian Official 1 and a friend of Low. Among other things, Aziz used these funds to purchase luxury real estate in the United States and the United Kingdom for his personal benefit, and to fund his movie production company, Red Granite Pictures. 1MDB has disclaimed any investment interest in Red Granite Pictures.

143. Over the course of several months, a large portion of the proceeds of both of the 2012 bond sales – approximately $1.367 billion in total – was transferred from 1MDB to a bank account at BSI Bank in Switzerland held in the name of Aabar-BVI. Plaintiff alleges on information and belief that the funds transferred to the Aabar-BVI Swiss Account by 1MDB were not held for the benefit of 1MDB, IPIC, or Aabar. Rather, the Aabar-BVI Swiss Account was usedto unlawfully divert proceeds of both the Project Magnolia and Project Maximus bonds, which were thereafter used, after having passed through various accounts, tomake substantial payments to Qubaisi, Husseiny, Malaysian Official 1, and 1MDB Officer 3.

178. Once funds were transferred from Aabar-BVI to Blackstone, they were used to make payments to Qubaisi and Husseiny (the two United Arab Emirates official), who served as officers of both Aabar and Aabar-BVI, to Malaysian Official 1, and to 1MDB Officer 3. The distribution of these funds from the Blackstone Account for the personal benefit of officials involved in the bond deal further evidences a misappropriation of public funds and the diversion of the bond proceeds from their intended purpose

(Section title): Blackstone transferred at least $30 million to an account belonging to Malaysian Official 1

193. Blackstone also transferred at least $30,000,000 to an account belonging to Malaysian Official 1 shortly after receiving funds from Aabar-BVI.

194. 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.”

195. That bank account belongs to Malaysian Official 1 and is the same account that received US$20,000,000 from the PetroSaudi Co-Founder in 2011, within days of the receipt by the PetroSaudi Co-Founder of funds from Good Star, as set forth in Section II.G.

196. On or about November 19, 2012 – less than two weeks after Blackstone received US$95,000,000 from Aabar-BVI via Enterprise – Blackstone transferred $25,000,000 to the same AmPrivate Banking-MR Account belonging to Malaysian Official 1.

200. Blackstone was used as an intermediary to obscure the fact that 1MDB bond proceeds were being sent from Aabar-BVI – of which Qubaisi and Husseiny were directors – to accounts that were beneficially owned by Quibaisi, Husseiny, Malaysian Official 1, and 1MDB Officer 3.

201. The funds sent to accounts belonging to Qubaisy, Husseiny, Malaysian Official 1, and 1MDB Officer 3, as described above, were unlawfully misappropriated from 1MDB and/or IPIC.

202. 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.

229. Funds transferred to the Tanore Account were distributed for the benefit of at least one public official associated with 1MDB. More particularly, very shortly after the bond offering (of US$3 billion) was closed, between approximately March 21, 2013, and March 25, 2013, US$681,000,000 was transferred from the Tanore Account to an account belonging to Malaysian Official 1. Of this amount, approximately $620 million was returned to the Tanore Account on or about August 26, 2013.

238. The Government of Malaysia provided a “Letter of Support,” dated March 14, 2013, in connection with the Project Catalyze transaction. That Letter of Support provided, among other things, that if 1MDB failed to provide adequate capital to ensure that 1MDB Global was able to service its obligations with respect to the bonds, Malaysia would then “step-in to inject the necessary capital into the Issuer or make payments to ensure the Issuer’s obligation in respect of the Debt are fully met.” The Letter of Support also indicated that, “[t]o the fullest extent permitted by law,” Malaysia would waive its sovereign immunity and submit itself to the jurisdiction of English courts in connection with disputes arising out of the letter. The letter is signed by Malaysian Official 1.

242. The offering circular also omitted material facts necessary to makes 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. The representation that ADMIC had not determined how all of the bond proceeds would be used did not encompass using those funds, beginning almost immediately after the bond issue, for the personal benefit of individuals related to 1MDB and their associates.

257. Instead, funds from the Tanore Account were sent to an account belonging to Malaysian Official 1, and were also used by Tan and Low to purchase art. Funds from the Tanore Account were also used by Low to acquire a substantial interest in a luxury hotel in New York City. These uses were inconsistent with the intended purpose of the bond proceeds as set forth in the offering circular and the April 23, 2013, 1MDB press release.

(Section title): $681 million was transferred from the Tanore account to an account belonging to Malaysian Official 1

259. Shortly after proceeds of the 2013 bond sale were diverted to the Tanore Account, US$681,000,000 was sent from the Tanore Account to a bank account belonging to Malaysian Official 1.

260. On or about March 21, 2013, Tanore transferred $620,000,000 into an account at AmBank in Malaysia, whose beneficiary was listed as “AmPrivate Banking-MR.” On or about March 25, 2013, an additional $61,000,000 was wired from the Tanore Account to the same account at AmBank, for a total of $681,000,000.

261. This account belonged to Malaysian Official 1 and is the same account that in 2011 received $20 million from the PetroSaudi Co-Founder that was traceable to the Good Star Account, as set forth in Section II.G. It is also the same account that in 2012 received at least $30 million from the Blackstone Account that was traceable to the Aabar-BVI Swiss Account and the 2012 bond proceeds.

262. On or about August 26, 2013, $620,010,715 was wired from a different account at AmBank to the Tanore Account. This AmBank account also belonged to Malaysian Official 1, and the transfer represented funds from the $681 million payments that were being returned to Tanore.

263. The attorney-general of Malaysia publicly stated that he conducted an inquiry into the $681 million in payments. 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.”

264. Bank records associated with the Tanore Account show that TAN was the beneficial owner of the Tanore Account, from which the $681,000,000 payments to the account of Malaysian Official 1 were made, and that 1MDB Officer 3 was added as an authorized signor on the Tanore Account roughly one day before the first wire of $620,000,000 was sent from the Tanore Account to the account of Malaysian Official 1.


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