It took a year in coming, but now that the United States Department of Justice indictment on 1MDB has been laid before the courts its impact can only be described as earth-shattering for Malaysia – and utter vindication for Sarawak Report.
The joint investigation by the ‘Kleptocracy Asset Recovery Unit’ together with the FBI was personally presented at a Press Conference by the US Attorney General Loretta Lynch, who described the investigation into 1MDB as the “largest single action ever by the Kleptocracy Asset Initiative” and a “significant step in our ongoing work to combat global corruption and to ensure that the United States offers no safe haven to those who illegally use public funds for private gain“
The asset recovery indictment accuses Malaysia’s Prime Minister Najib Razak directly of having received hundreds of millions of dollars stolen from 1MDB into his private account.
Most significantly of all it puts paid to the claim that the notorious $681 million paid into Najib’s account in 2013 was a “donation” from a Saudi Royal. To the contrary, the DOJ spells out in excruciating detail how this money was transferred not from a Saudi Royal, but from 1MDB, via Tanore Finance Corporation and into Prime Minister Najib Razak’s KL bank account.
And in a broad sweep of over a billion dollars worth of confiscated assets are included all the receipts from his step-son’s film Wolf of Wall Street, along with a string of properties and possessions held by Riza Aziz, Jho Low and their accomplice Khadem Al Qubaisi in the United States.
“Corrupt officials transferred money using a series of transactions involving more shell companies and bank accounts located all over the globe. Eventually more than $230 million of that found found its way in the account of shell companies whose beneficial owner was a close relative of a senior 1MDB official and that individual used money to buy luxury real estate in the United States and other assets and also used that money to fund a motion picture company called Red Granite Pictures who in turn used more than $100 million to finance the award-winning film The Wolf of Wall Street. Of course, neither 1MDB nor the Malaysian people saw a penny of profit from that film or the other assets purchased with funds siphoned from 1MDB. Instead that money went to associates of the corrupt officials at 1MDB and others” added Assistant Attorney General Leslie Caldwell in a follow up speech, in a clear reference to Najib and his step-son Riza Aziz.
Altogether, the indictment says, the Prime Minister’s agent Jho Low “laundered” approximately $368 million of 1MDB’s funds through the United States, through the assets it has now frozen.
“The $1 billion in assets that we’re discussing today are just a portion of the more than $3 billion that was stolen from 1MDB and laundered through American institutions in violation of the law. 1MDB was created to promote economic development… unfortunately and tragically a number of corrupt officials treated this public trust as a personal bank account”
says the US Attorney General – and there is no mistaking from this indictment that she is referring above all to Malaysia’s Prime Minister himself.
FBI Deputy Director Andrew McCabe was also on stage to outline the disgusting excesses of the thieves from 1MDB and explained why the United States has taken such strong and decisive action against the Malaysian fund:
“They used the money to pay gambling debts at Las Vegas casinos, they rented luxury yachts, they hired an interior decorator in London and spent millions on property… among the purchases was a jet for the purchase price of $35 million.
So why does this matter so much to us? Certainly there’s a lot going on in the world right now, terrorist attacks, violent crime and serious threats to American citizens and people around the world. Why does the corruption case halfway round the world matter so much to us here today? Well, I’ll tell you for a few reasons. First, because some of the profits of these schemes were invested in the United States, and when corrupt officials bring their ill-gotten gains to the United States, they also bring with they also bring with them their corrupt practices and disregard for the rule of law and that presents a threat to our economy and impacts trade and investment and fuels the growth of criminal enterprises and undermines our fair democratic processes…”
The FBI provides for the first time devastating and damning evidence of the purpose of the 1MDB thefts, which was to pass money to the man in charge who was Najib Razak.
The indictment (available in full at the base of this article) describes the PM as ‘Malaysian Public Official Number 1′:
From the very start the accusation is made that money was stolen from 1MDB, using several schemes and phases, listed as the 1) The Good Star Phase 2) The Aabar/BVI Phase and 3) The Tanore Phase.
Dealing with the Good Star Phase and PetroSaudi the indictment makes immediately clear that the claims by 1MDB and oil firm PetroSaudi that Good Star belonged to the latter were lies – The Feds confirm that the firm belongs to Jho Low, who siphoned first US$700 million out of the joint venture and later US$330 million, all under false pretences.
The DOJ continues to lay out the direct and complicit role of PetroSaudi and its co-founding Prince Turki bin Abdullah in funnelling the stolen cash straight on to Najib. At last the role of the so-called ‘donor’ is laid bare. Several transactions involving the money stolen via Good Star, show that it was then sent to Turki, who sent it on to the Malaysian Prime Minister:
“Between February and June of 2011, approximately $24,500,000 of these funds was transferred into an account at Riyad Bank maintained in the name of a Saudi prince who, together with the PetroSaudi CEO, co-founded PetroSaudi. From those funds, $20,000,000 was then transferred, within days, to an account belonging to Malaysian Official 1″
Lest there should be any doubt about the source of the funds and identity of Najib’s ‘Saudi Royal Donor’ this citation immediately carries on to make a deadly point. The account to which the Good Star money was sent was the very same AMPrivate Bank account belonging to Najib, which was later to receive the $681 million dollars from Tanore Finance Corporation, allegedly as a Saudi royal donation!
This is an indictment that could never be accused of mincing its words and this is what the United States prosecutors have to say when they turn next to Najib’s 1MDB fixer, Jho Low:
“Low laundered hundreds of millions of dollars in proceeds from the foregoing unlawful activity into the United States for the personal benefit of himself and his associates…..
Between approximately October 21, 2009, and October 13, 2010, eleven wires totalling approximately $368 million were sent from the Good Star Account to an Interest on Lawyer Account held by the law firm Shearman & Sterling LLP in the United States
More particularly, bank records show the following credits to the Shearman IOLA Account from the Good Star Account:
The figures show that the first $148 million in stolen money were transferred into Jho Low’s US accounts on 21st October 2009, just a couple of weeks after the $700 million was channelled out of 1MDB into his Good Star account in Zurich.
By this time, as Sarawak Report has noted, the young huckster was on a bender in Vegas, where work colleague Seet Li Lin boasted on Facebook that it was “raining Crystal” (champagne). The indictment complains that much of the cash from 1MDB was indeed wasted in Vegas on gambling and entertainment by these thieves working for the Malaysian Official 1.
The money transferred was then used by Low, says the indictment to “purchase assets and invest in business interests for their personal benefit, including, but not limited to, luxury real estate, a Beverly Hills hotel, a private jet, and a major Hollywood motion picture“.
There is no doubt that the picture referred to is The Wolf of Wall Street, starring Jho Low’s party pal Leo Di Caprio, which features first on the list of assets that the United States Government wishes to confiscate.
The lavish and extravagant spending explains the numerous instances cited already by Sarawak Report of astonishing spending in Vegas nightclubs, on yachts …. and on jewellery bought at Hong Kong’s Rose Trading on behalf of Rosmah Mansor:
“…between October 2009 and October 2010, misappropriated 1MDB funds sent from the Good Star Account into the Shearman IOLA Account were transferred as follows: (i) approximately $12,000,000 in wires to Caesars Palace, a Las Vegas casino; (ii) approximately $13,400,000 in wires to the Las Vegas Sands Corp., the owner of the Venetian Las Vegas, another casino; (iii) a wire for approximately $11,000,000 to “Eric” TAN Kim Loong, an associate of LOW; (iv) approximately $4,000,000 in wires to Jet Logic Ltd., a luxury jet rental service; (v) a wire for approximately $3,500,000 to LOW’s sister; (vi) a wire for approximately $3,080,000 to Rose Trading, a Hong Kong jeweler; (vii) approximately $2,698,000 in wires to Yachtzoo, a luxury yacht rental service; (viii) approximately $2,288,000 in wires to Argent Design Ltd., a United Kingdom-based interior designer; (ix) a wire for approximately $670,000 to Excel Air, a jet rental company; (x) approximately $460,000 in wires to Skyline Private Air, an aircraft rental company; and (xi) a wire for approximately $155,000 to Billiyon Air, a jet rental company.”
Separately, as recorded also by Sarawak Report, huge sums were also sent from Good Star to the ADMIC account in Singapore, also owned by Jho Low:
“Over the course of five wire transfers between June 28, 2011, and September 4, 2013 approximately $389 million was transferred from the Good Star Account to an account at BSI Bank in Singapore held in the name of Abu Dhabi Kuwait Malaysia Investment Corp. (“ADKMIC BSI Account”). LOW is the beneficial owner of the ADKMIC BSI Account.”
Confirms the indictment. This money was also used by Low to acquire business and other assets in the US.
The DOJ goes on to deal with what it describes as the second major phase of the kleptocracy scam, plainly orchestrated by the one man still in charge throughout, PM Najib Razak. Again, all Sarawak Report’s months of breaking stories and reporting on Aabar and its Chairman Khadem Al Qubaisi (for which we were banned in Malaysia) is vindicated by this confirmation by the United States Department of Justice that at least $1.367 billion was stolen from the scheme.
“In 2012, approximately $1.367 billion in 1MDB funds that were raised in two separate bond offerings were misappropriated and fraudulently diverted to bank accounts in Switzerland and Singapore..” [112 DOJ indictment on 1MDB]
The DOJ confirms that “Almost immediately after receiving the proceeds of each of the 2012 bond issues, 1MDB wire transferred a substantial portion of the proceeds – totalling approximately $1.367 billion between the two bond sales, or more than forty percent of the net proceeds raised – to a Swiss bank account belonging to an entity called Aabar Investments PJS Limited”. The account was a fake subsidiary of the genuine Aabar as Sarawak Report and others have reported, but which Najib and 1MDB have continued to deny.
So what happened to that money next? At last we have the answers and the proof that once again it went to a Jho Low company already identified by Sarawak Report as Blackstone Asia Real Estate Partners:
“within days of receiving funds from 1MDB, Aabar-BVI transferred a total of approximately $636 million to the Singapore bank account held by Blackstone Asia Real Estate Partners (“Blackstone Account”). .. The beneficial owner of the Blackstone Account was identified in bank records as “Eric” TAN Kim Loong (“TAN”), a Malaysian national and an associate of LOW.”
This money was then parcelled out to the Aabar 1MDB conspirators including Aabar Chairman Khadem Al Qubaisi, CEO Mohamed Al Husseiny, and then “In October and November 2012, Blackstone transferred $30,000,000 to an account belonging to MALAYSIAN OFFICIAL 1.” i.e. Najib Razak.
Next a nice lump of the stolen money also went to step-son Riza Aziz:
“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.”
Back in 2013 Sarawak Report was threatened with legal action for questioning these expenditures by Riza. But, then Najib’s step son pulled back. No wonder, because according to the DOJ’s forensic and devastating analysis, everything we had said was absolutely right.
“The offering circular contained misleading statements and omitted material facts necessary to make its representations not misleading…”
The DOJ does not waste time in making clear that America’s top bank misled the buyers of the 1MDB bonds that it negotiated. This with regard to the first power purchase bond of $1.75 bn for Tanjong Energy, called “Project Magnolia”:
“Internal documentation prepared by Goldman summarizing the bond transaction indicates that the “general corporate purposes” for which the bond proceeds were contemplated included “pre-fund guarantee fees to IPIC, cash on balance sheet, and transaction related expenses.”
In reality, however, nearly $577 million – a sum equivalent to more than one third of the net proceeds of the Project Magnolia bond offering – was diverted to Aabar-BVI within one day of 1MDB’s having received the proceeds of the bond offering. Nothing in the offering circular disclosed that 1MDB would transfer any of the bond proceeds to Aabar-BVI, or that funds transferred to Aabar-BVI would subsequently be used for the benefit of officials at 1MDB, IPIC, and Aabar, including QUBAISI, IPIC’s Chairman, and HUSSEINY, Aabar’s CEO…”
It places Goldman Sachs in serious trouble, as long suspected by followers of 1MDB. The DOJ points to the astronomical costs of GSI’s compliant and misleading services, which again disadvantaged investors and the Malaysian public, who were Goldman’s clients:
“1MDB agreed to pay Goldman: (a) a fee of 1% of the principal amount of the notes, or $17.5 million, as an “Arranger Fee,” and (b) $175,000,000, as a “Commission,” for a total of $192,500,000. These fees amount to roughly 11% of the principal amount of the offering and were to be deducted directly from the subscription proceeds of the bonds”
Exactly the same scam was carried out with the second $1.75 bn power purchase bond “Project Maximus” as the first, the DOJ says, with half the money being immediately diverted.
“As with Project Magnolia, the offering circular for Project Maximus nowhere disclosed that nearly half of the net bond proceeds would be transferred to Aabar-BVI, in the form of “collateral” or otherwise, or that funds transferred to Aabar-BVI would subsequently be used for the personal benefit of officials at IPIC, Aabar, and 1MDB, including QUBAISI and HUSSEINY.’
And once again Goldman Sachs misled buyers in its offering circular:
“Although IPIC did not directly guarantee the Project Maximus notes as it had with the Project Magnolia bonds, it nevertheless agreed to privately secure the bonds on a bilateral basis with Goldman. No reference to IPIC’s indirect guarantee was included in the offering circular.
The most deadly and damning accusation out of all this of course is that the proceeds of this looting ended up with Najib [Malaysian Public Official 1] and his co-conspirators at Aabar and 1MDB:
“the Aabar-BVI Swiss Account was used to unlawfully divert proceeds of both the Project Magnolia and Project Maximus bonds, which were thereafter used, after having passed through various accounts, to make substantial payments to QUBAISI, HUSSEINY, MALAYSIAN OFFICIAL 1, and 1MDB OFFICER 3″
The 1MDB conspirators made a fatal error throughout their dealings, in that they conducted all their affairs in dollars. The incentive was clear – they wanted their loot in international currency, not to invest it back in their own country of trusting voters. However, this means that from the start the US investigators have been able to trace each and every transaction they undertook, through their clearing systems.
So, in May 2012, we are told $907,500,000 in proceeds from the bond sale was transferred to the Aabar owned Swiss Private Falcon Bank (of which Al Husseiny was the Chairman) – a couple of days later $576,943,490 went on to the fake Aabar’s account in the Private Swiss BSI Bank in Lugano.
“Nothing in the Project Magnolia offering circular disclosed that any funds would be sent to Aabar-BVI, let alone one third of the net bond proceeds” The DOJ again admonishes Goldman and the other banks involved.
Likewise, in October $790 Million in 1MDB Funds Was Diverted to the Aabar-BVI Swiss Account from the next Maximus Project Bond. This represented more than forty percent (40%) of the total net proceeds of the two bond sales, says the DOJ.
The DOJ slams the practice shown throughout the 1MDB scam and often previously raised by Sarawak Report, of choosing names for bogus companies, which are designed to make them sound like subsidiaries of large and more reputable concerns.
“The practice of utilising a bank account held by an entity with a name that mimics a well-known commercial enterprise is a technique commonly employed to lend the appearance of legitimacy to transactions that might otherwise be subject to additional scrutiny by the financial institutions involved, for example, because of the size of the transaction or because of the role of a politically-exposed person or entity in the transaction.” the DOJ observes…. in which case, why were the banks not ready against being fooled?
The indictment rolls relentlessly on. From the power purchase deals, the DOJ explains that a total of $1.1 billion dollars was sent out of the power purchase deals to the fake Aabar account at BSI Lucerne and then on to the fake Blackstone Asia Real Estate Partners Account at Standard Chartered Bank in Singapore, managed by the Jho Low stooge, Eric Tan.
A lot of this money was changed into cash at money exchanges in Singapore, a common launderer’s trick, says the DOJ. Meanwhile, they trace the money from the second bond deal thus: “roughly six days after the Project Maximus bond issue and four days after Aabar-BVI received approximately $790 million from 1MDB Energy Langat” . This money was then transferred via two intermediary companies to Blackstone to the tune of $455,000,000.
Devastatingly, the DOJ then says that from Blackstone the money was passed on to Najib and his accomplices:
On the distribution of this money the DOJ confirms Sarawak Report’s earlier information that nearly half a billion dollars went to the Edmond de Rothschild Bank Privee account of Khadem Al Qubaisi, which had of course been denied by the bank.
“Blackstone Transferred Approximately $473 Million to an Account Controlled by QUBAISI……Between approximately May 29, 2012, and November 30, 2012, four wires totaling $472,750,000 were sent from the Blackstone Account to an account at Bank Privee Edmond de Rothschild (“Bank Rothschild”) in Luxembourg maintained in the name of Vasco Investments Services SA (“Vasco Account”).
Khadem Al Qubaisi’s side-kick CEO of Aabar Mohamed al Husseiny also got his kickback out of Malaysia’s stolen public money:
“Between May and December 2012, entities belonging to HUSSEINY, then- CEO of Aabar, also received $66,600,000 from the Blackstone Account.”
…. and of course money was also transferred to Najib, known as ‘Malaysian Official Number 1″:
“Blackstone also transferred at least $30,000,000 to an account belonging to MALAYSIAN OFFICIAL 1 shortly after receiving funds from Aabar-BVI.
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.”
That bank account belongs to MALAYSIAN OFFICIAL 1 and is the same account that received $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.
On or about November 19, 2012 – less than two weeks after Blackstone received $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.
That totals $135 million transferred from 1MDB, via Aabar, then Blackstone to Najib’s AmPrivate Bank account in KL, from the power purchase deals during the course of 2012. So, who is the criminal, Sarawak Report and others for asking some questions about 1MDB or the Prime Minister?
Riza Azia was another beneficiary of the power purchase deal money explains the DOJ – “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.” Aziz used the money to buy real estate and pay for his Red Granite production company’s expenses…. so much for the claim of independent investors.
The money was sent direct from bogus Aabar to a Red Granite account at BSI Singapore:
Malaysians will be interested to learn that Riza Aziz claimed that this money was a “gift” from Aabar! He is clearly a man who learns from his parents. Much of the money was used to buy his string of fancy houses, which have been identified by Sarawak Report in Hillcrest Drive Beverley Hills and Lygon Place in London.. as well as his fancy pad in New York.
The explanation of the “gift” to Riza’s tax consultants was that Aabar was owned by a ‘family friend’. If a Sultan can donate a billion to Najib, why not? Mohamed Al Husseiny again did the honours by sending a letter confirming his “gift” to Riza.
The rest of the money went into the Wolf of Wall Street, a film that has been seized with all its profits by the United States DOJ as the number one item in this asset recovery bid:
Between June and November 20, 2012, eleven wires totaling $64,000,000 were sent from the Red Granite Capital Account to an account at City National Bank in the United States maintained by Red Granite Pictures.
These funds transferred to Red Granite Pictures in the United States were then used to fund Red Granite Picture’s operations, including the production of the film “The Wolf of Wall Street,” which was released in the United States on December 25, 2013.
As if it could not get any worse the DOJ then discloses that at least $41 million of the money was used to gamble with by Aziz, Low and Tan over a number of sessions in Las Vegas. The co-producer of Red Granite Joey McFarland also drew on this gambling account.
The indictment moves finally into what it describes as the Tanore Phase, a deadly name for Najib, given the association with Sarawak Report’s revelations last July of the shocking transfer of $681 million transferred into his AmBank account just before the last election.
Najib in the end claimed the money was a ‘donation’ from a Saudi Royal.
It wasn’t says the DOJ and no one in Malaysia will be in the least surprised. After all the lies and fairy tales about donors from the Saudi Royal Family, it is over this issue above all the others that Najib must resign.
This last tranche of money that went through Tanore is confirmed as having been raised (as suspected by Sarawak Report) from the third and final Goldman Sachs bond issue of $3 billion raised in March 2013 in the name of a Strategic Joint Venture with Abu Dhabi’s Aabar fund in order to build the Tun Razak Exchange.
in 2013, more than $1.26 billion in 1MDB funds that were raised in a third bond offering arranged by Goldman were misappropriated and fraudulently diverted to bank accounts in Switzerland and Singapore. In issuing these bonds, 1MDB participated in the publication and disclosure of an offering circular that again contained material misrepresentations and omitted material facts necessary to render its representations not misleading regarding:
All that money, says the DOJ was funnelled through Tanore Finance Corporation, which like Blackstone before it was managed by Jho Low’s employee Eric Tan. And the DOJ confirms that it was this money – the notorious $681 million – stolen from 1MDB, that ended up in Najib Razak’s AmBank account… just like Sarawak Report suggested months ago:
“very shortly after the bond offering closed, between approximately March 21, 2013, and March 25, 2013, $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.”
So there we have it. No Saudi Royal and no return of money to the ‘donor’, just back to Tanore when it was no longer needed in KL for other business ventures and purchases:
1MDB funds diverted to the Tanore Account were also used by LOW and TAN to purchase artwork for their personal benefit and to purchase an interest in the Park Lane Hotel for the personal benefit of LOW. The disposition of these funds was not consistent with the intended use of the 2013 bond proceeds nor was it made for the benefit of 1MDB or ADMIC.
Once again there is a deadly admonishment for Goldman and Najib:
“The offering circular 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.
First the bilk of the money raised was sent to the 1MDB Global account at BSI Lugano – “On or about March 19, 2013, a total of $2,721,000,000, representing proceeds of the bond sale, was transferred from Bank of New York Mellon into the BSI Lugano account of 1MDB Global in two separate wires..”
$1,590,000,000 of that was invested in funds.,, the same two companies used earlier to transfer cash to Blackstone. Within two days much of the remainder went from 1MDB Global’s BSI account to Tanore:
Within approximately two days after 1MDB Global began its transfer of more than $1.5 billion to the Overseas Investment Funds, the Overseas Investment Funds collectively transferred a total of $835,000,000 to the Tanore Account….. funds from the Tanore Account were sent to an account belonging to MALAYSIAN OFFICIAL 1 [NAJIB] 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.
There is much more in this report, but the above facts laid out by the US DOJ, backed by all the evidence available to federal investigators, thanks to the dollar clearing systems, are a devastating indictment of the Malaysian Prime Minister, who must now resign.
Najib has been proven a thief and a liar and to be bad at both. He has taken from his own people and abused their trust and he has shamed Malaysia by proving to be not only the greediest and most excessive Kleptocrat ever recorded, but also the most inept.
Caught red-handed, Najib has no choice. He has to go.