Absolute Power Corrupts Absolutely

Absolute Power Corrupts Absolutely

Illegal logging has caused another log jam on the river upstream from Bakun - corruption has endless consequences

Illegal logging has caused another massive but barely reported log jam on the river upstream from Bakun – a current and very real danger caused by corruption

In Malaysia too much deference to so-called VVIPs has allowed too much power to drift into the hands of a tiny number of people.

It is plainly not good for them and it is certainly not good for anyone else.

Such types inevitably start to believe they can get away with just about anything and indeed they do – until their deeds unravel.

Leading UMNO are a generation who inherited this accumulated power and they have started to act as if they personally own the state.

Tunku Ismail bin Ibrahim got the last laugh on being told to stop acting like a politician. He told UMNO's hereditary politicians to stop acting like royals.

Tunku Ismail bin Ibrahim got the last laugh on being told to stop acting like a politician. He told UMNO’s hereditary politicians to stop acting like royals.

Most troubling is the growing evidence that Malaysia’s bigwigs consider themselves entitled to raid all manner of public funds, built from the savings of working folk, as if these were theirs for the taking.

This is a serious abuse of trust and the undertaking by those in authority to protect such funds.

Pension funds, religious funds and supposedly independent cooperative trusts have all now become subject to the excessive influence of the politicians in charge of UMNO, who treat them like political piggybanks, according to a growing body of information.

Look at the example of the company SRC International, started under 1MDB, which is completely controlled by Najib Razak.

To avoid proper auditing, this company was subsequently moved under the Finance Ministry, which also is completely controlled by Najib Razak.

SRC managed to secure a huge RM4 billion loan from the pension fund KWAP in 2011. Yet, despite persistent attempts by the opposition, it has so far given no public accountability whatsoever as to how this money has been spent.

Meanwhile, both KWAP and the pilgrimage fund Tabung Haji have also been arm-twisted to help bail out 1MDB’s growing financial difficulties by buying up its land bank at inflated prices. Other public investment bodies, such as EXIM bank, have likewise been dragged in to provide lending.

Power over everything, but accountable for very little - Najib and wife Rosmah

Power over everything, but accountable for very little – Najib and wife Rosmah

The reason that 1MDB is so short of money, of course, is that it has poured borrowed billions into its own projects, for which again it has provided zero accountability.

Behind all these manoeuvres is just one man, Najib Razak, who appears to be beholden to nobody, yet in charge of just about everything.

New emails unearthed by Sarawak Report from the London law firm White & Case, who managed 1MDB’s negotiations with the firm PetroSaudi, show just how central Najib Razak is to the management of the beleaguered fund.

These emails fly in the face of attempts by Najib to claim he was barely involved when the original scandal over the missing billions first broke.

Detail of the vast pearl on Rosmah's finger.  Is it false?

Detail of the vast pearl on Rosmah’s finger. Is it false?

White & Case cite Najib as the sole signatory responsible for the deal on the part of 1MDB, in his capacity as “sole shareholder” of the fund.

Subject: RE: Funding/ Completion Instructions and Documentation
From: “Yong, Jonathan” <[email protected]>
Date: 30/09/2009 09:05
To: Lim, Jo Yan; Buckland, Timothy
CC: Broke, Philip; Reynolds, John; Rimmer, James; [email protected]; KL, Filing Asst16 AAR; Chia, Brian; Shahrol Halmi; Casey Tang; Kelvin Tan; Charlie Sparrow

Jo Yan,

We will confirm the points raised in your below email shortly.

In the meantime, could you please provide an update on the situation as regarding the Bank Negara letter in connection with the case of bank from BSI to JPM?

Kind regards,

Jonathan

Jonathan Yong
Trainee Solicitor
Corporate Mergers and Acquisitions Practice
White & Case LLP
5 Old Broad Street
London EC2N 1DW
United Kingdom
Telephone: + 44 (0) 207 532 1977
Fax:          + 44 (0) 207 532 1001
[email protected]

_____

From: Lim, Jo Yan [mailto:[email protected]]
Sent: 30 September 2009 08:48
To: Buckland, Timothy
Cc: Broke, Philip; Reynolds, John; Rimmer, James; [email protected]; KL, Filing Asst16 AAR; Yong, Jonathan; Chia, Brian; Shahrol Halmi; Casey Tang; Kelvin Tan
Subject: RE: Funding/ Completion Instructions and Documentation

Dear Tim,

I am writing to tie up some loose ends:

  1. Letter Agreement

Please find attached a pdf copy of the execution page of the Letter Agreement to amend the Joint Venture Agreement. Could you please extend us a pdf copy of the executed pages by PSI and the JV Company for our record, and let us know where to send the original signing page.

  1. Bank Remittance

Please also find attached pdf copies of the bank remittance slips for the transfer of funds today, for the subscription of shares in the JV Company.

Could you please arrange for the 1,000,000,000 shares in the JV Company to be issued to 1MDB and let us have the subscription deliverables contemplated in Clause 4.1 of the Joint Venture Agreement.

  1. Loan Repayment Demand

From our review of the Loan Repayment Demand document, we note that the letter was drafted on the letterhead of PetroSaudi International Limited. We thought that it would have been on the letterhead of PetroSaudi Holdings (Cayman) Ltd. We understand from Patrick that the logo of PetroSaudi International Limited appears on the letterheads of all the companies, and they only change the footers of the letters for different companies.

Can you please confirm that Loan Repayment Demand letter is issued by PetroSaudi Holdings (Cayman) Ltd, and not PetroSaudi International Limited.

  1. JP Morgan’s Form A

Further to my email today (attached), could you please confirm that Tarik, HRH Prince Turki and the Minister of Finance Inc are named as the beneficial owners of the joint account in Form A because they are the ultimate beneficial owners of the shareholders of the JV Company. Presumably, it is JP Morgan’s requirement to name the ultimate beneficial owner of the account (and not the intermediaries).

Could you please also send us the revised Form A as suggested in the attached email.

  1. Board Resolution of JV Company

Please find attached a marked up version of the draft JV Company resolution, for your comments. Our insertions are based on the matters contemplated in Part 1 of Schedule 3 of the Joint Venture Agreement. Do let us have a copy of the revised resolution once it has been executed (note that under the Joint Venture Agreement, the board resolution may be delivered not later than 1 business day after subscription).

********

Best regards,

Jo Yan

_____

From: Casey Tang [mailto:[email protected]]
Sent: Wednesday, September 30, 2009 3:36 PM
To: Buckland, Timothy; Chia, Brian; Yong, Jonathan; Lim, Jo Yan
Cc: Broke, Philip; Reynolds, John; Rimmer, James; [email protected]; Shahrol Halmi; Casey Tang; Kelvin Tan; KL, Filing Asst16 AAR
Subject: RE: Funding/ Completion Instructions and Documentation

Dear all,

Pls. be advised that remittance has been executed as evidenced via MT103 from Deutsche Bank as attached. We would appreciate if the issuance of the shares to 1MDB be issued expeditiously. Kindly advise when can this be achieved.

Thanks and regards,

 

Casey Tang

From: Buckland, Timothy [mailto:[email protected]]
Sent: Wednesday, September 30, 2009 2:17 PM
To: [email protected]; Yong, Jonathan; [email protected]
Cc: Broke, Philip; Reynolds, John; Rimmer, James; [email protected]; Shahrol Halmi; Casey Tang; Kelvin Tan; [email protected]
Subject: Re: Funding/ Completion Instructions and Documentation

The avoidance of doubt language is fine.

Thanks  _____

From: Chia, Brian <[email protected]>
To: Yong, Jonathan; Lim, Jo Yan <[email protected]ongPartners.com>
Cc: Buckland, Timothy; Broke, Philip; Reynolds, John; Rimmer, James; [email protected] <[email protected]>; Shahrol Halmi <[email protected]>; Casey Tang <[email protected]>; [email protected] <[email protected]>; KL, Filing Asst16 AAR <[email protected]>
Sent: Wed Sep 30 02:30:30 2009
Subject: RE: Funding/ Completion Instructions and Documentation

Tim/Jonathan,

I have added some avoidance of doubt language to the letter agreement to amend draft JVA. Please let me know if you are okay with it and we can sign this version.

I have no other comments to the documents attached to your email below.

best regards,

_____

From: Chia, Brian
Sent: Wednesday, September 30, 2009 8:47 AM
To: Yong, Jonathan; Lim, Jo Yan
Cc: Buckland, Timothy; Broke, Philip; Reynolds, John; Rimmer, James; [email protected]; Shahrol Halmi; Casey Tang; [email protected]; KL, Filing Asst16 AAR
Subject: RE: Funding/ Completion Instructions and Documentation

Tim/Jonathan,

 

Thanks. I know its late and have been working to verify the documentation. Given the time crunch, I am sending you comments incrementally as I see them:

For the Loan Repayment Demand, why is the letter drafted on letterhead of PetroSaudi International Limited? It should be on PetroSaudi Holdings (Cayman) Limited’s letterhead (since the Loan Agreement was made with PetroSaudi Holdings (Cayman) Limited) which is now directing repayment to  PetroSaudi International Limited).

best regards

_____

From: Yong, Jonathan [mailto:[email protected]]
Sent: Wednesday, September 30, 2009 3:17 AM
To: Chia, Brian; Lim, Jo Yan
Cc: Buckland, Timothy; Broke, Philip; Reynolds, John; Rimmer, James; [email protected]; Shahrol Halmi; Casey Tang; [email protected]; KL, Filing Asst16 AAR
Subject: Funding/ Completion Instructions and Documentation
Importance: High

Dear Brian and Jo Yan,

Ahead of tomorrow’s funding and completion, please refer to the below points and the attached files.

 

  1. Bank Account Details

(a) Account details for payment of 300,000,000 USD (to be paid into the account set up with J P Morgan (‘JPM’)  in the name of 1MDB PetroSaudi Limited (the ‘JV Company’)

 

Pay to: Chase Manhattan Bank New York
ABA: 021000021
Swift: CHASUS33
Account: 001-1-008182
In favour of: J.P.Morgan (suisse) SA
Swift: MGTCCHGG
Reference: For further credit to account 7619400

 

(b) Account details for payment of 700,000,000 USD to an account in the name of PetroSaudi International Limited (Saudi)

To: J P Morgan Chase Bank, New York, USA.

ABA: 21 000 021

Swift:   CHASUS33

Account: 544-7-44876

In favour of: RBS Coutts Bank Ltd

Swift: COUTCHZZ

Reference: For further credit to account 11116073

 

  1. Letter from JPM confirming new account

 

Please find attached (as ‘Signatories Letter.pdf’) a confirmation letter from JPM that a new company account in the name ofthe JV Company, number 7619400 (the ‘New Account‘) is to be opened, effective tomorrow (30 September 2009).

The letter further confirms that the signatories on the account are:

Mr. Tarik Obaid or Mr. Patrick Mahony

jointly with

Mr. Azral bin Ibrahim Halmi Shahrol or Mr. Keng Chee Tang.

  1. Form A

Please find attached as (as ‘Form A.pdf’) JPM ‘Form A’ which details the beneficial ownership of the New Account and will be dated tomorrow (30 September 2009). Please be aware that the account number of the account variously appears as 76194 and 7619400 in JPM documentation. We have followed up with them on this point and they have confirmed that the final two digits are inconsequential, that is to say, both numbers refer to the same account held by the JV Company.

  1. Loan Repayment Demand

For your information, I attach (as ‘Loan Repayment Demand.pdf’) a letter dated 29 September 2009 demanding repayment of the shareholder loan which directs repayment to an account of PetroSaudi International Limited.

  1. Draft Letter agreement to amend the JVA

We would be grateful if you would please review and confirm your agreement with the attached draft letter agreement (as ‘PetroSaudi – Letter of Agreement.DOC.DOC’) which amends the JVA in accordance with the revised payment details set out above. Should you have any comments we would be grateful to receive these at your earliest convenience.

  1. Written Resolutions

For you information, please find attached (as ‘1MDB PetroSaudi Limited – Written Resolutions re bank, issue & directors.DOC’) draft board resolutions for the JV company to be executed tomorrow (following payment) in relation to:

the appointment of JPM as the JV Company’s bankers;

the approval of the authorised signatories (including Tang and Shahrol) to the bank account;

the issue of 1,000,000,000 shares in the JV Company to 1Malaysia Development Berhad; and

the appointment of directors (including Tang and Shahrol) of the JV Company.

7, Consent Letters

I attach the consent letters (as ‘1MDB – TKC director acceptance letter.DOC’ and ‘1MDB – SABIH director acceptance letter.DOC’) by which Tang and Shirol consent to their appointment of directors of the JV Company. Please arrange for these to be executed and returned to us.

Kind Regards,

Jonathan
Jonathan Yong
Trainee Solicitor
Corporate Mergers and Acquisitions Practice
White & Case LLP
5 Old Broad Street
London EC2N 1DW
United Kingdom
Telephone: + 44 (0) 207 532 1977
Fax:          + 44 (0) 207 532 1001
[email protected]

The emails in this trail also damningly illustrate how on the day AFTER the PetroSaudi joint venture deal was signed, on 29th September, key parties were still confused as to who was supposed to owe whom the $700 million ‘loan’ allegedly being settled by 1MDB.

They further reveal (see highlights in red) that 1MDB and Petrosaudi were presenting a bank account, which belonged to the Jho Low controlled company Good Star, as belonging to “PetroSaudi International Limited (Saudi)”, which was a simple lie.

The outcome was that $700 million of borrowed public money was signed off by Najib to a different company to the one it was supposed to have benefitted.

Much of that borrowed public money has subsequently been traced straight into Jho Low’s personal accounts at BSI bank in Singapore.

All on the say so of the man in charge of every step of the operation, Prime Minister Najib Razak – Jho Low’s close patron.

Wall Street Journal reveals a further raid on 1MDB

This excess of concentration of power was also highlighted by the Wall Street Journal last week, in an article which detailed how ludicrous overpayments for power plants by 1MDB, (sanctioned again by Najib as the sole decision maker for the fund) translated into huge “donations” by Genting, which had made billions more than it should have, to ‘charities’ of which Najib was Chairman.

These ‘charities’ promptly engaged in electioneering, using the money in attempts to boost Najib’s party UMNO in key battleground states like Penang.

It is now being noted that a related charity is currently being employed in Sarawak to distribute similar largesse in battleground areas in the run up to the impending state election.

So, an increasing body of evidence indicates that Najib feels entitled to raid money from pension funds and sovereign funds and to raise public borrowing, in order to effectively operate slush fund operations for political purposes.

One prominent UMNO supporter has even confided to Sarawak Report how Najib ticked him off for complaining about corruption over 1MDB:

“He said, ‘you should stop complaining about this matter as I am using 1MDB to fund UMNO, so we don’t have to rely on deals with business to support us in future’. He was quite open about this and he supposed I would sympathise, since I too am with UMNO”

If this is case, what is there to prevent a man in Najib’s position from taking one step  further and helping himself to these hard earned pensions and religious funds saved up by trusting Malaysians?

Malaysia’s total deference to UMNO’s leadership and the woeful lack of accountability, scrutiny and checks and balances have clearly provided every opportunity for a person in Najib’s place to do just that and stuff his own pocket.

This is invidious for Najib, because it is clearly impossible for a man who has so much influence and who operates with so little accountability to avoid suspicion.

A politician must not only be honest, but be able to be seen to be so.

In a situation such as the present, where billions have plainly gone missing, but where there is zero transparency and where the Prime Minister cum Finance Minister cum UMNO Chairman has so much untrammelled personal power, what are people to think?

It does not help that Najib and his wife have started to display so much new wealth and extravagance.  The PM’s press office has attempted to explain this as ‘normal for a person in his position’.

Yet, unfortunately, it can not be explained in terms of his salary and open sources of income.

Suspicion now comes naturally in Malaysia

So, when the UMNO dominated agricultural cooperative fund FELDA announced this week that it was to buy out the Indonesian interests of the businessman Peter Sondakh for a vastly inflated price, the situation immediately engendered widespread comment.

Sondakh is a known close associate of Najib and is facing personal bankruptsy.  This injection of FELDA money will bail him out.

Plenty are therefore asking whether we can now expect to see generosity from the grateful businessman once again toward some of Najib’s political charities?

Over in Sarawak, for example, Adenan has been bemoaning that he is short of funds to grease the palms of expectant poor folk in advance of the Sarawak polls – Najib, on the other hand, is looking for an early win to polish his political image.

Can these politicians be surprised, under the circumstances, that plenty are now wondering out loud whether FELDA’s excessive payments for Peter Sondakh’s business interests will end up funding Adenan’s election treasure chest in a few weeks time?

UMNO cannot complain at such questions, because Najib and his party have lain themselves open to them through previous conduct, as detailed by the Wall Street Journal.

These ‘VVIps’ have taken too much power, kept too much hidden and lost too much money.

Meanwhile mysterious sources of income keep flowing through unexplained channels to fund bribes during elections and the lavish lifestyles of ministers, who are fond of telling others not to quibble or be ‘jealous’ over their ‘right’ to be rich.

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