How The DOJ Exposed The Deceit And Lies By 1MDB's Staff Plotters - ANALYSIS

How The DOJ Exposed The Deceit And Lies By 1MDB's Staff Plotters - ANALYSIS

When the Task Force investigations began in Malaysia into 1MDB, wanted posters were immediately issued for two of the fund’s most senior staff, both of whom had already fled the country in the wake of Sarawak Report’s original exposes in early 2015.

These wanted characters were 1MDB’s Executive Officer, Casey Tang, and its General Counsel & Executive Director of Group Strategy, Jasmin Loo.  Malaysia’s own investigative bodies were plainly already sufficiently concerned over transgressions by the pair to want them in custody.

And, yet just a few weeks later, Najib’s hasty replacement Attorney General announced the matter entirely closed, despite official protests lodged by the Malaysian Anti Corruption Commission and Central Bank.

As we all know, the FBI and DOJ have now taken up the trail, given the extention of this trans-border crime into the United States in the form of money-laundering.  The detail of the latest 251 page US Department of Justice court document (filed in June) reads like a full length detective novel, spelling out in minutely substantiated detail exactly how these two functionaries, together with a team of others, allegedly cheated and connived to defraud Malaysia of billions.

The document also makes clear that both Casey Tang [‘1MDB OFFICER 1“] and Jasmine Loo [“1MDB OFFICER 3“] received the same fat reward for their respective roles helping Najib Razak’s ‘Official Advisor’ at 1MDB, Jho Low, siphon billions from the fund.

Firstly, on December 22nd 2010, $5 million of the stolen money was transferred from Jho Low’s Good Star Limited to an account held at BSI Bank in Lugano in the name of a company called Totality Ltd, of which Casey Tang was the beneficial owner:

Paragraph 118. On or about December 20, 2010, Good Star wire transferred $30,000,000 to an account at Standard Chartered Bank in Singapore held in the name of Alsen Chance Holdings Limited (“Alsen Chance Account”). “Eric” TAN Kim Loong (“TAN”) was the stated beneficial owner of the Alsen Chance Account. TAN was a close associate of LOW, who also served as a proxy for LOW in numerous financial transactions….
119. On or about December 22, 2010, Alsen Chance wire transferred $5,000,000 to a bank account at BSI in Lugano held in the name of Totality Ltd. (“Totality Account”)…..
120. 1MDB OFFICER 1 was the beneficial owner of the Totality Account. Totality Ltd. was a shell company set up by 1MDB OFFICER 1 for the purpose of maintaining an account at BSI.

Second, in December 2012, Jasmine picked up the same amount:

Paragraph 165…. in December 2012, Blackstone transferred $5 million to a Swiss account beneficially owned by “Jasmine” LOO Ai Swan (“LOO”), who was then 1MDB’s General Counsel and Executive Director of Group Strategy.

The DOJ court filing painstakingly details how these two rewarded 1MDB officers worked together with a ring of collaborators to defraud the fund and deceive a swathe of banks, who plainly didn’t check hard enough to find out if they were being lied to by these supposedly respectable Malaysian government servants.

Much of this solid evidence has yet to be properly relayed to the majority of Malaysians, since it remains untranslated and suppressed in Malaysia.

Therefore, in advance of Najib Razak’s visit to Washington, which he plans to present as evidence that the 1MDB case is being shelved by the United States, Sarawak Report has analysed some of the detail from those court papers, to make clear there is no question but that this criminal investigation is based on serious and undeniable evidence.

Which is why the DOJ are not dropping the case.

Ring Of Fraudsters

Chief amongst the characters, who have been identified by the DOJ as having demonstrably lied and provided false information to banks and others in this “massive conspiracy”, are Jho Low himself, Tarek Obaid and his Chief Investment Officer at PetroSaudi (Patrick Mahony), Tang, Loo, The CEO of 1MDB (Shahrol Halmi), The Chief Investment Officer of 1MDB/CEO of its subsidiary SRC (Nik Faisal Arif Kamil), The CEO and Chairman of Abu Dhabi’s Aabar fund (Mohammed Al Husseiny and Khadem Al Qubaisi) and Najib’s step-son and the owner of Red Granite Pictures, Riza Aziz.

With the exception of Shahrol Halmi and Nik Faisal, all of these are shown in the course of the DOJ evidence to have received payments out of the money they helped steal from 1MDB.  The Prime Minister, Najib Razak, received by far the largest slice of the booty however, in the form of around a billion dollars that was channelled into his AmBank ‘Mr Account’ in KL, along with Low, who received hundreds of millions into his Good Star and Blackstone accounts.

So, how did these conmen operate?

DOJ Details The Good Star Scam

The ‘Good Star Phase’ of the scam back in 2009/10 provides several examples of deliberate and coordinated deception, where the fraudsters told one story to one party and then a completely different story to somebody else.

In order to remove $700 from 1MDB’s initial investment into the bogus joint venture with PetroSaudi, for example, 1MDB officers informed the Board (retrospectively) that the money was owed to PetroSaudi in repayment of an earlier ‘loan’. The DOJ makes plain there never was any such loan, however Casey Tang continued to make this excuse to 1MDB’s bankers at Deutsche Bank, who wanted to know why such a large sum was being diverted into a separate account to the one controlled by the 1MDB/PetroSaudi Joint Venture company?

“And for us what we care about making sure they have issue us one billion dollars [shares]. (Casey Tang told Deutsche Bank) “they want to send to Timbuktu also, we don’t care’. [par 73]

Together with CEO Shahrol Halmi, Tang later represented to the board that the payment of the $700 million was a good deal, because PetroSaudi was injecting assets into the venture of far greater value than this – assets worth $3 billion, according to a bogus valuation report organised by PetroSaudi itself.  When the Board tried to repair the damage and organise a genuine valuation and get the money back the management team obstructed their efforts.

Meanwhile, the DOJ document makes clear that the same management team had told a completely different story again to officials at Bank Negara in order to get permission to export the cash. “..when they applied to us, they got 1.5 billion will be put by the Saudi MDB, one billion by us, uh by Malaysia….so long as it does not deviate from the original intention” The Bank Negara official told Deutsche Bank. However, of course it did.

Meanwhile, over in Switzerland the PetroSaudi team were working together with Jho Low to present yet another completely different explanation to the receiver banks as to why such a huge sum was going into Jho Low’s off-shore shell company Good Star Limited. Patrick Mahony [“PetroSaudi Officer”] had originally tried to help Low open a Good Star account at the same BSI Geneva branch where PetroSaudi held its own account. Explaining the soon to be anticipated payment of  $700 million Mahony made no mention of the cock and bull story about a repayment of a loan to his own company PetroSaudi.  Instead, he told the BSI bankers that this was Jho Low’s “commission” for arranging the deal between 1MDB and PetroSaudi – clearly a staggering percentage.

The DOJ details how the Swiss bankers were immediately suspicious and rejected the account:

60. On or about September 22, 2009, the chief investment officer for PetroSaudi (“PETROSAUDI OFFICER”), a U.K. national, contacted BSI in Geneva to discuss the opening of a bank account for the Joint Venture. During the account opening process, the PETROSAUDI OFFICER explained the anticipated structure of the Joint Venture investments and advised that an unspecified portion of 1MDB’s $1 billion investment in the Joint Venture would be paid to LOW as a commission for having made the introduction between MALAYSIAN OFFICIAL 1 and the Petrosaudi co-founders. BSI refused to enter into a business relationship with the Joint Venture due to concerns about the transaction. In an email dated September 28, 2009, a banker at BSI in Lugano wrote, “I don’t like the transaction at all! In particular the role and involvement of Mr Low Taek Jho ‘looks and feels’ very subspicious [sic] to me.”

Disappointed, Mahony went to a second bank JP Morgan, says the DOJ, this time with a different story “The Joint Venture then approached J.P. Morgan (Suisse) about opening an account, without disclosing the same details about the structure of the investment.”

Meanwhile, Jho Low opened a separate account at Coutts Zurich and came up with a completly different story again about why he was expecting to receive $700 million into that brand new account. Far from mentioning the ‘pay back of a loan to PetroSaudi’ Low explained to the Swiss banders that 1MDB had decided to engage his company Good Star as an ‘Investment Manager’ for some of its funds:

84. RBS Coutts employees .. met with LOW on or about October 2, 2009, to confirm the validity of the $700 million wire. To justify Good Star’s receipt of $700 million from 1MDB, LOW had provided the bank with a copy of a purported “Investment Management Agreement” between 1MDB, as the client, and Good Star, as the investment manager. This agreement, dated September 29, 2009, was signed by 1MDB OFFICER 1 and Li Lin Seet. Li Lin Seet was an associate of LOW and an employee of LOW’s private equity firm, the Wynton Group; he was also identified in the agreement as Good Star’s chief investment officer. According to this purported agreement, 1MDB was a “founding investor [in Good Star] who wishes to support and assist [Good Star] in realising its purpose by providing an initial capital contribution amounting to USD700 million.” The funds were to be used to “invest in real estate and private equity to provide long-term capital growth for the investor.”

This, of course, was not the case as the 1MDB Board had never agreed to invest money through Good Star, of which it had never heard.  Meanwhile, back in Malaysia on the very same day, 1MDB’s Shahrol Halmi was still assisting Casey Tang in misrepresenting the money sent to Good Star as a loan repayment to PetroSaudi in order to get Deutsche Bank to release the cash:

“82. Thereafter, at approximately 7:51 p.m., 1MDB OFFICER 2 emailed the Deutsche Bank Employee and 1MDB OFFICER 1 with authorization to disclose to RBS Coutts that the beneficiary of the $700 million wire was Good Star. However, 1MDB OFFICER 2 misrepresented the nature of the relationship between Good Star and PetroSaudi. Specifically, 1MDB OFFICER 2 stated: “This payment was for beneficiary ‘Good Star Limited’ in their SWIFT. Good Star is owned 100% by PetroSaudi International Limited.” In reality, however, Good Star’s sole shareholder and the signatory on its account was LOW – not PetroSaudi

Altogether, it means that the money was fraudulently sent out of Malaysia on the understanding that it was a repayment of a loan to a PetroSausi subsidiarly called Good Star (which Good Star was not), while on the other hand it was received in Switzerland on the understanding that the money was being invested in Jho Low’s company as part of an Investment Management agreement concluded with 1MDB.

Bank Negara, Deutsche Bank and the 1MDB board were assured by Shahrol Halmi, Casey Tang and later also Tarek Obaid himself that Good Star was a 100% subsidiary of PetroSaudi, whilst on the other hand Jho Low was simultaneously telling Coutts that it was his company and he had done a direct deal with 1MDB.

However, Coutts were still suspicious about Jho and before it would take the money it demanded confirmation from a senior 1MDB official that the Malaysian fund was indeed investing with Jho Low.  Damningly, Casey Tang therefore hopped on a plane the very next day and flew to Zurich where he helped Jho Low by giving a completely different story to Coutts to the one he had just given to the 1MDB Board and Deutsche Bank over in Malaysia.

There in the Zurich bank office Tang confirmed to Coutts that 1MDB had signed an Investment Management Agreement with Jho Low’s Good Star!:

On or about October 28, 2009, two RBS Coutts bankers met with LOW and 1MDB OFFICER 1 in Zurich. 1MDB OFFICER 1’s identity was verified with a copy of his passport. At this meeting, 1MDB OFFICER 1 confirmed the false information that LOW had provided the bank about the purpose and validity of the $700 million transfer.

What better proof that 1MDB’s Senior Management were deliberately lying and changing their stories to different banks in order to get the money out of Malaysia on the one hand and then safely into Jho Low’s entirely separate bank account in Switzerland on the other. Without that active connivance and downright lying in all directions by Tang and Halmi, the banks at either end of this transaction would never have agreed to facilitate the theft of such a large sum of money by Jho Low, as the filing makes clear.

But, that was not the end of the Good Star deceptions.

According to the DOJ evidence Jho’s story soon changed again, when he wanted to start getting the money out of Good Star and into his own ventures and personal bank accounts.  Accordingly, Jho went back to Coutts the following year and told the bank that his arrangement with 1MDB had been altered into a loan so that he could invest it in what he wanted. Coutts apparently believed him!

88. By early 2010, LOW had changed the stated justification for the $700 million wire transfer, characterizing it as the proceeds of a loan from 1MDB to Good Star. LOW provided RBS Coutts a copy of a purported loan agreement between Good Star and 1MDB, dated January 12, 2010, to replace the earlier Investment Management Agreement. The agreement purported to retroactively recognize the $700 million transfer from 1MDB to Good Star as a loan to Good Star to “finance its strategic objectives and future growth through acquisitions, in particular, in the real estate/hospitality area, the energy sector and financial services.” The 1MDB Board never approved such a loan to Good Star, and bank statements for the Good Star Account show no repayment of a loan to 1MDB

In a final crowning deception a different story again had to be prepared for Bank Negara to explain the disappearance of the $700 million.  The Central Bank was informed that the money had been placeed with PetroSaudi as an investment:

89. On or about October 23, 2009, Deutsche Bank informed Bank Negara through a regulatory filing that the purpose of the $700 million wire transfer was for an “equity investment in [a] new entity.” The “new entity” referred to in this regulatory filing was the 1MDB-PetroSaudi JV.

90. The 1MDB-PetroSaudi JV never had an account at RBS Coutts. Rather, as stated above, the 1MDB-PetroSaudi JV maintained an account at J.P. Morgan, and that account received only $300 million of the total $1 billion that was to be invested in the Joint Venture.

Back in KL, the DOJ filing goes on to detail, both Shahrol Halmi and Casey Tang continued to work together to tell the 1MDB Board that the money had been paid to PetroSaudi as part of the Joint Venture Contract.  Whe the issue was raised again in later months the owner of PetroSaudi, Tarek Obaid sent a signed letter to 1MDB confirming that Good Star was owned by PetroSaudi and had received that loan repayment, which was a lie.  The letter proves that Obaid and PetroSaudi were knowing and willing collaborators in the massive deception to defraud 1MDB on behalf of Jho Low.

153. LOW supported this claim by providing BSI with a letter from OBAID, dated March 8, 2015. In that letter, OBAID “confirm[ed] that GSL [Good Star Limited] is part of the PetroSaudi Group on 1 September 2009 through the transfer of its bearer share to us.”…
155. Both the letter from OBAID and the letter from SAUDI ASSOCIATE 1 contained false statements concerning the beneficial ownership of the Good Star Account.

Further details in the court document show how Low changed his story about the ownership of the company back and forth to different bankers in order to support his different objectives. Tarek Obaid proved willing ot assist having agreed from the start that in return for the massive injection of hundreds of millions into his fledgeling company he would be willing to “act as a front” for Jho Low’s ‘other ventures’.

[See this

Later Double Dealing With Singapore Banks

Further analaysis of the DOJ court filing shows that the same pattern of connivance, deception and double dealing continued between these same conspirators in the later stages of theft from 1MDB, as Jho Low and his team continued to lie and tell different stories to different banks as the money siphoned out into his own accounts and those of Najib and his family.

Take, for example, how they told two different stories about the $1.367 billion that was deliberately siphoned out of the so-called 2012 Power Purchase bonds raised by 1MDB. The money was sent off to a fraudulent BSI bank account in Lugano that appeared to belong to Aabar/IPIC, but in fact had been set up for a bogus off-shore company with the same name created by Mohammed Al Husseiny and Khadem Al Qubaisy, who had allegedly joined the conspiracy.

The 1MDB officials called the money a ‘refundable deposit’ for the purposes of their auditors, so it could be written up as an asset in the public accounts, but at the same time described them as ‘non-refundable payments’ to the banks, so they could actually spend the money how they liked:

161. In their audited financial statements for the year ending on March 31, 2014, 1MDB booked their substantial payments to Aabar-BVI as an asset rather than a payment, describing it as a “refundable deposit . . . held aside as collateral for the guarantee” that IPIC provided for the 2012 bonds.

162. In contrast, LOW and 1MDB officers represented to bank officials involved in the transfer of the $1.367 billion that the funds represented non-refundable payments to Aabar-BVI in consideration of IPIC’s guarantee of the 2012 bonds. The fact that $1.367 billion in proceeds of the 2012 bond sales was to be paid to Aabar-BVI was not disclosed in the bond offering circulars.

A large chunk of that stolen money was then sent on to Riza Aziz to fund his movie the Wolf of Wall Street.

Again, the DOJ investigation shows how Jho Low, this time working with 1MDB CEO Shahrol Halmi [1MDB Officer 2], told one story to BSI Bank where the money was diverted and a different story to Goldman Sachs, which was raising the bond.  BSI was shown an alleged “Contribution Agreement” signed by Halmi which showed that 1MDB had agreed to pay Aabar/IPIC hundreds of millions of dollars for guaranteeing the bond as well as offering Aabar an option to buy 49% of the venture. Goldman was given an identical looking but subtly different version of the same arrangement, however, described an “Options Agreement” also signed by Halmi.  This merely specified the Abu Dhabi fund had been offered an option in return for its guarantee, therefore failing to inform bond purchasers that half the money raised would be siphoned off immediately from the enterprise into the bogus off-shore Aabar BVI.

The DOJ makes plain that the objective of these conflicting but seemingly identical documents, conived at by Halmi, was to be able to secretly steal the money without the buyers of the bond being aware that the money being borrowed was being instantly stolen by the managers of the fund:

208. Shortly before the transfer of approximately $577 million from 1MDB to the Aabar-BVI Swiss Account ..BSI was given a copy of an agreement between Aabar-BVI and 1MDB Energy Limited entitled “Collaboration Agreement for Credit Enhancement” (hereinafter, “Contribution Agreement”). The agreement bears the signature of 1MDB OFFICER 2 and HUSSEINY, and is dated May 21, 2012, the same day as the closing date for the bond sale. This agreement was provided to BSI as part of the compliance process, to bolster the legitimacy of the incoming $577 million transfer from 1MDB.
209. The Contribution Agreement provided to BSI was similar in appearance to the Option Agreement that was provided to Goldman and that was referenced in the offering circular for Project Magnolia. Like the Options Agreement, the Contribution Agreement purported to set forth the consideration given by 1MDB in exchange for IPIC’s guarantee of the Project Magnolia bond notes. And like the Option Agreement, the Contribution Agreement provided that Aabar-BVI would receive an option to acquire a 49% interest in the power assets that 1MDB had contracted to purchase. Unlike the Option Agreement, however, the Contribution Agreement also provided that 1MDB would pay Aabar-BVI a “credit enhancement and underwriting contribution in cash,” within three days of 1MDB’s receipt of the bond proceeds…The Contribution Agreement further provided that Aabar-BVI was “unconditionally entitled to deal with [the cash contribution from 1MDB] as it deems fit.” The agreement provided that payment would be made to the Aabar-BVI Swiss Account.

To be fair to the various banks whose noses seemed to have been far too easily pulled over 1MDB therefore, the DOJ makes plain that these financial institutions were being deliberately deceived and mislead by determined fraudulance and fakery carried out by a band of conspirators, who neverthless held positions as the most senior officers of an apparently respectable Malaysian Government fund.

211. ….BSI Bank relied on representations that the funds were a legitimate payment to a subsidiary of IPIC pursuant to the Contribution Agreement. BSI also relied on representations that this fee arrangement had been created with the input and assent of Goldman.

None of it was true. 1MDB officials lied and deliberately deceived these banks. The question that faces Najib Razak’s hosts in Washington is how could they possibly have set out to deceive in such a way and then get away with it in Malaysia if it had not been with approbation from the very top?

Given that Najib Razak was the sole signatory for all financial decisions at 1MDB and given that so much of the money went to Najib and his step-son (along with hundreds of millions in diamonds to his wife) that already concrete impression can only be strengthened further.

Look out for Part II of our analysis of the deliberate deception and double-dealing by 1MDB – as described in detail by the DOJ court filings – due shortly. 

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