Australia’s Malcolm Turnbull will be acting host to his special Australia-ASEAN Special Business Summit next weekend. And lining up to shake his hand will be Malaysia’s PM Najib Razak, thirsty for another photo-op that he can propagandise back home as ‘validation’ that he is not tarnished by his 1MDB mega-thefts.
Donald Trump came to regret his own encounter with Najib last year, prompting Theresa May to impose a news blackout on his subsequent UK visit with no pictures released until the dodgy kleptocrat was back out of British airspace.
Now Turnbull’s act of apparent realpolitic (who cares if Najib is a thief if some of the cash being bled out of Malaysia comes our way?) appears to be starting to give him similar problems. This businessman turned banker turned politician has found himself facing some uncomfortable criticism and questions over the scandal, which has in the past days reached into his own family and his own past.
Many in Australia have long questioned why the country’s regulatory authorities have done absolutely nothing to investigate let alone punish their own ANZ Bank for its horrendously ‘lax’ management of its effective subsidiary, AmBank, which poured billions of stolen 1MDB cash into Najib’s personal accounts in the run up to the last general election?
All the top personnel at AmBank were seconded from ANZ Bank – its CEO, COO, compliance and risk chiefs – indeed that was one of the big selling points for the Malaysian bank. Until, 1MDB broke, of course. At that point, ANZ started changing its tune and distancing itself, claiming that contrary to previous announcements the Australian HQ had no control or direct oversight of the Malaysian bank, of which it was the largest shareholder.
Questioned by MPs the heads of ANZ came up with the lamest of answers and excuses, which ought to have had the regulatory authority pouncing. However, ASIC (the authority concerned) has done nothing. It has treated 1MDB with greater imperviousness than the three proverbial deaf, blind and dumb monkeys, whilst those senior figures responsible at AmBank have swanned back off to other high paying (and extremely responsible) jobs in Australian banks.
This matter has been questioned, most consistently by a Malaysian local financial blogger, Ganesh Sahathevan, who has asked time and again why Australia has been so determined to be blind over this banking scandal of such enormous proportions? He has pointed out that Prime Minister Turnbull is an ex-Goldman Sachs man and so is his son.
Goldman Sachs was the bank that originally raised the US$6.5 billion in bonds, much of which ended up in Najib’s bank accounts in KL just two days after the bond offer was completed. The commission charged by the bank was outrageous and the subject of gossip almost from inception (nearly $600 million in total) – indeed, Sarawak Report was the first to expose the truth of that gossip when we published information on those bond issues back in 2013, just as Najib was winding up his hot AmBank accounts.
Sahathevan last week once again raised the fact that at the time Malcolm Turnbull’s son Alex was working in the very department that negotiated that deal with Malaysia and ought therefore have got an extremely nice bonus as a result. Was that the money Turnbull Jnr had used to move on from Goldman and set up his own hedge fund, Sahathevan had again publicly asked? And was this the reason nothing was happening in Australia over 1MDB?
Moving from business to politics is always a tricky manoeuvre, especially if there are less than transparent areas from his past that the subsequent politician appears reluctant to fully discuss – as the present President of the United States is finding out. Likewise, observers are equally, and doubtless again unfairly, reflecting that the Prime Minister of Australia’s seemingly over-easy stance towards corruption in present day Malaysian government could also be linked to his own ties to Malaysian logging businesses.
Turnbull made his initial fortune not by brilliant ‘rocket science banking’ activities as a Goldman ‘Master of the Universe’, but by activities such as plain old tree felling in the lawless and appallingly corrupted context of the Soloman Islands – one of the under-reported environmental tragedies of our time. He was the Chairman of one of the rapacious companies, Axiom, that razed that paradise to the ground in no time flat back in the 90s, a job primarily financed by Malaysian connected timber concerns of the most corrupted and ruthless variety.
Axiom was registered through a complext network of off-shore companies and was eventually bought out by a Malaysian concern registered in the BVI – one of those convenient black holes designed by our present finance system to allow dirty money and its ownership to be disguised. Of course, it is entirely possible that all the owners and buyers in these particular transactions were in fact completely honest and above board and just chose for reasons of their own to hide themselves. But how are we to know since Mr Turnbull isn’t telling much about his time in the Solomon Islands and the details are lost in off-shore finance?
We may wonder why governments around the world are allowing that sort of thing, but it doesn’t take long to figure out, when you consider the facts of the matter, does it?
What Malcolm Turnbull has put on the record about this episode in his career is that as Chairman of the company he simply wasn’t down there doing any dirty dealings on the ground and he has insisted that in fact he was doing his darndest to bring in more responsible practices into the Soloman Island logging business, whilst so prominently engaged in it. He has described himself as a corporate doctor:
“Responding to the issue at the time, Mr Turnbull told ABC radio that he had had no hands-on role in the logging operations on the Islands.
Describing himself as a “corporate doctor”, Mr Turnbull said that after he saw the consequences of poor forestry he had tried to encourage local owners to change their ways. Mr Turnbull said he was unaware the companies had been described as having some of the worst logging practices in the world.
He said he was aware of some companies having “difficulties” and that Axiom had acquired them to clean up the mess.
The vision of the founders of Axiom, of which I was not one, was to acquire these logging companies and then restructure them and sort of reposition them so that they became sustainable operations,” Mr Turnbull said. “My only involvement with the company was as a corporate doctor.”
This is encouraging confirmation that the Australian PM’s heart is in the right place…. but the fact of the matter remains that the Soloman Islands got razed, the people got trashed and Malcolm Turnbull got rich. He took on the profits of his early business career to become a partner in Goldman Sachs, focusing on South East Asian business before eventually cashing out as a very rich man indeed to take on the rather different sort of challenge of running Australia.
One assumes that after a lifetime of dealing with the Malaysian establishment he retains a lot of friends in positions of power in that country and has plainly not been too peturbed over the years by the blatant nature of the corruption that has characterised the BN regime, destroyed the Borneo Jungle and in the process violated indigenous rights and employed armies of trafficked labour (including North Korean slave labour) in palm oil plantations.
Perhaps, some are surmising, this is why the present Australian government is less than squeamish when it comes to the fall out from 1MDB or shaking the hand of Najib Razak? After all, what makes for good business often makes for sticky politics.
At which point Turnbull’s son Alex has come up with the same sort of justification that his Dad has been employing over the Soloman Islands. Alex wasn’t prepared to sit quiet and listen to Sahathevan question his bonus like that – it wasn’t fair. So, he has gone public to say that yes, he was in the Goldman Sachs team over in KL, but he had called out the whole scam and was sidelined as a result. His career as a Master of the Universe pretty much over for not being enough of a crook to stomach the deal of the century.
So he left Goldman, calling himself a whistleblower who sees himself as punished by the outcome (as opposed to rewarded by the sort of bonus that the rest of us would retire on).
Dad says he is not commenting. However his PR advisors will doubtless now be sweating over the best form of damage control, as Najib’s proferred hand comes ever closer as the days go by.
Because, Alex’s outburst has re-opened another Sahathevan theme of recent months that the Australian hierarchy has done its best to ignore as well. The new boss of Australia’s banking regulator is one James Shipton, who was none other Goldman’s head of government and regulatory affairs in Asia at the time those dodgy bonds were negotiated.
Sahathevan has surmised that Shipton would have got a juicy bonus too, as the guy who ultimately okay’d the deal. However, interestingly, just as the rumours were exploding during the aftermath of the Malaysian election in 2013 about that 1MDB slush fund and the Goldman commission on the bonds, Shipton decided to quit banking just like Alex.
He took the modestly low key position by comparison as executive director of the licensing division of the Hong Kong Securities regulator. That is an important job, but there are unlikely to be the sort of bonus packages built in to normally tempt a high flying Goldman guy. Shipton then went on to do a stint in academia, before landing his Australia top regulatory job last October.
Rudely, Sahathevan has been asking what chance remains now that the role of Australia’s banks in that particular scandal will be investigated?
Remember, just two days after Goldman raised the money on the last of three enormous bond issues US$681 million plopped straight into Najib’s accounts in KL and no one has yet explained to any level of satisfaction the grounds on which Goldman decided that the unseemly rush to raise that $3,5 billion bond (the excuse for demanding such a high payment) was appropriate.
Let’s go through it. Najib had embarked on March 12th 2013 on a purported programme to fund a massive building project over coming years on a site in KL – the so-called Business Exchange. For this 1MDB had set about raising the US$3.5 billion. Yet, instead of such an enormous project proceeding at the normal stately pace, Najib had insisted he needed ALL THE MONEY up front by 21st March 2013 – that is, by the end of the very same month!
Goldman did it in the time and took the risk, says the bank, which is why it charged the huge premium. But, since there was no realistic reason for needing to raise the money that quickly (unless for the illegitimate, criminal, ulterior motive of funding the impeding election for BN) why did Mr Shipton allow his bank to engage in such a stink of rotten fishy sort of deal?
He is unlikely to sign a paper that starts any kind of investigation into finding out why during his tenure at ASIC. So why did the Turnbull government appoint him?
So, are we seeing the slow but deadly fight back of the Masters of the Universe – the global banking community, who weathered the devastating crash they caused without a single slap on the wrist to any of them?
It looks likely. Alex Turnbull also revealed in his welter of self-justification last week that he has ‘told all’ to the authors of an up-coming book on 1MDB by journalists from the Wall Street Journal. Presumably, the book will exonerate him in return for his ‘whistleblowing’.
More concerning is who else this book plans to exonerate, as more details of the line it plans to take have started to emerge. We are being told in the growing PR around the book that this aims to be a ‘Michael Lewis-style thriller’ about how a single bad-boy pulled of the heist of the century (using Sarawak Report’s original headline on 1MDB).
It is being intimated that the ‘fast-paced read’ will detail how this wide-boy from Penang gulled the world’s banks and waltzed past auditors and regulators with a breath-taking audacity and skill that has left all these worthy institutions gasping with astonishment and embarassment.
Sarawak Report is concerned by this line of spin, little of which goes to the truth and relevance of 1MDB. This blog and the likes of Ganesh Sahathevan have put in years of effort into exposing 1MDB and related scandals for a very good global reason.
This episode does not owe to the supposed brilliance of Jho Low, far from it. As the bloated party boy himself has said he was just one of many such operators, who do the work of people like Najib in Malaysia and elsewhere. KAQ from Abu Dhabi was another – their reward is to become fabulously rich in the process.
However, the truth is that the amateurish and ridiculous antics of this ostentatious young playboy were as easy to read as as primary school book, as those who have followed this scandal will know. Anyone who has read his series of letters to various banks providing ludicrous, even hilarious excuses for needing to layer hundreds of millions around the global banking system will know they represented transparent fraud.
What counts here is the deliberate and systematic failure by numerous banks, lawyers, accountants, auction houses, PR people, regulators and the like to call out his blatant money laundering. And we should not let them off the hook by pretending they didn’t know and that Jho Taek Low was the brilliant operator who deceived them all.
1MDB is a scandal that Sarawak Report, followed by regulators in the US and Switzertland and Singapore, has taken the time and energy to expose, but its real importance lies in the fact that it represents the weakness of a global financial system that allows the vast majority of our global wealth to transit through dark pools of off-shore secrecy, enabling the super-rich and dirty politicians to disguise the sources of their wealth (and avoid taxation at the same time).
The Australians have elected themselves a PM who for obvious reasons is unexpected to want to take action on that matter. So, for now, have the Americans and the British. However, the public are largely unaware, because newspapers rarely flag up the problem either (look who owns them and who pays for their advertising).
We need to call out the bankers and all the other players and not write up excuses for them. Jho Low deserves a just and painful punishment, but he ought not to be the scapegoat for 1MDB. His boss, who is Malaysia’s corrupt leader, and all those who were ready to do business with him, need to be held to account as well.