AG’s Chambers had acknowledged “MALAYSIAN OFFICIAL 1” is PM Najib in its Q&A today on its Internet portal on the DOJ suit, but it has failed to rebut DOJ case that US$681 million in Najib’s personal account was from 1MDB through Tanore account and not from any Arab royalty

One year ago on 25th July 2015, Kuala Lumpur was awash with rumours that the Prime Minister, Datuk Seri Najib Razak was about to be charged in court for corruption arising from 1MDB and RM2.6 billion “donation” twin mega scandals.

I found such rumours quite incredulous as how the Prime Minister, Datuk Seri Najib Razak with his intelligence networks could  be unaware of such rampant grapevine talk and was doing nothing about the situation.

But three days later, “The Empire Struck Back”, starting with the then Attorney-General Tan Sri Gani Patail, who was told early in the morning of Tuesday, July 28, 2015 when he went to his office that he had been sacked, followed by the sacking of the then Deputy Prime Minister, Tan Sri Muhyiddin Yassin, Senior Minister for Rural and Regional Development, Datuk Seri Shafie Apdal, and a series of other actions to clamp or  close down investigations into the 1MDB and RM2.6 billion (which later turned out to be RM4.2 billion) donation mega scandals – like the dissolution of the  high-level Special Task Force on 1MDB; the derailment of PAC investigations into 1MDB; the arrest, immediate transfer and intimidation of top officials of the national investigative and enforcement agencies in the country like the Attorney-General’s Chambers, the Police, Bank Negara and the Malaysian Anti-Corruption Commission.

In the past 12 months, despite being hounded and haunted by the twin RM55 billion 1MDB and RM4.2 billion “donation” scandals, Najib seemed to grow from strength to strength until five days ago, when the US Department of Justice (DOJ) filed civil suits to seize over US$1 billion assets in the United States which had been stolen, embezzled or  defrauded from the people of Malaysia through the national sovereign wealth fund, 1MDB.

As the DOJ legal suits were initiated under the US Kleptocracy Assets Recovery Initiative 2010, Malaysia overnight achieved a new status – becoming a kleptocracy and one of the most globally corrupt nations!

“Kleptocracy” has been defined as rule by a thief or thieves.

When did Malaysians ever aspire the nation to become a “kleptocracy”?

Although the Prime Minister, Datuk Seri Najib Razak himself had not been mentioned, the reference of “Malaysian Official 1” which appeared 34 times in the DOJ legal suit can only refer to him.

In fact, the Malaysian Attorney-General’s Chambers acknowledged “MALAYSIAN OFFICIAL 1” is none other than Prime Minister  Najib in its Internet portal when it uploaded a 17-point  “Q&A” on the DOJ suits.

Although the Malaysian AG’s Chamber’s “Q&A” on the DOJ suit acknowledges that “MALAYSIAN OFFICIAL 1” is Prime Minister Najib, IT failed to satisfactorily explain the 34 references in the 136-page DOJ suits to “MALAYSIAN OFFICIAL 1”.

The “Q&A” issued by the Attorney-General’s Chambers even failed to give satisfactory rebuttal to one specific statement dealt in  the DOJ suits, viz: that the US$681 million in Najib’s personal banking accounts were from 1MDB through Tanore account and not from any Arab  royalty.

According to the DOJ, the over US$1 billion assets which are the subject of its forfeiture suits, represent a portion of the proceeds of over US$3.5 billion misappropriated from 1MDB in three phases:

•	firstly, the “Good Star” phase where more than US$1 billion was misappropriated from 1MDB from Sept. 2009 to 2011;

•	secondly, the “Aabar-BVI” phase in 2012, where approximately US$1.367 billion was misappropriated from 1MDB from two separate bond issues totalling US$3.5 billion arranged by Goldman Sachs International;

•	thirdly, the “Tanore” phase, where several individuals, including 1MDB officials, diverted more than US$1.26 billion out of a US$3 billion third bond issue arranged by Goldman in March 2013.

The US$681 million deposit into Najib’s personal banking account occurred in the third “Tanore” phase, after the issue of a US$3 billion Goldman-underwritten bonds in March 2013.

“Eric” Tan Kim Loong (“TAN”),  “an associate of Jho Low”, is the stated beneficial owner of Tanore Finance Corporation (“Tanore Account”) and “several bank accounts into which misappropriated 1MDB funds were transferred”.

The following is from the DOJ Suit:

“Section IV. D. $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, $681,000,000 was sent from the Tanore Account to a bank account belonging to MALAYSIAN OFFICIAL1.

“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 Acciount 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, as set forth in Section III.E.3.

“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 payments. In a press release issued on January 26, 2016, the Malaysian Attorney-General confirmed that, ‘the sum of USD681 million (RN2.08 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.”

It is clear that  the Malaysian Attorney-General’s Chambers “Q&A” had  failed to rebut DOJ case that US$681 million in Najib’s personal account was from 1MDB through the Tancore account and not from any Arab royalty.

Malaysians are entitled to a full answer not only on the US$681 million “donation” to Najib’s personal banking accounts, but all the other references which required 34 mention of “MALAYSIAN OFFICIAL 1” in the 136-page DOJ legal suits on forfeiture of over US1billion 1MDB-linked assets in the United States.

[Speech at the Penang DAP SSS (Support, Sympathy, Solidarity) Lim Guan Eng ceramah at Caring Society, Penang on Monday, July 25, 2016 at 10 pm]

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‘Grand larceny in 1MDB’

by Tommy Thomas

Malaysiakini

26.7.2016

COMMENT
 The might of the most powerful nation in the world has been brought to bear to investigate, uncover and institute legal proceedings to forfeit assets purchased through money stolen from proceeds of bonds sales by 1MDB.

The combined efforts of three US agencies, the Federal Bureau of Investigation (FBI), the Department of Justice and the Internal Revenue Service (IRS), with the assistance of law enforcement agencies in other countries, have produced the most complete, holistic picture of the great fraud perpetrated by Jho Low and his co-conspirators to defraud the people of Malaysia of billions of ringgit ultimately belonging to them.

The 136-page, 513-paragraph ‘Verified Complaint for Forfeiture in Rem’ is a tour de force. The people of Malaysia, suffering under a state of powerlessness and helplessness, owe an immeasurable debt to the sterling work carried out by truly independent institutions in the United States.

As a long-time critic of US domestic and foreign policies, I pay tribute to their selfless work in exposing the greatest robbery in modern times; what is the Great Train Robbery of the 1960s compared to 1MDB!

The fact that the US initiative is brought by its newly established ‘Kleptocracy Asset Recovery Initiative’ is significant. Thus their complaint asserts that Prime Minister Najib Abdul Razak is a kleptocrat, a term that was only coined in the late 1990s to describe African dictators like Joseph Mobutu, Sani Abacha and Robert Mugabe plundering their own countries.

More than US$3.5 billion in funds belonging to 1MDB were stolen, and the US complaint seeks the forfeiture and recovery of more than US$1 billion in assets purchased from that stolen money. It represents the largest single action ever brought by the Kleptocracy Initiative.

The serious allegations against Najib, his stepson, Riza Aziz and Jho Low for their corrupt dealings have shamed our nation. Through their action, Malaysia has joined the ranks of the most corrupt nations in the globe.

One could not have a more succinct description of the corrupt practices engaged by these persons than what the Complaint states in Paragraph 6:-

“6. 1MDB was ostensibly created to pursue investment and development projects for the economic benefit of Malaysia and its people, primarily relying on the issuance of various debt securities to fund these projects. However, over the course of an approximately four-year period, between approximately 2009 and at least 2013, multiple individuals, including public officials and their associates, conspired to fraudulently divert billions of dollars from 1MDB though various means, including by defrauding foreign banks and by sending foreign wire communications in furtherance of the scheme, and thereafter, to launder the proceeds of that criminal conduct, including in and through U.S. financial institutions. The funds diverted from 1MDB were used for the personal benefit of the co-conspirators and their relatives and associated, including to purchase luxury real estate in the United States, pay gambling expenses at Las Vegas casinos, acquire more than US$200 million in artwork, invest in a major New York real estate development project, and fund the production of major Hollywood films. 1MDB maintained no interest in these assets and saw no returns on these investments.”

A close reading of the comprehensive document will indicate that the draftsmen had access to thousands of incriminating materials, hardly surprising considering the reach of the FBI and IRS when the US dollar and their banking system are used for nefarious purposes. Further, the paper trail would have been immensely damning.

From their advanced state of knowledge, as demonstrated by the exhaustive nature of the civil complaint, it is only a small step for the FBI and Department of Justice (DOJ) to next take, that is, to institute criminal proceedings against the persons referred to in the complaint. Such criminal proceedings cannot come soon enough for all right thinking persons.

The US government complaint completely vindicates the brave reporting of Clare Rewcastle-Brown and the Sarawak Report, Wall Street Journal, New York Times, the Edge led by its intrepid editor Ho Kay Tat and P Gunasegaram in KiniBiz. So too the public statements of Dr Mahathir Mohamad, Tony Pua, Lim Kit Siang and Ambiga Sreenevasan.

They have been unfairly demonised by the Malaysian Establishment, for speaking the truth and an apology is due to them. And Malaysia owes a great debt to Clare Rewcastle-Brown for her single-minded investigative journalism of the very highest standard.

Because the complaint is in effect a history of the fraudulent dealings undertaken by 1MDB, under the control of Najib and Jho Low from the time of its birth, it should be read carefully. No summary can do justice to its detailed narration: the primary document must be reviewed.

I propose to focus on the role played by Najib and the corrupt practice of his step-son, Riza. But before I do so, mention must be made of the Verification by Robert B Heuchling, Special Agent, FBI which appears at the last page of the complaint. He has signed the complaint, thereby confirming the veracity of its contents under the penalty of perjury, and goes on to state that he has had access to files, records and information supplied to him by law enforcement officers.

This signifies personal responsibility on the part of Heuchling, establishing that he is satisfied with the truth of the matters complained of. Thus, it would be foolhardy for anyone to simply dismiss the complaint as a political document by a foreign agency wishing to undermine the Najib administration.

Najib Abdul Razak

A minor criticism can be levelled against the complaint: its failure to actually name Najib Abdul Razak. The obvious inference is that it was a political decision not to shame a sitting prime minister most friendly to USA and its president. But the legal draftsmen, no doubt irritated by such political constraint to their freedom to plead in the manner of their choosing, make it crystal clear that Najib is “Malaysian Official 1”.

Thus, Paragraph 28 states that Malaysia Official 1 “is a high-ranking official in the Malaysian government who also held a position of authority with 1MDB”. At all material times, Najib is, and was, the prime minister, finance minister and chairperson of the advisory committee of 1MDB. No other member of the government held such triple functions, a fact expressly recognised in Paragraph 39 of the complaint.

Just in case any reader of the complaint has any difficulty in recognising Najib as Malaysian Official 1, it would be removed by reading the very next Paragraph, that is Paragraph 29 (indeed, the juxta-positioning of the 2 paragraphs is itself instructive). Riza Aziz is described as “a relative of Malaysian Official 1”. Riza is the stepson of Najib, and is not related to any other personality directly, indirectly or remotely involved in the 1MDB scandal.

In such circumstances, it is absolutely pointless for Najib and his loyal, diehard supporters to claim that because he is not named in the complaint, it does not refer to him. Indeed, the complaint cannot properly be understood in its entirety, unless one understands Najib’s dominance over 1MDB, as was the political and business reality.

The first reference to wrongdoing on Najib’s part appears in Paragraphs 99 to 102. Paragraph 99 states that US$20 million was transferred between February and June 2011 into Najib’s now notorious personal account with AmBank, Kuala Lumpur, from monies stolen from 1MDB. Paragraph 102 states that this was the same AmBank account which received US$681 million in March 2013.

The second corrupt action involving Najib is referred to in Paragraphs 178 and 193, Paragraph 178 states that 1MDB bond proceeds were diverted from their intended purpose for the personal benefit of among others, Najib, which further evidences “a misappropriation of public funds”. In the case of Najib, Blackstone in that transaction transferred at least US$30 million to his Ambank account: see Paragraph 193.

The third reference to corrupt monies received by Najib can be found in Paragraph 229 which states that during a five-day period in March 2013, US$681 million was transferred from the Tanore account to Najib’s AmBank account, from which US$620 was returned to the Tanore account in August 2013.

What happened to the difference of US$61 million, is not mentioned in the complaint. Thus, it is clear that at least a total of US$731 million was received by Najib in his Ambank account.

Paragraph 238 is critical. It explains why creditors were prepared to purchase bonds issued by 1MDB, which is a company with a paid-up capital of just RM1 million, but able to issue US$3 billion worth of bonds in March 2013 (to give just one example of such a bond issue). That is because Najib, as finance minister, signed a letter of support on behalf of the government of Malaysia.

Regardless of the title of that document, effectively the government was guaranteeing repayment if 1MDB defaults. Najib was not only prepared to risk injury to Malaysia’s sovereign immunity by being sued in the Courts of England, but more importantly was also undertaking to pay tax-payers monies from the Consolidated Fund, if 1MDB defaults.

In so signing the letter of support, Najib was placed in a terrible conflict of interest position: his interest as a beneficiary of corrupt monies overriding his duty as a public servant elected to protect taxpayers’ money.

The complaint also focuses on the offering circular, leading to the issue of 1MDB Bonds. Paragraph 242 states that the offering circular was misleading because it failed to disclose that Najib “would receive hundreds of millions of dollars from the proceeds of the bond sale within days of its closing”.

Paragraphs 259 to 264 deal with a subject familiar to Malaysia: the title to this part of the complaint reads: “US$681 million was transferred from the Tanore Account to an Account Belonging to Malaysian Official 1”. Paragraph 259 simply states:

“Shortly after proceeds of the 2013 bond sale were diverted to the Tanore Account, US$681,000,000.00 was sent from the Tanore Account to a bank account belonging to Malaysian Official 1.”

No guesses needed that this official was Najib, (and no other person). According to Paragraphs 248 and 249, Eric Tan Kim Loong, a close associate of Jho Low, was the sole authorised signatory to the Tanore Account, but in March 2013 1MDB Officer 3 was given signing authority on the Tanore Account through a Power of Attorney.

Thus, although Paragraph 262 pleads that RM620 million was returned by Najib to the Tanore Account, it does not mean that Najib could not have had access to it, thereafter, since the Tanore Account was controlled by Jho Low. What is clear is that the monies were not a gift from the Saudi royalty, but proceeds from bonds issued by 1MDB, which means 1MDB must repay them. And if 1MDB cannot, Malaysian taxpayers will.

The allegations levelled against Malaysian Official 1 in these paragraphs of the complaint are most grave, and indicate a pattern of systematic corruption, while holding the most important office in the state. Again, there is absolutely no doubt that although these paragraphs do not expressly name Najib, it is impossible to think of any other individual fitting the role.

Riza Aziz

What has so far received far less publicity is the corrupt monies received by Najib’s stepson, Riza. It is a classic case of a kleptocrat in charge of the nation’s treasures plundering them for the benefit of a close relative. Again, Najib placed himself in a conflict of interest position.

Paragraph 120 of the complaint begins the case against Riza. It states there that shortly after receiving proceeds of the two 2012 bond sales from 1MDB, US$238 million was transferred to a Singapore bank account belonging to Red Granite Capital, a BVI entity owned by Riza.

About US$100 million of this money was used to purchase luxury real estate in the US and UK for Riza’s personal benefit, and about US$64 million to fund his movie production company, Red Granite Pictures. The scheme to defraud 1MDB of US$238 million is explained in detail from Paragraphs 202 to 219.

Riza Aziz also transferred some US$41 million from the sum of US$238 million to be applied to defray gambling expenses incurred in the Venetian Casino, Las Vegas by Jho Low, Eric Tan and himself (Riza): see Paragraph 220 and 226. The final corrupt dealing by Riza was his purchase of the Qentas Townhouse in posh Belgravia, London for £23 million: see Paragraph 492.

Unprecedented, shocking, massive, brazen, blatant: one soon runs out of words to describe the scale and magnitude of the corrupt actions of the wrong-doers. How those who designed, devised and implemented these dastardly deeds thought they could escape in the modern, borderless world is itself mind-boggling.

Proceedings in Malaysia

Why were similar proceedings not instituted in Malaysia? After all, Malaysia is the natural jurisdiction since the company in question, 1MDB, is incorporated and carries on business here. Najib, Riza and Jho Low are Malaysians. So the nexus to Malaysia is greater than anywhere else.

Is it not embarrassing for the attorney-general of Malaysia to be reminded by his counter-part in the United States, under whose leadership the complaint was brought, that stealing from public funds by Najib is a criminal offence under Malaysian law. Thus, in Paragraph 499, seven separate offences under our Penal Code are listed as being violated: three provisions under the Malaysian Anti-Corruption Commission (MACC) Act are also identified in that Paragraph.

Bank fraud is a crime under at least three provisions under the Penal Code, as we are reminded in Paragraph 500. And the entire world knows about the universal application of Anti-Money Laundering Legislation (like AMLA) across the globe; a consequence of 9/11. And yet no criminal proceedings have been commenced in Malaysia!

Former deputy prime minister Muhyiddin Yassin and former attorney-general Gani Patail will testify as to what happened to them a year ago when they tried to act against Najib. Unfortuately, the late Kevin Morrais’ role in the 1MDB scandal has never been publicly clarified, and remains a matter of rumour and speculation.

A climate of fear has enveloped all the senior office-holders of the major institutions of the nation. MACC, the inspector-general of police (IGP) and Bank Negara have gone silent. The Public Accounts Committee (PAC) has been disbanded, and the auditor-general’s report has been marked an official secret.

Because 1MDB was the company which directly suffered losses worth billions of ringgit, they should have filed civil recovery actions against persons like Jho Low and Najib, who were supposed to look after their interests but in fact were plundering it. Since the wrong-doers are still very much in control of 1MDB, it is not surprising that the company has not complained, much less resorted to litigation against anyone.

Litigation by other parties have so far been unsuccessful. I should disclose that I was part of the legal team that acted for some of the opposition parties and personalities when they sued Najib and 1MDB last July upon discovery of the US$681 million being credited into his personal account at Ambank.

The civil suit was summarily struck out as being wholly without merit, although all the contentions therein, based principally on the Sarawak Report and Wall Street Journal, have been corroborated by the US complaint.

Najib must resign

It is now abundantly clear that Najib Abdul Razak has long forfeited his right to remain in office as our prime minister. The documentary evidence, which cannot be denied, is overwhelming. US$731 million of corrupt money was credited into his personal account, and his stepson received US$238 million. In the eyes of the world he is a kleptocrat, and cannot stay in office. He must resign immediately.

TOMMY THOMAS is a prominent lawyer specialising in corporate litigation and insolvency, and commercial and public law. He has appeared in litigation involving bonds and other sophisticated financial instruments and has dealt with administrative, labour and constitutional cases.

                This entry was posted on Tuesday, 26 July 2016, 9:12 pm and is filed under
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Malaysia Won’t Interfere With Foreign 1MDB Legal Action

By YANTOULTRA NGUI

Wall Street Journal

July 26, 2016

Government won’t protect citizens, senior government official says

 KUALA LUMPUR, Malaysia—The Malaysian government won’t protect citizens from legal action taken outside the country stemming from the scandal surrounding state investment fund 1Malaysia Development Bhd., a senior government official said Tuesday.

Johari Abdul Ghani, who is second in command in the Finance Ministry under Prime Minister Najib Razak, who is also finance minister, said that the 1MDB scandal served as a “very expensive lesson’’ for  the Southeast Asian country.

“As far as the government of Malaysia is concerned, any individuals that basically have committed any offense in any countries outside Malaysia, the Malaysian government will not protect them,” Mr. Johari told reporters. “We want them to face the due legal process. That is the commitment of the government.”

Mr. Johari was speaking a week after the U.S. Justice Department filed a civil lawsuit seeking to seize assets that it said were bought with $3.5 billion misappropriated from the fund. 1MDB was set up by Mr. Najib in 2009 to promote economic growth. The Finance Ministry wholly owns 1MDB.

The Justice Department’s civil lawsuit named Riza Aziz, Mr. Najib’s stepson, as a “relevant individual,”along with Malaysian financier, Jho Low.

Mr. Riza wasn’t immediately available for comment. Red Granite Pictures, a film company partly owned by Mr. Riza, said it is cooperating fully with all inquiries and that it and Mr. Riza “did nothing wrong.”

A representative for Mr. Low declined to comment, but he has previously denied wrongdoing.

Among the Justice Department’s assertions were that some $1 billion originating with 1MDB was plowed into hotels; luxury real estate in Manhattan, Beverly Hills and London; fine art; a private jet; and the 2013 film “The Wolf of Wall Street.”

The lawsuit doesn’t name Mr. Najib, but there are 32 references in the complaint to “Malaysian Official 1,” who allegedly received hundreds of millions of dollars in funds siphoned from 1MDB.

A person with direct knowledge of the investigation said that “Malaysian Official 1” is Mr. Najib. Descriptions of the official in the filings include information about Mr. Najib’s position at 1MDB along with other identifying details.

Mr. Najib has been at the center of the scandal surrounding 1MDB since The Wall Street Journal reported more than a year ago that hundreds of millions of dollars that originated with 1MDB flowed into his personal bank account. Mr. Najib has said he did nothing wrong and that any suggestions of wrongdoing were political smears. The Malaysian attorney general has said the funds that went into Mr. Najib’s account were a legal political donation from Saudi Arabia and cleared him of wrongdoing, and said most of the money was returned.

Mr. Najib’s press secretary noted the civil lawsuits filed by the Justice Department and said the Malaysian government would fully cooperate with any lawful investigation. 1MDB denies wrongdoing and also said it would cooperate with any lawful investigation.

Mr. Najib has fought off efforts to oust him from his office by rallying members of his party, which has run Malaysia since its founding, and pushing out officials who opposed him.

In Singapore, authorities said last week that they had frozen bank accounts holding $184 million, $88 million of which the authorities said belongs to Mr. Low and his family.

Singapore authorities also said they had found “control failings” and breaches of money-laundering regulations at several financial institutions in the city-state as part of a wide-raging investigation into alleged misappropriation of funds from 1MDB.

                This entry was posted on Tuesday, 26 July 2016, 8:27 pm and is filed under
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The Malay Shame and Tragedy That Is 1MDB

by Bakri Musa

26.7.2016

Imagine had Prime Minister Najib Razak responded differently to the US Department of Justice Asset Forfeiture lawsuit and said instead, “I have instructed my Foreign Minister to seek clarification to determine who this “Malaysian Official 1” so we could investigate him. I have also directed the Attorney General to review the evidence in the DOJ complaint.”

            As for 1MDB, imagine if its spokesman had responded, “We view with deep concern allegations that assets meant for our company, a public trust, had been corruptly diverted. We seek clarification on who 1MDB Officials 1 and 2 are to make sure that they are no longer in our employ. We will review our policies to ensure that such pilferages as alleged by DOJ if they did occur will not recur. Additionally, we are engaging legal counsel to protect our interests in the American trial.”

            Instead, what Malaysians and the world heard last Wednesday were irrelevant and meaningless statements to the effect that neither Najib nor 1MDB are the defendants in the suit. True and obvious, needing no response or clarification. The defendants are the owners of those seized assets which are alleged to have been acquired with funds corruptly siphoned from 1MDB, a GLC of which Najib is the Chairman.

            The responses from Najib, his ministers, and 1MDB only brought shame to themselves, to Malays, and to Malaysia.

            As for the defendants, their options are either not to contest the suit and thus forfeit those assets, or fight it. Negotiated settlement is unlikely. This is the biggest asset forfeiture in US history; Attorney-General Lynch is out to make a point to corrupt kleptocrats everywhere in these days of complex cross-border money laundering.

            Before this, the biggest forfeiture involved the giant telecom company, Amsterdam-based Vimpel.com, and individuals close to the president of Uzbekistan. The Uzbeks ignored the suit while the company pleaded guilty to the criminal charges. Rest assured that those defendant Uzbeks won’t be visiting Disneyland or Las Vegas any time soon!

            This 1MDB corruption may be a legal case but politics is never far off the radar in Putrajaya and Washington, DC, as well as in the potentially more volatile international arena.

No-Contest Option

Not contesting would save substantial legal fees and other costs, as well as the not insignificant personal hassle factor. Those aside, the biggest advantage would be not further exposing the defendants and others, legally as well as in many other ways, during the pretrial discovery and trial. Spared a trial the identity of “Malaysian Official 1” will never be known, at least not officially, a crucial consideration in Putrajaya.

            The loss of those assets, even though in the hundreds of millions (in US dollars, not worthless ringgit), is at least quantifiable. However, even the Sultan of Brunei could not shrug off a loss of that magnitude.

            Choose this option and Reza Aziz, one of the defendants who according to court documents is also related to Malaysian Official 1, would be well advised to pack up and find a country that does not have extradition or tax treaty with the US. He also had better get used to a much less luxurious lifestyle.

            Were Reza to pursue this course, at least in his old age he could regale his grandchildren with stories that he once owned a glittering condo in Manhattan and shared drinks with Hollywood stars in Las Vegas.

            That would also be a very Malay story. At Kampung Baru today there are many elders who look with nostalgic gaze at the skyscrapers in the Golden Triangle and lament, “Ah, itu cerita dulu!” (Those are old stories!)

            The US Government would recoup its considerable costs from those assets. Rest assured there would be itemized bills for every paper clip and DOJ lawyers would be charging senior partners’ rates. Even after factoring that there will still be substantial loot left. By statute, that belongs to the people of Malaysia.

            If Najib is still Prime Minister, do you think those Americans would be dumb enough to return those millions to the same scoundrels? America could not disburse them to Malaysian NGOs either as most are not sympathetic to UMNO. That would present a delicate diplomatic problem. On the hand it could prove to be the most sophisticated and effective exercise of “soft power,” more powerful than “boots on the ground” in effecting regime change.

            At any rate don’t expect those Monet paintings to hang on the walls of kampung huts any time soon.

Contesting the Forfeiture

Contesting would be no walk in the park. It would be expensive, protracted, and risk uncovering details that could trigger criminal charges. American lawyers are not cheap and potential defense attorneys would want their substantial fees paid upfront and from “clean” sources. With those assets tied, Reza better have other fat bank accounts. Even if he were to receive help from his “Malaysian Official 1” relative, Reza’s defense attorneys would insist, and need unchallenged documentation, that the money is legitimate and not siphoned public funds.

            The earliest a trial could begin would be a year or two hence, in time for the UMNO Leadership Convention or worse, the next Malaysian election. A trial would also risk exposing the identity of “Malaysian Official 1, a consideration for Putrajaya.

            Being a civil case the burden of proof for the prosecution is lower, merely the preponderance of evidence, not the much higher “beyond a reasonable doubt” of a criminal trial. The burden also shifts to the defendants to prove that those assets were acquired with untainted funds.

            In court documents Reza Aziz claimed that the millions he received from some unknown Arab was a gift. An incredulous assertion that even his accountant did not believe him; hence the attestation from his “donor.” If this be a trial by jury, it would be tricky to convince an American juror, as with Reza’s accountant, that receiving millions from a stranger is a “gift.” Besides, the image of an Arab in America these days is far from pristine.

            With a trial the testimonies of those professionals who had advised the defendants would be scrutinized. The Watergate Hearings of the 1970s exposed the unsavory activities of the various advisors. Many prominent lawyers ended being disbarred, including the President’s Counsel as well as a former Attorney-General.

            A trial would highlight an ugly truth that could prove explosive in race-sensitive Malaysia. That is, Reza Aziz excepted, those corrupt Malays got only the crumbs while the gravy flowed to that Wharton-trained Chinaman. That won’t sit well with UMNO Youth’s “Red Shirts” or PERKASA boys.

            A trial would also showcase the professionalism and meticulousness of American prosecutors and investigators. That would not make the former failed UMNO operative and now Malaysia’s Attorney-General look good. The Malay image is already battered by the amateurs at 1MDB.

            From the perspective of international politics, it may be shrewd not to identify “Malaysian Official 1.” This forfeiture however, is not the only game. After all, Obama did not tee off with Najib that Christmas in Hawaii because he (Najib) was a Tiger Woods. It was part of Obama’s “Pivot to Asia” show, with Najib the prop.

            There are other actors in this new shadow play. China is asserting itself, most visibly through military exercises in the South China Sea but more effectively elsewhere. Note the abrupt change of face at the recent ASEAN conference that had initially condemned China, and ASEAN’s collective silence on the International Court’s decision on the South China Sea dispute.

            China too could play the Obama game, not on the green of Hawaii’s golf course but FELDA’s oil palm oil plantation. China could buy palm oil from Africa, and not offer inflated prices for those rusty 1MDB assets.

            Najib now has to balance the interests of his stepson and former Beverly Hills real estate tycoon Reza Aziz versus that of FELDA settlers and their wooden huts. Not an easy choice!

            The kampung boy in me longs to see a good fight by our modern-day Hang Tuah. Thus I challenge Reza to be jantan (man) enough to fight this US forfeiture.

            Back to reality, the winners in this 1MDB shadow play are many and obvious. Reza is one, though not as big as he was before the forfeiture; so too Malaysian Official 1 as well as IMDB Officials 1 and 2. As for that Wharton MBA character, he could still savor his shark’s fin soup in Taiwan. The US DOJ too is a winner, and a very big one.

            As for the losers, 1MDB is the obvious. Its current management should sue the previous board and management for incompetence as well as breach of fiduciary duties to recover some of the losses. Current management owes the company and Malaysians that much.

            The other victims are less obvious. They include FELDA settlers now deprived of better schools, smart young Malays who excelled on their IB tests but now cannot go abroad, and those dedicated GLC Malay executives whose reputations are now tainted because of the shenanigans of those monkeys at 1MDB.

            Those Malaysian officials who responded last Wednesday to the DOJ’s lawsuit and those Malays who still strenuously defend Malaysian Official 1 have yet to recognize these victims. That’s the terrible shame and great Malay tragedy.

                This entry was posted on Tuesday, 26 July 2016, 11:36 am and is filed under
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Apandi should explain why the 17-point Q&A on the DOJ suit which acknowledged that “MALAYSIAN OFFICIAL 1” is Prime Minister Najib was taken down after it was uploaded on AG Chambers’ Portal on Monday

The Attorney-General Tan Sri Mohamad Apandi Ali should explain why the 17-point Q&A on the US Department of Justice (DOJ) legal suits for forfeiture of over US$1 billion assets in the United States which had been stolen, embezzled or defrauded from 1MDB and the people of Malaysia was taken down after it was uploaded onto the Attorney-General’s Chambers’ Internet Portal on Monday.

Is this because the 17-point Q&A acknowledged that “MALAYSIAN OFFICIAL 1” mentioned 34 times in the 136-page 513-paragraph DOJ legal suits is the Prime Minister, Datuk Seri Najib Razak although Najib was not named in the suits?

Najib said after the DOJ filed its action under the US Kleptocracy Asset Recovery Initiative (KARI) 2010 on Wednesday that the government takes the DOJ’s allegations seriously, and that “whoever is named should take responsibility and clear their names, and ensure that the people’s money are not abused”.

As Najib is not, and cannot deny that he is the  “MALAYSIAN OFFICIAL 1” mentioned 34 times in the DOJ suits, and which was as good as acknowledged by the 17-point Q&A uploaded on the AG Chambers’ website on Monday, would he act on his own advice to “take responsibility” and clear his name “to ensure that the people’s money are not abused”?

Although the Malaysian AG Chambers’ website “Q&A” on the DOJ suit acknowledges that “MALAYSIAN OFFICIAL 1” is Prime Minister Najib, it failed to satisfactorily explain the 34 references in the 136-page DOJ suits to “MALAYSIAN OFFICIAL 1”.

The  “Q&A” on  the Attorney-General’s Chambers website on Monday even failed to give satisfactory rebuttal to the most outstanding item  in  the 1MDB scandal and  DOJ suits, viz: that the US$681 million in Najib’s personal banking accounts were from 1MDB through Tanore account and not from any Arab  royalty.

According to the DOJ legal suits, the over US$3.5 billion misappropriated from 1MDB came  in three phases:

•       firstly, the “Good Star” phase where more than US$1 billion was misappropriated from 1MDB from Sept. 2009 to 2011;

•       secondly, the “Aabar-BVI” phase in 2012, where approximately US$1.367 billion was misappropriated from 1MDB from two separate bond issues totalling US$3.5 billion arranged by Goldman Sachs International;

•       thirdly, the “Tanore” phase, where several individuals, including 1MDB officials, diverted more than US$1.26 billion out of a US$3 billion third bond issue arranged by Goldman in March 2013.

The US$681 million deposit into Najib’s personal banking account occurred in the third “Tanore” phase, after the issue of a US$3 billion Goldman-underwritten bonds in March 2013.

This is from the DOJ legal suits:

“259. Shortly after proceeds of the 2013 bond sale were diverted to the Tanore account, $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, as set forth in Section III.E.3.

“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 payments. In a press release issued on January 26, 2016, the Malaysian Attorney-General confirmed that, ‘the sum of USD681 million (RN2.08 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.”

The Malaysian Attorney-General’s Chambers Q&A failed to rebut the DOJ case that US$681 million in Najib’s personal account was from 1MDB through the Tancore account and not from any Arab royalty.

                This entry was posted on Wednesday, 27 July 2016, 3:51 pm and is filed under
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Goldman Sachs Is Sued on Ties to Malaysia’s Prime Minister

By NATHANIEL POPPER

New York Times

JULY 26, 2016

A private equity firm is suing Goldman Sachs, accusing it in court documents filed on Tuesday of improperly trying to curry favor with the scandal-plagued prime minister of Malaysia.

The firm, Primus Pacific Partners, said Goldman provided bad advice to one of its clients to help the financial fortunes of the Malaysian prime minister, Najib Razak.

The prime minister and people close to him have been previously accused by American authorities of embezzling billions of dollars from a Malaysian state investment fund, 1Malaysia Development Berhad, or 1MDB.

Last week, American authorities moved to seize multiple luxury properties that were believed to have been bought with the embezzled money by people close to Mr. Razak. Some of the money also went to fund the Hollywood film “The Wolf of Wall Street” and to buy valuable paintings by Van Gogh and Monet, authorities said.

Mr. Razak has denied the accusations of impropriety and shut down investigations within Malaysia, but multiple inquiries are moving forward in other countries.

Goldman is already being questioned for helping run bond offerings that the prime minister used to raise some of the money he is accused of embezzling, according to news reports.

Goldman’s star banker in the region, Tim Leissner, was a close financial adviser to Mr. Razak’s administration. Mr. Leissner left Goldman this year as accusations of improper activity related to 1MDB were raised. Mr. Leissner is married to Kimora Lee Simmons, a fashion designer and former model.

Primus Pacific Partners filed the lawsuit against Mr. Leissner and Goldman in New York State Supreme Court in Manhattan.

Primus “ previously lost its challenge in the Malaysian courts seeking to stop a transaction involving a Malaysian company, which was then approved by shareholders,” Andrew Williams, a Goldman spokesman, said in an email statement on Tuesday. “We will vigorously contest this misguided additional lawsuit in New York court.”

The complaint says that in 2010, Mr. Leissner and Goldman advised one of the bank’s clients, the Malaysian bank EON Capital, that it should sell itself to another bank, Hong Leong Bank, which had financial ties to the Malaysian prime minister. The lawsuit says that Goldman used information acquired through its work advising EON Capital to help Hong Leong Bank submit a successful bid for EON. The suit also says that Goldman advised EON to accept the bid even though it could have received more money from other bidders.

The lawsuit says that at the time, Goldman concealed its close relations “and incentive to curry favor with the prime minister of Malaysia.”

One of the prime minister’s brothers was on the board of Hong Leong Bank, and another brother worked for a firm advising Hong Leong in its bid to acquire EON Capital.

In the year before the EON deal, Goldman acquired a license to operate in Malaysia, and it quickly rose to become one of the top banks advising the government and 1MDB.

Goldman helped 1MDB raise $6.5 billion through bond offerings and received unusually large fees to do so, The Wall Street Journal has reported.

American authorities are looking at whether Goldman helped Mr. Razak move some of the bond proceeds to a personal bank account without alerting authorities, The Journal has reported.

The complaint filed this week says that Goldman did not reveal its close relationship with Mr. Razak to EON Capital and argues that EON Capital would not have kept Goldman on as an adviser if the information had been public.

Primus Pacific Partners was a shareholder in EON Capital at the time and says in the complaint that it lost out on $170 million that it could have received if EON had sold itself to the highest bidder. Primus says in its suit that it opposed the deal at the time but failed to stop it from going through. A Malaysian court blocked its attempt to stop the deal in 2011. The lawsuit is seeking $510 million, which includes damages.

“Goldman Sachs’s egregious misconduct here apparently was part of a broad pattern of corruptly winning favor with the prime minister in order to further Goldman Sachs’s business opportunities in Malaysia,” the suit says.

                This entry was posted on Wednesday, 27 July 2016, 8:26 am and is filed under
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Apandi should explain why the Attorney-General’s Chambers sought to rebut only  17 of the references to “MALAYSIA OFFICIAL 1” in the US DOJ suits to forfeit over US$1 billion 1MDB-linked assets in United States and not to all 36 references?

Yesterday, I asked the  Attorney-General Tan Sri Mohamad Apandi Ali to explain why the 17-point Q&A on the Malaysian Attorney-General’s Chambers website  on the US Department of Justice (DOJ) legal suits for forfeiture of over US$1 billion assets in the United States which had been stolen, embezzled or defrauded from 1MDB and the people of Malaysia had been  taken down after it was uploaded on Monday.

A detailed search has found that the 17-point Q&A, though not displayed on its main AGC portal page, is still available on the AGC website at:

http://www.agc.gov.my/agcportal/uploads/files/Publications/Press/MalaysianOfficial1(Q%26A).pdf

Although the Prime  Minister Datuk Seri  Najib Razak is not named in the DOJ suits, a person referred to   “MALAYSIAN OFFICIAL 1” is  mentioned 36 times – a person who is identified as the Prime Minister.

The AGC’s  17-point Q&A as good as acknowledged that “MALAYSIAN OFFICIAL 1” is Najib, and what Apandi should explain is why the Attorney-General’s Chambers sought to rebut only  17 of the references to “MALAYSIA OFFICIAL 1” in the US DOJ suits and not to all the 36 references.

What is most noteworthy of the AGC’s Q&A on the DOJ suit is Q&A No. 17, which reads:

“Soalan 17: Bagaimana pula dengan deposit yang dibuat ke dalam akaun Malaysia Official 1 sebagaimana disebutkan dalam laporan FBI?”
 and the answer:

“Adalah penting untuk kita tahu, akaun ini biarpun dibuka atas nama peribadi, ia bukan untuk kegunaan peribadi di mana ia adalah satu akaun khas presiden untuk kegunaan parti dan dibenarkan oleh perlembagaan parti. Amalan ini turut diperakui Muhyiddin Yassin. Malah, WSJ turut mengakui dana dalam akaun ini digunakan bagi tujuan politik dan bukannya untuk kegunaan peribadi. TIdak pernah pada bila-bila masa, Malaysia Offi¬cial 1 menerima wang daripada akaun 1MDB untuk dimasukkan ke dalam akaun peribadinya. DOJ mendakwa Malaysia Offi¬cial 1 mengekalkan jumlah RM210 juta daripada tiga pindahan yang boleh dikaitkan dengan 1MDB.”

This was followed by rebuttals of the allegations in the  DOJ suits on
“Tiga pemindahan wang itu ialah”
:

1.	RM60 juta (USD20 juta pada masa itu) dibayar pada 2011 (kerjasama perkongsian antara 1MDB dan PetroSaudi bermula pada 2009) daripada akaun Gabenor Riyadh ketika itu, Prince Turki Al Saud. DOJ mendakwa pembayaran RM60 juta ini pada tahun 2011 datang daripada pelaburan USD1.83 bilion yang dibuat 1MDB bagi perkongsian kerjasama dengan PetroSaudi pada 2009.

2.	RM100 juta (USD30 juta pada masa itu) – dibayar pada lewat 2012 daripada akaun BlackStone Asia. DOJ mendakwa wang RM100 juta ini pada Nov 2012 adalah daripada bon USD3.5 bilion yang dikeluarkan 1MDB dan IPIC pada April 2012. Namun demikian, pemindahan ini turut disokong oleh sekeping surat setahun sebelum itu iaitu pada 2011 di mana pengirimnya menjelaskan akan memindahkan wang sehingga USD375 juta daripada beberapa akaun termasuk BlackStone Asia.

3.	RM50 juta – yang datang daripada RM2.08 bilion (atau terkenal dengan jumlah USD681 juta pada kadar tukaran ketika itu USD1 = RM3.05) dipindahkan pada Mac 2013, iaitu sebelum PRU13 sebelum dikembalikan pada Ogos 2013, melalui akaun Tanore. Pemindahan ini turut disokong surat daripada penderma kerabat diraja Arab Saudi di mana SPRM turut menemuramah keluarga kerabat diraja itu dan Menteri Luar Arab Saudi turut menyatakan ia adalah dana mereka. Saya pasti tidak pada bila-bila masa Malaysia Offi¬cial 1 mengetahui asal usul sebenar dana yang dipindahkan ke dalam akaunnya. Pengetahuannya adalah berdasarkan kepada aturan tahun-tahun sebelum itu yang dibuat dengan kerajaan Arab Saudi di mana derma politik disalurkan ke akaunnya untuk kegunaan parti. Adalah penting untuk kita fahami, setiap pemindahan itu akan turut dilampirkan dengan surat daripada kerabat diraja Arab Saudi.

Without going into the merit or demerits of these rebuttals, which contradict the allegations in the DOJ suits, Apandi should explain why the Attorney-General’s Chambers only dealt with 17 references of the DOJ suits on “MALAYSIA OFFICIAL 1” and not with all the 36 references in the DOJ suits.

Is the above clarification and rebuttal made with the knowledge and authority of Najib?

Furthermore, who is the “saya” in the third rebuttal on “Tiga pemindahan wang itu ialah” – whether the “saya” is the Attorney-General Apandi himself?

Najib said after the DOJ filed its action under the US Kleptocracy Asset Recovery Initiative (KARI) 2010 on 20th July  that the government takes the DOJ’s allegations seriously, and that “whoever is named should take responsibility and clear their names, and ensure that the people’s money are not abused”.

Can Malaysians expect a full statement from Najib, or the AGC on his behalf, referring to everyone of the 36 references to “MALAYSIAN OFFICIAL 1” in the 136-page 513-paragraph DOJ legal suits?

                This entry was posted on Thursday, 28 July 2016, 1:49 pm and is filed under
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1MDB: The inside story of the world’s biggest financial scandal

by Randeep Ramesh

Guardian

Thursday 28 July 2016

How a jailed former banker and a lone British journalist broke a story that shook the world

On 22 June 2015, Xavier Justo, a 48-year-old retired Swiss banker, walked towards the front door of his brand new boutique hotel on Koh Samui, a tropical Thai island. He had spent the past three years building the luxurious white-stone complex of chalets and apartments overlooking the shimmering sea and was almost ready to open for business. All he needed was a licence.

Justo had arrived in Thailand four years earlier, having fled the drab world of finance in London. In 2011, he and his girlfriend Laura toured the country on a motorbike and, two years later, they got married on a secluded beach. The couple eventually settled down in Koh Samui, a tourist hotspot, just an hour’s flight south of Bangkok. After trying out a couple of entrepreneurial ventures, Justo eventually decided that he would go into the hotel business. He bought a plot with an imposing house and began building: adding a gym, villas and a tennis court.

That June afternoon, he was expecting a visit from the tourism authorities to sign off on the paperwork. Instead, a squad of armed Thai police burst through the unlocked door, bundling Justo to the ground. The officers tied their plastic cuffs so tightly around Justo’s wrists that he bled on the dark tiled floor. The police quickly moved into his office, ripping out the computers and emptying the filing cabinets.

After two days in a ramshackle local jail, Justo was flown to Bangkok and paraded before the media, in a press conference befitting a mafia kingpin. Still wearing shorts and flip-flops, he was flanked by four commandos holding machine guns, while a quartet of senior Royal Thai Police officers briefed the assembled reporters on the charges against him.

Justo was charged with an attempt to blackmail his former employer, a little-known London-based oil-services company named PetroSaudi. But behind this seemingly mundane charge lay a much bigger story.

Six months earlier, Justo had handed a British journalist named Clare Rewcastle Brown thousands of documents, including 227,000 emails, from the servers of his former employer, PetroSaudi, which appeared to shed light on the alleged theft of hundreds of millions of dollars from a state-owned Malaysian investment fund known as 1MDB.

The documents that Justo leaked have set off a chain reaction of investigations in at least half a dozen countries, and led to what Loretta Lynch, the US attorney general, described last week as “the largest kleptocracy case” in US history.

According to lawsuits filed last week by the United States Department of Justice (DoJ), at least $3.5bn has been stolen from 1MDB. The purpose of the fund, which was set up by Malaysia’s prime minister, Najib Razak, in 2009, was to promote economic development in a country where the median income stands at approximately £300 per month. Instead, the DoJ alleged that stolen money from 1MDB found its way to numerous associates of Prime Minister Najib, who subsequently went on a lavish spending spree across the world. It also accused Najib of receiving $681m of cash from 1MDB – a claim he denied. Money from 1MDB, the US also claimed, helped to purchase luxury apartments in Manhattan, mansions in Los Angeles, paintings by Monet, a corporate jet, and even financed a major Hollywood movie.

The US justice department breaks the alleged theft down into three distinct phases: the first $1bn defrauded under the “pretence of investing in a joint venture between 1MDB and PetroSaudi”; another $1.4bn, raised by Goldman Sachs in a bond issue, misappropriated and fraudulently diverted to a Swiss offshore company; and $1.3bn, also from money Goldman Sachs raised on the market, which was diverted to a Singapore account.

“A number of corrupt 1MDB officials treated this public trust as a personal bank account,” Lynch told the press last week. “The co-conspirators laundered their stolen funds through a complex web of opaque transactions and fraudulent shell companies, with bank accounts in countries around the world, including Switzerland, Singapore and the United States.” PetroSaudi, which is not a party to the lawsuit, denied the US allegations and said that the DoJ’s asset-forfeiture claims are “no more than untested allegations”.

Najib, who has used every ounce of his power to obstruct investigations into the scandal – a charge he denies – is not mentioned by name in the US lawsuits, which refer to him as “Malaysian Official 1”. But the man at the centre of the intricate swindle depicted in the US lawsuits is an adviser to Najib: Jho Low, a Harrow-educated 29-year-old friend of the prime minister’s stepson. Low, a babyfaced young man who likes to party with Lindsay Lohan and Paris Hilton – and calls his Goldman Sachs banker “bro”, according to the DoJ – is accused by the US of masterminding the theft of $2bn from 1MDB, which was sent to bank accounts in Switzerland, Singapore and the Virgin Islands. Low has said that he has not broken any laws and was not being investigated.

Low’s sidekick is Riza Aziz, Najib’s stepson. Riza produced The Wolf of Wall Street – Martin Scorsese’s tale of corruption, decadence and greed – and both he and Low were thanked by name in Leonardo DiCaprio’s Golden Globes acceptance speech for best actor. In 2011, Low took a 20% stake in EMI, the world’s largest music-publishing company, for $106m – in the same year, he bought a $30m penthouse for his father at the Time Warner Center in Manhattan, overlooking Central Park. Riza’s Hollywood production company has said: “There has never been anything inappropriate about any of Red Granite Pictures or Riza Aziz’s business activities.”

All this and more is laid out in the US filing, which details claims of an amazing heist, carried out by conspirators who rinsed billions from the people of Malaysia through offshore accounts and shell companies in tax havens such as the Seychelles and British Virgin Islands. The scale of the enterprise echoes Balzac’s maxim that behind every great fortune lies a great crime.

The global effort to uncover Malaysia’s missing billions began with Xavier Justo. He leaked 90GB of data, including 227,000 emails, from his former employer PetroSaudi, an oil services company that had signed the first major deal with 1MDB. (PetroSaudi denies any wrongdoing.) Without these files, there would have been no reckoning.

Justo’s connection to PetroSaudi was his long friendship with one of the company’s two founders, a Saudi national named Tarek Obaid. The two men had met back in the late 1990s, when they both partied regularly in the nightclubs of Geneva. By 2006, the two men were inseparable: Justo had become an established businessman, running a large financial services firm, Fininfor, and the owner of a Geneva nightspot named the Platinum Club. Justo regarded Obaid as a “younger brother”, and in 2008, lent him $30,000 and a desk in the Fininfor offices to help start up PetroSaudi.

Obaid and Justo were an unlikely pair, brought together by a love of the high life. Justo, the son of Spanish immigrants to Switzerland, did not go to university. Obaid is a graduate of Georgetown University’s prestigious School of Foreign Service. His brother, Nawaf, served as a special adviser to the Saudi ambassador to the UK. Obaid’s PetroSaudi co-founder, Prince Turki bin Abdullah, is the seventh son of the late King Abdullah bin Abdulaziz, who ruled Saudi Arabia from 2005 until his death in 2015.

When Justo left Geneva in 2009, PetroSaudi was little more than a name on a calling card, formally incorporated in London with an address at an anonymous business unit near Victoria. Two years later, it had taken in $1.83bn.

PetroSaudi’s business was access capitalism: opening doors with the help of friends in high places. The basic idea was to capture a piece of the huge oil revenues being generated by state-owned firms in developing countries – treasure chests waiting to be unlocked by a firm that was a “vehicle of the Saudi royal family”, which could count on the “full support from the kingdom’s diplomatic corps”. PetroSaudi told potential partners that it controlled oil fields in central Asia, which it would put up as collateral to secure cash from state investors.

This was the pitch that landed PetroSaudi’s founders a meeting with the Malaysian prime minister in August 2009. Aboard a 92m megayacht off the coast of Monaco, Obaid and Prince Turki spent the day with Najib, his adviser Jho Low, and other members of the prime minister’s family. Snapshots taken at the meeting have the look of a holiday cruise – baseball caps and shorts – but their discussion was serious business. What resulted was a decision for Low and Obaid to work together on a deal that would allow them both to control mind-boggling sums of money.

Although Low held no formal position in the Malaysian government, he had become a trusted confidant to the prime minister. Despite his youth, Low had been instrumental in working with Goldman Sachs to set up a sovereign wealth fund to invest the revenues of an oil-rich Malaysian state.

Around the time that Low and Najib went boating with the PetroSaudi founders, the Malaysian central government took control of the wealth fund – which was soon renamed as 1Malaysia Development Berhad (1MDB) and given a mandate to promote economic development in Malaysia. The fund had more than $1bn to spend, and Prime Minister Najib had the sole power to approve investments and to hire and fire board members and managers. Low appeared to facilitate transactions – according to the DoJ, he even attended board meetings of 1MDB and acted as a link with the PM.

The new fund’s first major deal was signed a few weeks after the meeting with PetroSaudi – a $2.5bn joint venture agreement between PetroSaudi and 1MDB, inked during a visit by Najib to Saudi Arabia in September 2009. The press release said that the joint venture would “make strategic investments in high-impact projects” and “underscored the confidence Saudi Arabia has in Malaysia”.

But, according to the US justice department, the deal was merely a “pretence” for “the fraudulent transfer of more than $1bn from 1MDB to a Swiss bank account” controlled by Low – “a 29-year-old with no official position with 1MDB or PetroSaudi”. PetroSaudi has always maintained that all 1MDB funds were paid to entities owned by its shareholders.

The multibillion-dollar joint venture deal was completed with extraordinary speed – in less than a month. Shortly after the yacht meeting, on 28 August 2009, Obaid had introduced Low to Patrick Mahony – the company director who handled PetroSaudi’s business affairs. According to documents seen by the Guardian, Low and Mahony met for lunch in New York on 9 September to discuss the joint venture.

After dining at Masa – a sushi restaurant where the set menu costs $540 a head – Mahony emailed Low the next day with an offer: “We know there are deals you are looking at where you may want to use PSI [PetroSaudi] … we would be happy to do that. You need to let us know where.” PetroSaudi said the documents seen by the Guardian are unreliable, stolen, fake and that they have been selectively quoted.

Less than three weeks later, the deal was done. PetroSaudi would contribute $1.5bn in oil and gas assets to the joint venture, while 1MDB would inject $1bn in cash.

According to the US court filing, 1MDB transferred $300m into an account belonging to the PetroSaudi joint venture, but the remaining $700m was sent to a Swiss account at RBS Coutts, controlled by a Seychelles-registered shell company named Good Star. The US justice department complaint alleges that Jho Low, and not PetroSaudi, was the beneficial owner and sole authorised signatory of Good Star. US authorities claim that officials at 1MDB provided false information to banks about the ownership of the Good Star account in order to divert the $700m.

In documents seen by the Guardian, on 30 September 2009 PetroSaudi appears to direct that the $700m be paid into an account controlled by the company – but three days later, when the compliance department at RBS Coutts requested further details about the name of the beneficiary account, the address given by 1MDB was the Good Star account. On the same day, 2 October, Low emailed Mahony to say “Shld be cleared soon”. PetroSaudi told the Guardian: “No money put into the joint venture by 1MDB was misappropriated or is missing. Its investment was repaid with profit … All transfers from 1MDB were paid with the full approval of the 1MDB board.”

According to documents seen by the Guardian, the Good Star transaction made Obaid, then 32, and Mahony, then 33, very rich men. Records indicate that on 30 September 2009, Good Star agreed to pay $85m to Obaid, which the Seychelles company described as a fee for “brokering services”. The money was deposited into Obaid’s Swiss JP Morgan account. At the same time, emails and legal documents indicate that Mahony was given a contract as “investment manager” for Good Star. On 20 October, Obaid emailed his contact at JP Morgan to request that $33m be transferred into an account belonging to Mahony.

Four days later, Mahony began discussions to set up an offshore company to buy a £6.7m townhouse in Notting Hill – and by 12 November, contracts for the house had been exchanged. The former banker created a numbered bank account in Switzerland, and all payments for the purchase were made from this account, via a British Virgin Islands company that Mahony had set up.

In response to questions from the Guardian, PetroSaudi said the payment to Obaid was not a brokerage fee and that the transfer of $33m to Mahony had nothing to do with the PetroSaudi-1MDB joint venture.

Laura and Xavier Justo were blissfully unaware of their friend Obaid’s changing fortunes. The couple were sunning themselves on Thailand’s Andaman coast in December 2009 when Obaid rang Justo offering him a director’s position in London with PetroSaudi. He told Justo the company had become an overnight success, but it needed someone who could help it grow.

Justo rejected Obaid’s initial offer, but he was eventually persuaded by the temptation of a well-paid “adventure”. According to Justo, Obaid promised him a salary of £400,000, “millions in bonuses” and the perk of a £10,000-a-week flat in Mayfair, central London. Justo pitched up in London in spring 2010, and by June was a PetroSaudi director. But he was kept out of the lucrative Asian business. Instead, Justo, a native Spanish speaker, was tasked with launching a new operation in Venezuela, and spent much of 2011 flying between London and Caracas.

Between September 2010 and May 2011, 1MDB agreed to lend an additional $830m to the joint venture with PetroSaudi – bringing 1MDB’s total investment to $1.83bn. Of these new payments, US officials allege, $330m was paid into the Swiss account they say was controlled by Low, on the basis of a request by Obaid – who is identified in the US legal complaint as “PetroSaudi CEO”.

Emails and bank records seen by the Guardian suggest that in the nine months from September 2010, Obaid transferred $77m from his Swiss JP Morgan account to his PetroSaudi co-founder, Prince Turki bin Abdullah. According to the US authorities, banking records show that in the spring of 2011, Prince Turki also received $24m from the Good Star account controlled by Low – and that “within days”, $20m from these funds was transferred to an account belonging to the Malaysian prime minister, Najib.

Meanwhile, Low was becoming known on the New York club scene as a fixer for the global super-rich – snapped by paparazzi swigging magnums of Cristal with R&B singers and Hollywood stars. According to US authorities, Low spent $100m from the joint venture transactions on properties in Hollywood and $40m on New York apartments. The funding for The Wolf of Wall Street, the US complaint alleges, can be directly traced to the billion dollars diverted from the PetroSaudi joint venture.

In the meantime, Justo was growing disaffected with working conditions at PetroSaudi. According to his wife, Laura, the first sign of discontent was his discovery that his salary payments were only about half of what Justo said Obaid had offered him – a slight that was compounded when he learned that the promised multimillion-pound bonus would be considerably less than that – more like six figures than seven.

There were other niggles, too. He complained to Laura that he was often paid late, and sometimes not at all. He claimed that he ended up paying rent on the flat in Mayfair that was supposed to be covered by his employers.

 Leonardo DiCaprio in The Wolf of Wall Street.

 Leonardo DiCaprio in The Wolf of Wall Street. Photograph: Allstar/Paramount Pictures

At first, Justo told Laura, he thought these were just mishaps – nothing malicious, just poor corporate bookkeeping. But he became increasingly dismayed by Obaid’s behaviour. Justo told friends that Obaid had become “arrogant” after striking it rich. Justo was especially disturbed by what he described as changes in his younger Saudi friend – telling other people that Obaid had become irrational, and displayed “uncontrollable” rage.

Justo and Obaid’s long friendship, stretched to breaking point over 12 months of highly charged corporate life, finally snapped. At the end of 2010, Justo missed a flight for an important meeting. He apologised to Obaid, but according to Justo, his friend “went mad”, sending him a stream of abuse, via text messages and emails.

Sick with worry, Justo decided to resign in March 2011. In the angry email exchanges that followed, Obaid called Justo “arrogant” and a “smart ass”. In April, things came to a head in Mayfair. Amid the marble, dark leather and metal art deco detailing of the exclusive Connaught hotel bar, Mahony and Justo hammered out the terms of his departure. According to Justo, Mahony had agreed to pay him about 6.5m Swiss francs (£5m) in severance. However, in the midst of a heated conversation, Mahony’s phone rang. It was Obaid, who apparently told Mahony to settle on 5m Swiss francs (£3.85m). Justo, who had poured his heart out to Mahony, telling him he was at his “lowest point emotionally”, shed tears. A day later, Justo claims that he was told his severance package would, in fact, be 4m Swiss francs (£3m).

As the rancour set in, Justo took a copy of the data on the PetroSaudi servers. In September 2013, a little more than two years after he had left PetroSaudi, Justo sent a fateful email to Mahony. Justo was insistent that he be paid what was owed to him, warning that he had a file of information on PetroSaudi. “The official side paints a nice picture but the reality is commissions, commissions, commissions,” he wrote.

In the furious exchanges that followed, Mahony accused Justo of blackmail. Mahony presciently told his former colleague: “What troubles me so much is the way in which I see this situation ending – with the destruction of you.”

A few months earlier, over a Chinese meal in London, the journalist who would break open the 1MDB scandal first heard rumours about an extraordinary heist in Malaysia. Clare Rewcastle Brown met a contact at a restaurant in Bayswater who showed her screen grabs of internal documents from PetroSaudi: on a single printed page, there were highlights of PetroSaudi’s dealings with 1MDB, under the heading “Thousands of documents related to the deal (emails, faxes and transcripts)”. She recognised the names and the deal. Her heart skipped a beat. “A bomb went off in my head,” Brown recalled. She knew right away that this was a huge story.

Rewcastle Brown is a classic British rebel at the heart of the establishment. She was born on the island of Borneo – part of which now belongs to Malaysia – when it was still part of the British empire, where her father was a colonial policeman and head of the local intelligence service. Her brother-in-law is the former British prime minister Gordon Brown. After working as a reporter for the BBC, in 2010 Rewcastle Brown set up Sarawak Report, a website dedicated to uncovering corruption in the place of her birth.

Working out of her tiny kitchen in central London, she published story after story exposing corruption in the timber and oil industries that were despoiling the country’s rainforests for profit. Her email was hacked and she received death threats, but she carried on, regardless. Early in 2013, Malaysian politicians labelled her an “enemy of the state”. Rather than be cowed, she considered this a badge of honour. In person, Rewcastle Brown is a curious mix of the bawdy and the brave, almost to the point of recklessness. Her mantra: “I just want the story.”

After the meeting in Bayswater, Rewcastle Brown knew she needed to get the 1MDB documents. The first hurdle was that the source of the PetroSaudi papers apparently wanted millions for the information. It was money she did not have.

Another stumbling block was that no journalist in Malaysia wanted to touch the story. In Malaysia, Prime Minister Najib had just won a tightly contested election, and was flush with power. Rumours were swirling around the cache of PetroSaudi documents – some said the Russian mafia was behind the data dump, while others speculated that it might be an elaborate trap, set by the prime minister to ensnare his critics.

Undeterred, Rewcastle Brown arranged with her contact to meet the source in Thailand. In October 2013, she pitched up at the lobby of the Plaza Athénée hotel, in Bangkok. She had told her husband she was hoping to meet a “balding bespectacled short Swiss guy”. Instead, into the foyer stepped Xavier Justo – muscular and 6ft 6in tall. Rewcastle Brown was faced with a “physically imposing, extremely elegant” man. “Oh my God,” she thought. “This guy is going to duff me up.”

But Justo admitted that he was just as scared as she was. According to Rewcastle Brown, he seemed “very, very nervous” and repeatedly warned her that “the people we were dealing with were ruthless, had huge amounts of money and were very, very powerful – and they could do what they liked to us”.

Justo told Rewcastle Brown that he wanted $2m in exchange for the PetroSaudi-1MDB documents. It was, he said, the money he should have been paid when he left PetroSaudi.

Although he shared a few documents at the meeting, Justo was adamant: no cash, no data. Rewcastle Brown needed to find a rich person prepared to pay for the papers.

At around this time, concerns about 1MDB had begun to spread in Malaysia. Financial analysts pointed out that the fund was not generating enough cash to cover interest payments on the billions of dollars of debt it had acquired. The hundreds of millions that had been spent on art work, jewellery, real estate, gambling and parties did not realise any return on the “investment”. By 2014, Prime Minister Najib’s political opponents had taken to taunting him with the accusation that the wealth fund should be renamed “1Malaysia’s Debt of Billions”.

In August 2014, Najib received another political blow. Mahathir Mohamad, the towering figure of modern Malaysian politics who served as prime minister from 1981 to 2003, announced that he was withdrawing support for Najib, his former protege. In the weeks that followed, Mahathir became more vocal in his criticism, warning that 1MDB was adding to Malaysia’s dangerously high debt levels.

This warning went unheeded. The fund’s debt swelled. By November 2014, 1MDB owed almost $11bn. Najib, who chaired the fund’s advisory board, appeared unconcerned, telling the state news agency that the government was not liable for the debt if the fund went bankrupt.

As the crisis deepened, Rewcastle Brown continued her quest for a person willing to pay Justo for the PetroSaudi-1MDB documents. She noticed that some of the most searching reporting on the scandal had appeared in Malaysia’s best-selling business weekly, the Edge. Sensing that she may have found a wealthy ally, Rewcastle Brown contacted the Edge’s owner, Tong Kooi Ong, a former banker turned media tycoon, who owned a number of business publications.

In January 2015, Tong, Rewcastle Brown and Justo met in a five-star Bangkok hotel, the Fullerton. Tong booked a conference room, and brought a number of IT experts, as well as the editor of the Edge, Kay Tat. At the meeting, Justo laid out the 1MDB joint venture, making the same claims that the US Department of Justice would set out 18 months later: namely that hundreds of millions of dollars that were intended for economic development in Malaysia had instead been diverted into a Seychelles-based company. The man at the centre of the transaction was alleged to be Najib’s adviser and family friend, Jho Low.

It was a potentially huge scoop. Tong agreed to pay Justo $2m. Tong and Rewcastle Brown were immediately handed disk drives with the data. But the payment was never made. Justo did not want the money in cash, and he worried that a large transfer of funds into his account would look suspicious. Tong offered Justo one of his Monets as collateral – but Justo declined, and said “no, I trust you”. Rewcastle Brown finally had the documents she had been chasing for 18 months.

On 28 February 2015, Rewcastle Brown posted the first big story online – under a typically unrestrained headline: “HEIST OF THE CENTURY!” The article claimed to show how $700m had disappeared from the 1MDB joint venture and found its way into various offshore companies and Swiss bank accounts.

The impact of the article was felt around the world. In the US, law enforcement officials who had been alerted to reports that Low was spending huge amounts on New York apartments now had a fix on the possible source of his wealth.

While researching the story, Rewcastle Brown had teamed up with the Sunday Times, which helped her decrypt the files Justo had given to her. The paper ran an interview with Mahathir, the former Malaysian prime minister, who called for an immediate investigation and a full audit. “Somebody must be doing something stupid to part with $700m for no very good reason as far as I can see,” he said.

In Malaysia, the response was immediate. On 1 March 2015, 1MDB’s management claimed that it had exited the joint venture in 2012, and that it had received back its investment in full, with an additional profit of $488m. PetroSaudi claimed that the $700m had all gone to “PetroSaudi-owned entities” – denying, in other words, that companies controlled by Jho Low had received payments in the deal.

Not long before Rewcastle Brown’s story broke, 1MDB’s bonds had been effectively downgraded to junk. After another £200m of Malaysian government funds were required to plug a hole in 1MDB’s finances, Najib bowed to the inevitable and ordered investigations by the country’s auditor general and the parliamentary accounts committee. Soon, the country’s central bank and anti-corruption agency were also looking at 1MDB. Malaysia’s top policeman was reported as saying that the prime minister would also be investigated.

Najib tightened his grip on power. As prime minister and finance minister, he wielded enormous authority: in April, the government pushed through harsh penalties and restrictions on free speech, particularly on social media. Five executives of Tong’s The Edge Media Group – which had also published details of the PetroSaudi deal – were arrested for sedition. The government also introduced a new law, ostensibly aimed at terrorists, which allowed suspects to be detained indefinitely. In July 2015, the Edge weekly was banned from publishing.

Although the scandal only seemed to be getting bigger, it had not ensnared Prime Minister Najib personally. Then, on 2 July, Rewcastle Brown and the Wall Street Journal reported that Malaysian government investigators had discovered that $681m from banks, agencies and companies with ties to 1MDB had been deposited in Najib’s private accounts in 2013. A few days later, investigators raided the offices of 1MDB.

Najib was now at the centre of a corruption probe relating to allegations that billions of dollars had disappeared from a Malaysian investment fund he controlled. Deputy Prime Minister Muhyiddin Yassin, once a supporter of Najib, publicly called on him to answer questions about the fund. It seemed that Najib was cornered.

On the morning of Monday 28 July, the attorney general, Abdul Gani Patail – a party loyalist who had previously gone after the prime minister’s opponents – arrived at his office expecting to finalise corruption charges against Najib. The indictment, which Rewcastle Brown later obtained and published, would have charged the prime minister with corruption resulting from the investigations into 1MDB.

The attorney general never got to press those charges. On reaching his office, he was summarily dismissed by a civil servant. In a public statement, Najib said the country’s top legal officer was too ill to continue in the role. Also relieved of their posts were the head of special branch and the deputy prime minister. Meanwhile, four members of the investigating parliamentary accounts committee were promoted, without any choice, to cabinet positions, which left them with no power to continue investigating, and the committee’s work was declared suspended. The next day, a mysterious fire swept through police headquarters, where records of white-collar crimes were kept.

It seemed that Najib was in control again.

The crackdown revealed a ruthless side to Najib. However, there was a loose end that could unravel everything: Xavier Justo. Not only had Justo leaked information about 1MDB’s dealings with PetroSaudi, he was also a potential star witness in any future court proceedings about the financial scandal.

Justo was placed in a cell with 70 other prisoners. The floor was covered with sweat and urine

After Justo was arrested for blackmail and flown to Bangkok in June 2015, he was placed in a cell with 70 other prisoners. The floor was covered with sweat and urine, and the room was so tightly packed that prisoners could not sleep on their backs. According to Justo’s wife Laura, her husband’s first foreign visitor was his former friend, colleague and PetroSaudi director, Patrick Mahony. Smooth and charming, Mahony flashed a smile and said he was there to help.

Laura says that Mahony offered Justo a deal: confess and plead guilty, and PetroSaudi will get you out of here by the end of the year. Justo reluctantly agreed. He signed a confession – without a lawyer present – which claimed that he had attempted to blackmail his former employers, and apologised to Mahony and Obaid “for the harm stress and anxiety I caused them”. According to Laura, a man who claimed to be a Scotland Yard detective – and later told her he had been hired by PetroSaudi – took down Justo’s confession. (PetroSaudi told the Guardian that Justo had “illegally obtained commercially sensitive, confidential and private documentation” and was in prison for “blackmail and extortion”.)

Justo was sentenced on 17 August 2015 at Southern Bangkok criminal court. At the trial he was granted a translator, but his lawyer did not turn up, sending an assistant instead. The trial and sentencing took 15 minutes. Justo got three years in a Thai jail for attempting to blackmail a UK company out of $2m.

Life behind bars in Klong Prem Central prison, where Justo is incarcerated, is not for the fainthearted. In a city where temperatures rarely drop below 26C, Justo shares a cramped “VIP” cell with 25 other prisoners. Breakfast is at 7am. Water is rationed. Prisoners have no food after 3pm. There is a small bathroom area at the rear of the cell, which consists of a tap and a hole in the floor for a lavatory.

As 2015 wore on and it became clear that her husband was not going to be out of jail by the end of the year, Laura grew increasingly suspicious of her contacts at PetroSaudi. A series of stories in the Swiss and Malaysian press purporting to tell Justo’s side of the story depicted him as an unwitting pawn in a political plot against the Malaysian prime minister. Things were not getting better for Justo – they were getting worse. In his prison cell, Justo was now sleeping on a thin blanket – his mattress was withdrawn a few months after he arrived, as was his exercise hour.

Laura came to believe that Justo was a victim of a deceit by his former friends, who tricked him into confessing and handing over copies of PetroSaudi’s servers, in an attempt to protect themselves and their Malaysian associates by burying the case. In May 2016, in a last-gasp effort to save her husband, Laura turned to the one person who she knew Justo trusted: Rewcastle Brown, who brought her to the Guardian.

When I met Laura in June 2016, she was at first calm and composed, but broke into tears when speaking about her husband, her voice cracking with emotion. Justo has not seen their son since he was eight months old. “I only want justice to be done,” Laura recently wrote in an email. “Xavier was no thief, he was only asking for what he had been promised. Even through this darkest and most difficult time of his life, which is right now, he writes to me that he is keeping strong for our son and I – that he will fight for us whatever it takes.”

Since reaching out to Rewcastle Brown and the Guardian, Laura has handed over notes smuggled out of prison in which Justo says he has been framed. Laura believes that Patrick Mahony of PetroSaudi has controlled Justo’s life behind bars, deciding how comfortable his living space would be and who could visit him. (Foreign prisoners have a list posted outside the prison of permitted visitors. Mahony is listed as number two. Laura is number five.)

Laura says she has emails and WhatsApp messages, as well as recordings of phone calls from last year that suggest that Mahony is under increasing pressure from Najib, on one hand, and from US and Swiss investigators combing through 1MDB’s deals, on the other.

In taped telephone conversations with Laura, Mahony appears obsessed with Rewcastle Brown, whom he refers to as a “bitch”. In a recorded conversation with Laura from November 2015, Mahony refers obliquely to a powerful person whom he claims could help reduce Justo’s sentence: “I told you the other evening, who the ultimate person is controlling this, and I am due to have another meeting with him soon … This guy is still stressed because it’s his political career on the line. He’s in deep shit and that’s all he cares about, nothing else.”

When Laura asks what she should tell her husband, Mahony says: “The only way that you can show that you’re on his side – to be a team player – is if you’re ready to put yourself out in the media. You are ready to denounce all the people who are conspiring against him … I am not going to lie to you … You can help the situation or you cannot help the situation.”

When Laura presses for Justo’s release, Mahony snaps. “I’m still dealing with this shit every day. You need to remember we are all in the shit. I know he’s in prison and you are alone with the baby. And I looked at you the other day and I told you I feel for you. But me, I’m also in the shit. And a lot of other people are in the shit. A prime minister of a country is in deep shit because he has been put in this shit.”

By December, Mahony admits in another phone call that he had been to the US, where “the FBI is looking at all this shit” and that he had been pulled in by the Swiss attorney general’s office. “The Swiss are continuing to really give us shit … They know they have nothing … But they say they are fearful of being accused of not doing anything.” PetroSaudi said that it will cooperate with any official authority in any jurisdiction and added that it is not the subject of any investigation in any jurisdiction. Mahony has not been interviewed by US or Swiss officials.

The consequences of Justo’s leaks are still reverberating around the world. When the US Department of Justice laid out the case against 1MDB last week, it pulled no punches. “The Malaysian people were defrauded on an enormous scale,” said Andrew McCabe, the FBI’s deputy director. US officials told the Guardian that any party who wanted to contest the attorney general’s claim must file a response in a federal court within 60 days to answer the factual allegations.

In a separate case, the DoJ is also investigating whether Goldman Sachs violated US banking law in its handling of $6.5bn in bond offerings that it carried out for 1MDB. The Wall Street behemoth earned $593m in fees for the issue. Goldman Sachs denied any wrongdoing. The bank told the Guardian: “We helped raise money for a sovereign wealth fund that was designed to invest in Malaysia. We had no visibility into whether some of those funds may have been subsequently diverted to other purposes.”

Most important was that the DoJ allegations directly contradicted repeated assertions by Prime Minister Najib about the origins and purpose of hundreds of millions of dollars that ended up in his personal bank accounts – which he had claimed was a gift from a Saudi benefactor.

The DoJ filing was released at a critical moment for democracy in Malaysia. On 1 August, a draconian national security act introduced by Najib comes into force – allowing the Malaysian government to establish martial law in any designated geographic area. The law will dramatically expand the powers of Malaysia’s security forces – allowing for arrests, searches and seizures without warrants and the bulldozing of buildings.

But in the rest of the world, investigations into the sprawling corruption scandal are continuing to expand. In Switzerland, the US justice department identified RBS Coutts and Rothschild Bank as conduits for transactions in the corruption complaint. The Swiss attorney general is probing the billion-dollar fraud. The banks declined to comment when contacted by the Guardian.

Singapore found “lapses and weaknesses” in anti-money-laundering controls at major banks. For the first time in the island state’s history, the authorities shut down a merchant bank. In April the United Arab Emirates froze hundreds of millions of dollars in accounts held by alleged conspirators in the 1MDB fraud and banned the account holders from travelling abroad.

The board of 1MDB said that it was “confident that no wrongdoing had been committed” but as a “precautionary measure”, its accounts for 2013 and 2014 should no longer be “relied on by any party”. Najib has said that he did not commit “any offence or malpractice”. His attorney general cleared him of corruption earlier this year.

For now, the man whose revelations enabled the exposure of this vast fraud remains in a Bangkok prison. Xavier Justo was motivated by a mixture of morality and revenge – the desire to settle scores with a friend who betrayed him. To get even, he chose to blow the whistle, for a price. He may not go down in history as a hero who selflessly risked ruin to expose the truth. But in doing so, he did unwittingly sacrifice himself.

                This entry was posted on Friday, 29 July 2016, 6:53 pm and is filed under
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The Guardian view on Malaysian politics: a scandal meriting the world’s attention

Editorial

Guardian

28 July 2016

Investigations into the 1MDB development fund and a new security law are both cause for concern

Malaysia’s new security law, due to come into force on Monday, would be alarming at any time. Its sweeping powers permit authorities to declare national security areas which are off-limits to protests, where individuals and premises can be searched without a warrant, and where killings by security forces need not result in formal inquests. Changes to the country’s criminal code, undermining the rights of suspects, are similarly concerning. Human rights groups warn that existing laws, including the colonial-era Sedition Act – which Prime Minister Najib Razak once vowed to repeal – have been used to detain and muzzle critics. The country’s police chief recently warned that protests by electoral reform group Bersih would be permitted only if participants avoided calling for Mr Najib’s resignation.

The government says the National Security Council Act is needed to protect the public from a mounting global terrorism threat. It is striking, however, that it becomes law as the prime minister faces growing pressure and planned protests over the multi-billion-dollar 1MDB development fund scandal, which has snowballed since emerging a year ago. Even his erstwhile patron, former premier Mahathir Mohamad, has joined forces with the opposition in an attempt to oust him.

Mr Najib has denied wrongdoing throughout and Malaysia’s attorney general cleared him over allegations that $681m was siphoned from the development fund to his personal bank account, explaining that the cash was a political donation from the Saudi royal family. That explanation was itself striking, even given the Saudi foreign minister’s assurances that it was a genuine gift “with nothing expected in return”, and promises that most of it had been returned.

This month the US Justice Department filed civil lawsuits seeking to seize $1bn in assets, part of the $3.5bn it alleges high-level figures and their associates stole from the fund which Mr Najib founded and, as chairman of its advisory board, oversaw. (He is not named in the documents, which refer to him as “Malaysian Official 1”.) It alleges that money intended for the wellbeing of Malaysians was diverted to luxury properties, works by Monet and Van Gogh and even the making of The Wolf of Wall Street, though the movie’s production firm has denied any impropriety.

US attorney general Loretta Lynch told a press conference that misappropriated funds were laundered through a complex web of transactions and fraudulent shell companies with bank accounts in countries around the world; “We cannot allow the massive, brazen and blatant diversion of billions of dollars to be laundered through US financial institutions without consequences,” a colleague declared. One important question is how well such entities performed their duties. The US investigation – like the research of Clare Rewcastle Brown, whose London-based Sarawak Report has doggedly pursued concerns about 1MDB – is to be commended. This case concerns assets that rightfully belong to Malaysia’s 30 million citizens, but what has happened to them, and how, should concern the rest of us, too.

                This entry was posted on Friday, 29 July 2016, 9:18 am and is filed under
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