Friday, July 22, 2016

1MDB Blows Up

Am I ready for my close-up?
Civil lawsuits filed in federal court on Wednesday did not name Malaysian premier Najib Razak, referring instead to “Malaysian Official 1.” Some of the allegations against this official are the same as those in a Malaysian investigation over a $681 million transfer to his personal bank account. 
The US Department of Justice said $681 million from a 2013 bond sale by sovereign wealth fund 1MDB was transferred to the account of “Malaysian Official 1.” He is described in court papers as “a high-ranking official in the Malaysian government who also held a position of authority with 1MDB.” 
A source familiar with the investigation confirmed that “Malaysian Official 1” is Najib. 
Back in Malaysia, the hashtag #MalaysianOfficial1 was trending on Thursday.


Nothing to see here, really:
Minister in the Prime Minister’s Department Datuk Seri Azalina Othman Said added that the demand was especially unjustified as Najib was not identified in the lawsuit filed by the US Justice Department yesterday. “Their action reveals the true double standards of the opposition. They were silent when the secretary-general of the DAP was charged in court. “This is the unprincipled politics practised by the opposition,” she said in a statement today. 
Azalina took particular issue with Petaling Jaya Utara MP Tony Pua, saying he should “confuse” the public given his position as a Public Accounts Committee (PAC) member. 
She then stressed that the US lawsuit was a civil matter, and not criminal in nature.



Leave it to Letters to cut through to the takeaway:
Inter alia, the Federal Bureau of Investigation (FBI), the US Department of Justice (DOJ), and the Internal Revenue Service (the US tax revenue agency) have concluded that the Malaysian people were robbed. 
They have conclusively arrived at their findings that the co-conspirators “laundered their stolen funds through a complex webs of opaque transactions and fraudulent shelf companies and bank accounts around the world including Switzerland, Singapore and the United States..” The word ‘stolen’ was repeated many times. 
It is an open secret now that Prime Minister Najib, who created and led 1MDB, worked hand-in-glove with flamboyant businessman Low Taek Jho or Jho Low. The US Justice Department report listed three other 1MDB officials who were involved in this alleged fraud and the ‘Malaysia Official No 1', irrespective of who the person is.


Jho Low gives away the store and the story:
Mr. Low climbed the collector ranks quickly, buying Monet’s “Great Saint George” for $35 million in late 2013, the complaint said, and later requesting that it be held in his storage space at the Geneva freeport. In 2014, Mr. Low acquired “Waterlilies with Reflections of Tall Grass” for the equivalent of roughly $57.5 million, according to the complaint. The painting was later added as collateral by Mr. Low to his Sotheby’s loan agreement, and was held by Sotheby’s as of early last month, the complaint said. 
The complaint alleges that art work acquired by Mr. Low was bought using 1MDB funds that had been funneled through entities including accounts at Swiss banks BSI SA, and Falcon.


Despite recent reforms, Swiss banks are entangled yet again:
Details are starting to emerge about a string of offshore shell companies linked to bank accounts throughout the world. Several banks from different countries have been named in various documents from prosecutors. 
The first Swiss bank to be named in connection to 1MDB was the Lugano-based private bank BSI, which also has offices in Singapore. In May, the Swiss and Singaporean financial regulators withdrew the bank’s license in the two countries, accusing it of flagrant violations of anti-money laundering obligations. 
The Swiss Attorney general has opened criminal proceedings against BSI while a former employee of the bank has been arrested in Singapore. BSI has appealed the punishment imposed by the Swiss Financial Market Supervisory Authority (Finma), which included an order to surrender CHF95 million of illicitly gained profits, to the federal administrative court. 
Two more Swiss banks have recently been named – UBS and Falcon private bank. UBS was accused last week by the campaigning blog Sarawak Report of helping to funnel more than $2 billion of illicit funds from 1MDB. This accusation remains unverified.


The FT leaves us with the tragic punchline:
At a press conference, Mahathir Mohamad, Malaysia’s influential former premier and Mr Najib’s one-time mentor, called for a referendum on the premier’s leadership. 
But there is little sign the opposition will prevail. It remains divided and its de facto leader, Anwar Ibrahim, is in prison on a sodomy charge his supporters say was trumped up. 
“Najib’s position is fairly secure because his internal enemies, within his party, have been sidelined or dismissed. The opposition are really fragmented and in no position to take advantage of the situation,” said Ibrahim Suffian, director of the Merdeka Center, a Malaysian polling agency.


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