1MDB: Dr Mahathir's claims are baseless

PETALING JAYA - There is no justification or facts to back former prime minister Tun Dr Mahathir Mohamad's claims that vast amounts of money have disappeared, says Government investment body 1Malaysia Development Berhad (1MDB).

"He first claimed that RM42billion (S$15 billion) was missing. Then, when 1MDB provided a summary of how the RM42bil was spent, he started saying some of the RM42bil is missing. Now, Tun Mahathir has resorted to saying that vast amounts of money have disappeared," 1MDB said in a press statement issued on Tuesday.

1MDB added that Dr Mahathir was repeating the same questions about its dealings with PetroSaudi which ended in 2012, although 1MDB had responded to earlier allegations in detail when explaining a US$1.9bil (S$2.6bil) loan pointed out by him.

"Further to an earlier joint venture arrangement in 2009, 1MDB invested US$1.83bil  cash in murabaha notes issued by JV Co, a company that, by then, was 100 per cent owned by PetroSaudi following the termination of the joint venture in March 2010.

"In June 2012, this entire amount was repaid by way of conversion into shares of Petrosaudi Oil Services Limited for a value of US$2.22bil," said 1MDB.

1MDB added that in September 2012, it sold its shares in PetroSaudi Oil Services Limited for US$2.318bil and received fund units in a Cayman Islands registered fund. These fund units were owned by 1MDB via its 100 per cent subsidiary, Brazen Sky, and held through BSI Bank Singapore as custodian.

"Accordingly, 1MDB invested a total of US$1.83bil  with PetroSaudi as murabaha notes, and ultimately received US$2.318bil of fund units, representing a gain over time of US$488mil. The information referred to above can be found in the notes to 1MDB's financial statements," it said.

It added that contrary to Dr Mahathir's claims, it had clearly provided detailed information on this issue, most recently on June 16 in a direct response to a previous allegation raised by him.

"It is important to highlight that the murabaha notes were guaranteed by PetroSaudi, thereby having a lower risk profile than equity. 1MDB had an option to convert the murabaha notes into equity," it added.

The case that rocked Malaysia: 1MDB

  • Every time 1MDB borrowed money, large amounts of the cash were quickly misappropriated, according to investigators. The money followed a circuitous path, and roughly US$1 billion landed in the private bank accounts of Malaysian Prime Minister Najib Razak.
  • Transaction 1: The Saudi Arabian oil venture money

    1MDB borrowed about US$1.8 billion for a joint venture with Saudi oil company PetroSaudi International. About US$1 billion of the cash went to a Seychelles company called Good Star Ltd. A co-founder of PetroSaudi, Prince Turki bin Abdullah, received US$24.5 million from Good Star before transferring US$20 million to Mr Najib via an intermediary.

  • Transaction 2: The power plant money

    Two bonds worth a total of US$3.5 billion were sold for 1MDB by Goldman Sachs to fund the purchase of power plants. 1MDB was supposed to pay money for a guarantee on the bonds to a unit of Abu Dhabi's IPIC called Aabar Investments PJS. Instead, the funds went to the similarly named Aabar Investments PJS Ltd.

  • Transaction 2: The power plant money

    From Aabar BVI, about US$637 million went to a company called Blackstone Asia Real Estate Partners. Another US$463 million went from Aabar BVI to two mutual funds in the Caribbean island of Curaçao and then onto Blackstone Asia Real Estate Partners, which transferred a total of $170 million to Mr. Najib’s bank accounts.

  • Transaction 4: The Abu Dhabi real estate money

    Of the US$1.05 billion Mr. Najib received in his accounts, only US$80 million appears to clearly originate with Saudi Arabia. Another US$120 million came via an intermediary based in Saudi Arabia. At least US$20 million of that US$120 million has been traced clearly back to 1MDB by investigators. The remaining US$850 million came via Tanore Finance and Blackstone Asia.

  • Transaction 4: The four paths

    1MDB sold US$3 billion in bonds via Goldman Sachs to fund a real-estate joint venture with Abu Dhabi. 1MDB transferred US$1.27 billion ended up in a British Virgin Islands company called Tanore Finance Corp, which then transferred US$680 million to Mr. Najib’s accounts.

  • On July 20, 2016, US Attorney General Loretta E. Lynch announced the filing of civil forfeiture complaints seeking the forfeiture and recovery of more than US$1 billion in assets associated with an international conspiracy to launder funds misappropriated from a Malaysian sovereign wealth fund 1MDB.
  • Riza Aziz, stepson of PM Najib; Low Taek Jho, and Khadem Al Qubaisi, former Abu Dhabi managing director of sovereign wealth fund have been named in US Justice Department's lawsuits involving seizures of assets allegedly acquired with stolen 1MDB funds.
  • Riza Aziz, co-founder of Red Granite Pictures, was accused in US lawsuits of using US$100 million dollars that was diverted from Malaysian state development fund 1MDB in a money-laundering scheme, to finance the film.
  • US Department of Justice said Abu Dhabi tycoon Khadem al-Qubaisi, who helmed IPIC, used 1MDB funds to buy a New York penthouse and Beverly Hills properties.
  • UAE central bank reportedly told banks to freeze the assets of Khadem al-Qubaisi and Mohammed Ahmed Badawy Al-Husseiny (photo), the former chief executive of Aabar Investments PJS and provide information about their deposits and transactions.
  • Producer Riza Aziz (Lt) and cast members like Leonardo DiCaprio (next to him), at the UK premiere of ‘The Wolf of Wall Street’ in London. The movie was allegedly produced using stolen 1MDB funds.
  • A Beverly Hills home was bought by a shell company allegedly tied to Low Taek Jho.
  • Produced by Riza Aziz's Red Granite Pictures, The Wolf of Wall Street is expected to make another US100 million, according to industry analysts in the wake of the US lawsuits to seize assets acquired allegedly with stolen 1MDB funds.
  • Dumb And Dumber To was produced by Riza Aziz's Red Granite Pictures. US Department of Justice has named him in its lawsuits to seize assets acquired allegedly with stolen 1MDB funds.
  • Another movie produced by Riza Aziz's Red Granite Pictures is Daddy's Home.
  • Swiss authorities have seized artworks acquired allegedly with stolen 1MDB funds. They include Vincent Van Gogh's sketch La Maison de Vincent a Arles and Claude Monet's Nympheas avec Reflets de Haute Herbe (photo), which is worth US$57.5 million.
  • Swiss authorities seized Vincent Van Gogh's sketch La Maison de Vincent a Arles, which is worth US$5.5 million.
  • Also seized by Swiss authorities was Claude Monet's Sainte-Georges Majeur, which has an estimated worth of US$35 million.
  • PM Najib Razak and his wife Rosmah Mansoor in a minor pilgrimage at Mecca in March 2016. Najib has repeatedly denied wrongdoing over 1MDB allegations. US Department of Justice did not name him in its lawsuits but mentioned the involvement of a "Malaysian Official 1'.
  • Dr Mahathir Mohamad (R), former Malaysia Prime Minister, called for PM Najib to step down after the US disclosure.
  • A photo of a Park Laurel apartment in New York city. US Department of Justice said among the properties allegedly bought with stolen 1MDB funds is a US$33.5 million condominium at the Park Laurel. The purchase was made by a shell company allegedly controlled by Mr Riza Aziz, the step-son of PM Najib.
  • TwentyOne Angullia Park in Orchard Boulevard, where Mr Low Taek Jho owns a penthouse bought for $42.91 million in 2013, and another unit bought for $11.53 million. Singapore authorities have prohibited any dealing in the units since February 2016.
  • In March, the Wall Street Journal reported that deposits into personal accounts of Malaysia's prime minister totaled more than US$1 billion (S$1.4 billion) - hundreds of millions more than previously identified.
  • Tim Leissner, a Goldman Sachs partner who handled deals for 1MDB was suspended and later quit after bank investigators found he allegedly violated firm policies.
  • On Feb 5, private banker Yak Yew Chee withdrew his request to release money in his bank accounts, which had been frozen by Singapore authorities as part of their probe into 1MDB.
  • Yak Yew Chee, a senior private banker with Swiss bank BSI, was the first name to emerge from the Singapore probe into 1MDB, after it was reported that he was seeking access to his bank accounts which were frozen as part of the investigations.
  • In January, Malaysia's attorney-general said on in January that US$681 million (S$974 million) transferred into Prime Minister Najib Razak's personal bank account was a gift from the royal family in Saudi Arabia.
  • It was later reported that the payment was personally authorised to Prime Minister Najib Razak by Saudi Arabia's late King Abdullah.
  • Malaysians, eager to see if bank details that were published in the report were Madam Rosmah's, have been transferring RM1 (36 Singapore cents) to her account, liberal news portal Malaysian Insider reported.
  • Nine documents detailing how almost US$700mil (S$943mil) in 1MDB funds allegedly ended up in Prime Minister Datuk Seri Najib Tun Razak's (pic) personal bank accounts have been released by the Wall Street Journal (WSJ).
  • The documents showed alleged bank transfers from various companies to Najib's personal accounts on March 2013, December 2014 and February 2015.
  • However, some details such as the last five digits of the AmIslamic Bank Bhd account, said to belong to Najib, were redacted.
  • The development fund, which owns a large portfolio of power plants, has missed payments on the bridge loan that was due end-December and its lenders were keen to see it paid before they had to write it down in first-quarter earnings, bankers said.
  • Local media have reported that the final deadline was Feb 18.
  • Malaysia's indebted and controversy-ridden state investor 1MDB will be left as a skeletal structure and possibly dissolved under a debt repayment plan in which most of its assets will be sold, sources with direct knowledge of the matter said.
  • 1MDB, a property-to-energy fund whose advisory board is chaired by Prime Minister Najib Razak, has built debt of nearly 42 billion ringgit ($11.73 billion) to build a portfolio of power plants
  • Malaysian billionaire Krishnan is preparing to settle a $550 million loan owed by troubled state fund 1MDB, four sources familiar with the matter said - a last-minute reprieve for the fund whose debt woes are pressuring the ringgit and the country's sovereign credit rating.
  • Arul Kanda, newly appointed president and group executive director of Malaysia's state investor 1Malaysia Development Bhd (1MDB)
  • In his first week on the job, Kanda, the new head of loss-making Malaysian state investor 1MDB has had a ringside view of his future challenges.
  • A missed loan payment that spooked bond and currency markets...
  • And a possible delay in an ambitious asset sale he must pull off to cut a debt pile of nearly $12 billion.
  • Regarded as a cross between a sovereign wealth fund and a private investment vehicle, with Prime Minister Najib Razak chairing its advisory board, 1MDB is struggling under the burden of $11 billion in borrowed money.

It also refuted more claims by Dr Mahathir that it had overpaid for acquiring independent power producers (IPPs), saying that the value paid for them was based on independent advice from financial, legal, accounting, tax and technical advisors.

It also said 1MDB took a long-term view and considered the social and economic impact on the country in arriving at a final valuation.

"1MDB only acquires assets when we are convinced that they represent compelling long-term value. In this particular case, 1MDB purchased power plants from the original private sector owners i.e., first generation IPP investors, who were granted lucrative, long-term, fixed price contracts during the time Dr Mahathir was prime minister," said 1MDB.

1MDB added that the value it paid which may have involved a premium in certain instances, as is common when acquiring another business is commensurate with their future potential and overall benefit to the nation, before explaining how it intends to reduce its RM42bil debt.

It added that it was actively pursuing various options with respect to the monetisation of Edra Energy and, as reported by the media, had received significant interest from potential investors in both Malaysia and abroad.

"Combined, these actions will allow us to reduce 1MDB's debt significantly, and ensure that maximum value is generated for the 100 per cent ultimate shareholder, the Government of Malaysia," said 1MDB.

It said however that Dr Mahathir's allegations were damaging to its efforts to reduce the company's debt levels as well as the wider economy.

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