The “overkill” campaign to convince Malaysians that 1MDB scandal has finally been resolved with the 1MDB-IPIC “arbitration settlement” boomeranged as many basic questions remain unanswered

After the “arbitration settlement” between 1MDB and Abu Dhabi’s International Petroleum Investment Corporation (IPIC), the UMNO/BN Government propaganda machinery went into an overdrive to convince Malaysians that the 1MDB international kleptocratic money-laundering scandal had been resolved and settled once and for all.

But the propaganda campaign committed the fatal sin of doing an “overkill”, like the claims by the Barisan Nasional strategic communications director, Datuk Seri Abdul Rahman Dahlan, causing a boomerang as many basic questions about the 1MDB scandal, which had hounded and haunted Malaysians with the infamy and ignominy of a global kleptocracy, remain unanswered.

Examples of such propaganda overkill, which aroused more doubts and questions, are Abdul Rahman’s claims that the “arbitration settlement” shows that 1MDB funds did not end up in Prime Minister Datuk Seri Najib Razak’s pockets or that the 1MDB funds held in “units” in Singapore exist and will be monetized to pay IPIC – as they do not have such results.

Thanks to Abdul Rahman, these questions have returned to the centre-stage of public concern, together with other questions like “Why Malaysians have now to pay IPIC more than double what was actually borrowed by 1MDB” (asked by DAP MP for PJ Utara), “Where did the money paid by 1MDB go” (asked not only by former Prime Minister Tun Dr. Mahathir Mohamed but also by UMNO MP for Kulim Bandar Baru and Public Accounts Committee member, Datuk Aziz Sheikh Fadzir), “Will taxpayers foot 1MDB’s US$1.2b settlement with IPIC” (by PKR MP for Pandan Rafizi Ramli), “Who is buying the 1MDB ‘units’?” (by former Deputy Prime Minister Tan Sri Muhyiddin Yassin), my question yesterday “Is Malaysia fast becoming a rogue state in today’s international society?” among many others.

Is Najib prepared to convene a special session of Parliament to clear Malaysia’s infamy and ignominy of being regarded worldwide as a “global kleptocracy” to give full and detailed answers to all the charges about 1MDB international money-laundering scandal, in particular the nearly year-old United States Department of Justice (DOJ) largest kleptocratic litigation to forfeit over US$1 billion 1MDB-linked assets in the United States, United Kingdom and Switzerland?

Apart from the question whether 1MDB and the Malaysian government should have responded legally to the DOJ kleptocratic suits, Malaysia silence for nearly a year to the DOJ’s detailed charges of Malaysia as a global kleptocracy because of the international 1MDB money-laundering scandal is most deafening.

This is obvious when we refer to Paragraphs 6-12 to the 513-Paragragh 136-page DOJ lawsuit on 1MDB, which state:

“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 through 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 associates, including to purchase luxury real estate in the United States, pay gambling expenses at Las Vegas casinos, acquire more than $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.

“7. The criminal conduct alleged herein occurred in three principal phases:

“8. The “Good Star” Phase: The fraudulent diversion of funds from 1MDB began in approximately September 2009, soon after 1MDB’s creation. Between 2009 and 2011, under the pretense of investing in a joint venture between 1MDB and PetroSaudi International (“PetroSaudi” or “PSI”), a private Saudi oil extraction company, officials of 1MDB and others arranged for the fraudulent transfer of more than $1 billion from 1MDB to a Swiss bank account held in the name of Good Star Limited (“Good Star Account”). Officials at 1MDB caused this diversion of funds by, among other things, providing false information to banks about the ownership of the Good Star Account. Contrary to representations made by 1MDB officials, the Good Star Account was beneficially owned not by PetroSaudi or the joint venture, but by LOW Taek Jho, a/k/a Jho Low (“LOW”), a Malaysian national who had no formal position with 1MDB but was involved in its creation. LOW laundered more than $400 million of the funds misappropriated from 1MDB through the Good Star Account into the United States, after which these funds were used for the personal gratification of LOW and his associates.3

“9. The “Aabar-BVI” Phase: In 2012, 1MDB officials and others misappropriated and fraudulently diverted a substantial portion of the proceeds that 1MDB raised through two separate bond offerings arranged and underwritten by Goldman Sachs International (“Goldman”). The bonds were guaranteed by both 1MDB and the International Petroleum Investment Company (“IPIC”), an investment fund wholly-owned by the government of Abu Dhabi, in the United Arab Emirates (“U.A.E.”). Beginning almost immediately after 1MDB received the proceeds of each of these two bond issues, 1MDB officials caused a substantial portion of the proceeds – approximately $1.367 billion, a sum equivalent to more than forty percent of the total net proceeds raised – to be wire transferred to a Swiss bank account belonging to a British Virgin Islands entity called Aabar Investments PJS Limited (“Aabar-BVI”).

“10. Aabar-BVI was created and named to give the impression that it was associated with Aabar Investments PJS (“Aabar”), a subsidiary of IPIC incorporated in Abu Dhabi. In reality, Aabar-BVI has no genuine affiliation with Aabar or IPIC, and the Swiss bank account belonging to Aabar-BVI (“Aabar-BVI Swiss Account”) was used to siphon off proceeds of the 2012 bond sales for the personal benefit of officials at IPIC, Aabar, and 1MDB and their associates. Funds diverted through the Aabar-BVI Swiss Account were transferred to, among other places, a Singapore bank account controlled by TAN Kim Loong, a/k/a Eric Tan (“TAN”), an associate of LOW. Those funds were thereafter distributed for the personal benefit of various individuals, including officials at 1MDB, IPIC, or Aabar, rather than for the benefit of 1MDB, IPIC, or Aabar.

“11. The “Tanore” Phase: In 2013, several individuals, including 1MDB officials, diverted more than $1.26 billion out of a total of $3 billion in principal that 1MDB raised through a third bond offering arranged by Goldman in March 2013. The proceeds of this bond offering were to be used by 1MDB to fund a joint venture with Aabar known as the Abu Dhabi Malaysia Investment Company (“ADMIC”). However, beginning days after the bond sale, a significant portion of the proceeds was instead diverted to a bank account in Singapore held by Tanore Finance Corporation (“Tanore Account”), for which TAN was the recorded beneficial owner. Although the Tanore Account had no legitimate connection to 1MDB, the then-Executive Director of 1MDB was an authorized signatory on the account. 1MDB funds transferred into the Tanore Account were used for the personal benefit of LOW and his associates, including officials at 1MDB, rather than for the benefit of 1MDB or ADMIC.

“12. The proceeds of each of these three phases of criminal conduct were laundered through a complex series of transactions, including through bank accounts in Singapore, Switzerland, Luxembourg, and the United States.”

These seven paragraphs as well as the DOJ forfeiture suits of the over US$1 billion 1MDB-linked assets debunk any claim by the UMNO/BN government propagandists that the IMD-IPC “arbitration settlement” has fully and finally resolved the 1MDB scandal and cleared Malaysia of the ignominy and infamy of being regarded worldwide as a global kleptocracy.

Lim Kit Siang DAP Parliamentary Leader & MP for Gelang Patah