By Our Correspondent
Asia Sentinel
February 15, 2015

All computers and servers at 1Malaysia Development Bhd, the troubled investment fund backed by Malaysia’s Ministry of Finance, were called in and wiped clean just before the end of last year, the investigative blog Sarawak Report reported on Feb. 13.

1MDB employees told the blog that all computers and records at the fund were called in and cleaned, including personal computers and mainframe servers, supposedly because the fund’s system was hacked.

The chief economic advisor of the fund, which was started in 2009, is Prime Minister Najib Tun Razak. It reportedly faces RMB43 billion (US$12.01 billion) in debt and has been unable to meet loan payment dates several times. It was forced to go to Bank Negara, the country’s central bank, to ask for an extension in the payment dates, raising concern that its financial problems could threaten the entire Malaysian banking system. The bulk of the loans were made by the government-linked Malayan Banking Bhd or Maybank, and RHB Bank.

Sources confirmed the story to Asia Sentinel but the reason for the action appears unclear. It may stem from the fact that Sarawak Report, which is published by Clare Rewcastle Brown, announced last September that she had access to the fund’s emails.

One businessman said the decision to clean out the files could also pertain to a later defamation lawsuit filed against Taek Jho Low, the young tycoon who convinced Prime Minister Najib to create the fund. Low is being sued by businessman and publisher Tong Kooi Ong, who was the subject of anonymous blog attacks after his publication, The Edge, carried extensive and biting coverage of 1MDB’s crisis ridden business affairs. If Tong’s lawyers were to file a motion for discovery to obtain the fund’s internal emails, they are now gone

The order came as a surprise move by management, sources told Sarawak Report. The staff members said they were contacted directly by phone or in person and told to take their computers immediately to the IT section in order to be wiped. None of the instructions were delivered by text or email, leaving little record of the blitz, which took place in the space of just a few hours.

The result is that there are few records left available to show what has been going on at the beleaguered fund and this is widely believed amongst staff to be the reason. One of them sent out this message on the day it happened, which was Friday 19th of December, a fortnight before the departure of the previous CEO Mohd Hazem Abdul Rahman:

“1MDB has been collecting employee laptops and company-issued hand phones today. Staff were contacted in person or by phone call and informed to hand them in to IT. No emails or text messages were sent. On asking the reason for the hand-in staff were advised that there has been a hacking attempt and that therefore the company is collecting all laptops and handphones in order to (wipe the discs clean) before they are returned. Parallel to that the main servers are being wiped. If you try to email a 1MDB employee now the email will bounce back as undeliverable. Obviously the reason given is incredulous[sic] to say the least.”

IT experts told Sarawak report that the excuse of a hacking attempt is rarely a reason for wiping information from servers.

This snap decision to expunge all past records and emails from all staff computers and handheld devices as well as the organization’s mainframe computers will inevitably raise questions about whether management were trying to conceal potentially embarrassing information before the handover.

Numerous questions have been asked for several months from all quarters about the hundreds of missing millions from the fund, which were raised from public borrowing.

In September, Sarawak Report disclosed that it has been given access to emails, which indicated the extent of the involvement of tycoon Jho Low in 1MDB’s decision-making processes. An emailed directive was later sent out to all staff confirming the situation that all data pre-19 Dec. 2014 is no longer retrievable.

“It is an internal email” one staff member told Sarawak Report. “It says that as part of the wipe all 1MDB HQ emails have been re-configured. All emails prior to 19DEC14 are permanently wiped”.

1MDB has been the subject of considerable speculation of more thanUS$1 billion, which is said is in a redeemable Cayman Islands account, having been allegedly repaid to the fund by the company PetroSaudi, which originally received the loan.

The former CEO of 1MDB claimed at the end of last year that this money was being repatriated to help fund pressing debt repayments to Malaysian banks on the billions borrowed. When he took over the job in January the new CEO was first quoted as saying that all the money had indeed been returned. However, the fund has acknowledged the money has not been returned, allegedly because the low level of the dollar makes it a bad time to attempt to return the money .

Instead, business tycoon Ananda Krishnan is being pressured to stump up RM2billion to prevent 1MDB defaulting on its loans on Feb. 18, which would plunge the Malaysian economy into crisis. The escalating crisis has led to an increasingly poisonous atmosphere politically. Both opposition politicians and increasingly leaders from Najib’s own United Malays National Organization are demanding accountability and an explanation as to how such a vast debt could have accumulated out of borrowings in just five years.

In particular, former Prime Minister Mahathir Mohamad and his close friend and ally, the former Finance Minister Daim Zainuddin, have been leading critics inside UMNO. Surrogate bloggers closely allied with Mahathir have been saying Najib must go.