The Malaysian Insider
24 October 2015
Australian authorities are investigating key players connected to controversial state-owned investment firm 1Malaysia Development Berhad (1MDB), The Australian reported today.
The daily said the Australian Securities & Investments Commission (Asic) had in December launched investigations into Avestra Asset Management, located at 2 Miami Key, Icon Corporate Park, which has become the centre of a full-scale probe.
Avestra, along with another company known as Bridge Global Securities, was linked to a Cayman Islands entity called Bridge Global Absolute Return SPC Fund (BGARF), which according to the report was used to cover up a US$2.23 billion hole in debt-ridden 1MDB.
In May, The Edge had examined BGARF, a segregated portfolio company (SPC) managed by Bridge Partners Investment Manager (Cayman) Ltd.
It said the SPC was a high-risk portfolio and that investors were warned they could lose everything, cautioning that 1MDB had put billions of ringgit borrowed at very high cost into high-risk funds managed by companies without a decent track record.
Under a 2009 joint venture with Petrosaudi Holdings, 1MBD had tipped in US$1 billion in cash from which US$970 million was allegedly channelled to a company controlled by businessman Low Taek Jho, better known as Jho Loq.
According to The Edge Financial Daily, PetroSaudi was supposed to put in non-cash assets of US$1.5 billion to make it a US$2.5 billion joint venture.
However, the newspaper said PetroSaudi had never owned the main asset it was to put in farming rights to oil fields in Turkmenistan.
The joint venture was eventually called off but 1MDB never got back its cash, instead ending up with murabaha and promissory notes.
The Edge said 1MDB was now trying to cover the hole caused by the venture with PetroSaudi by paying termination fees of around US$2.22 billion to Aabar Investments to retire options issued to the latter.
Around the same time, The Wall Street Journal reported that some RM2.6 billion had been credited into Prime Minister Datuk Seri Najib Razak’s personal accounts ahead of the 2013 general election.
Najib initially denied the allegations, insisting that he had never taken money for personal gain, but later said the money had been given by a Middle East donor for Malaysia’s effort in combating terror group Isis.
Najib, who is finance minister and chairman of 1MDB’s advisory board, has long been criticised over the fund’s RM42 billion debts and opaque dealings.
Key figures including former prime minister Tun Dr Mahathir Mohamad have been calling for Najib’s resignation while opposition leader Datuk Seri Dr Wan Azizah Wan Ismail on Thursday submitted a motion of no confidence against the embattled leader.
In The Australian report, Bridge Global said it had not managed any Avestra funds since April 2013, adding that it was not aware that any shareholder funds invested in Bridge Global were associated with funds from 1MDB.
However, Bridge Global chairman Simon Lill was quoted as telling the daily that he “can’t rule out” an association between Bridge Global Absolute Return and 1MDB. – October 24, 2015.