By Una Galani
Breakingviews
Reuters

July 22, 2016

Malaysia’s sovereign fund scandal has exposed shortcomings in Goldman Sachs’ post-crisis overhaul of its business practices. Five years ago, the Wall Street firm led by Lloyd Blankfein went to great lengths to assure regulators, investors and clients that it was tightening up standards. But its dealings with the now disgraced 1Malaysia Development Berhad (1MDB) cast doubt on the depth of Goldman’s changes.

An attempt by the U.S. Department of Justice to seize assets bought with some of the $3.5 billion it says was stolen from 1MDB offer the clearest account yet of the bank’s deep relationship with the Malaysian fund. Though Goldman has not been accused of any wrongdoing, its name appears frequently in lawsuits that detail a complex web of fraudulent transactions over several years.

Back in 2009, Goldman helped set up the fund which counted Malaysian Prime Minister Najib Razak as its top advisor. An excerpt of an email suggests that, from the very start, Goldman executives were concerned about the issue of transparency at the new fund and its reliance on borrowed money. By the time the bank started raising money for 1MDB in earnest three years later, corrupt officials had already sucked around $1 billion from the fund, the legal documents show.

Nevertheless, between 2012 and 2013 Goldman helped 1MDB raise $6.5 billion by issuing three bonds. The Justice Department suggests that around 40 percent of that money was siphoned off, and indicates that $681 million ultimately found its way into Najib’s personal bank account, though the prime minister is not directly named. Read the rest of this entry »

By RICHARD C. PADDOCK
New York Times
JULY 22, 2016

BANGKOK — A United States Justice Department complaint filed in federal court this week directly contradicts repeated assertions by the Malaysian prime minister, Najib Razak, about the origins and purpose of hundreds of millions of dollars that ended up in his personal bank accounts.

While Mr. Najib and other Malaysian officials have insisted that the money was a gift from an unidentified Saudi donor, the Justice Department said that it was stolen from a Malaysian government investment fund that Mr. Najib oversaw. Mr. Najib has said he never received any money from the fund.

The court filing, one of several complaints filed Wednesday in a federal money-laundering investigation, provides the first official public documentation of transactions that challenge Mr. Najib’s version of events in a scandal that has battered his government for the past year.

The revelations could undermine his credibility and give new ammunition to a movement to force him from office. However, he maintains firm control over his governing party and has successfully stifled opposition with the firing of critics from party posts, the closing of online news outlets and the criminal prosecution of social media detractors and political opponents. Read the rest of this entry »

The 136-page United States Department of Justice (DO)’s legal suit to recover more than US$1 billion 1MDB-linked assets under the US Kleptocracy Assets Recovery Initiative 2010 has fully vindicated my April comments that the Public Accounts Committee (PAC) Report on 1MDB scandal dealt only the “tip of the iceberg”.

In my media statement on April 8, 2016, the day after the PAC Report was tabled in Parliament without the Auditor-General’s Report on 1MDB although it was an integral part of the PAC Report and proceedings, I said the PAC Report had not laid to rest or rebut in any manner international perceptions that Malaysia had become one of the world’s top nations in global corruption.

I said: “In fact, the PAC report will only confirm these international perceptions and doubts, which is why the 1MDB scandal is the subject of separate investigations by half a dozen countries, including the subject of the US Federal Bureau of Investigations (FBI) and Department of Justice (DOJ) under the US Kleptocracy Assets Recovery Initiative, and none of them will halt investigations because of the PAC Report.”

I said at the time that what was important was the “next step” – “how to probe further than just the ‘tip of of the iceberg’ – a job which other countries of the world will do if Malaysians themselves are not up to it to get to the bottom of the truth of the 1MDB scandal, which will be to the eternal shame of Malaysia!”

My brutal forecast has come to pass. Read the rest of this entry »

Although never intended to be taken seriously, the speculation sparked by the US Department of Justice’s (DOJ) legal suit to seize more than US$1 billion assets stolen from 1MDB about the identity of the kingpin of the 1MDB scandal, described merely as “Malaysian Official 1”, included the lighted-hearted one as to whether I could be “Malaysian Official 1”.

But this is a very serious matter, involving the country’s honour and international reputation.

Let me clearly and formally declare that I am not the “Malaysian Official 1.”

Will the Prime Minister, Datuk Seri Najib Razak similarly state his position – to formally deny it or confirm whether he is referred to as “Malaysian Official 1” and if the latter, what he proposes to do about the DOJ action. Read the rest of this entry »

The thirty minutes of the live streaming of the press conference of the United States Attorney-General Loretta E. Lynch, accompanied by other top US officials including Assistant Attorney General Leslie R. Caldwell of the Justice Department’s Criminal Division, U.S. Attorney Eileen M. Decker of the Central District of California, FBI Deputy Director Andrew G. McCabe and others at Malaysian time 11.30 pm last night on the invocation of the US Kleptocracy Assets Recovery Initiative to recover more than $1 billion obtained from corruption involving the Malaysian sovereign wealth fund, 1MDB, had been the most shameful, humiliating and mortifying experience for me as a Malaysian, and I believe for all Malaysians, regardless of race, religion or region, who love Malaysia and wants Malaysia to be respected all over the world.

Imagine, Malaysians who have dignity and pride about their nation, having to listen the US Attorney-General Lynch telling the whole world:

“The Department of Justice will not allow the American financial system to be used as a conduit for corruption.

“With this action, we are seeking to forfeit and recover funds that were intended to grow the Malaysian economy and support the Malaysian people. Instead, they were stolen, laundered through American financial institutions and used to enrich a few officials and their associates. Corrupt officials around the world should make no mistake that we will be relentless in our efforts to deny them the proceeds of their crimes. ”

Or the US Assistant Attorney-General Caldwell who said:

“According to the allegations in the complaints, this is a case where life imitated art.The associates of these corrupt 1MDB officials are alleged to have used some of the illicit proceeds of their fraud scheme to fund the production of The Wolf of Wall Street, a movie about a corrupt stockbroker who tried to hide his own illicit profits in a perceived foreign safe haven. But whether corrupt officials try to hide stolen assets across international borders – or behind the silver screen – the Department of Justice is committed to ensuring that there is no safe haven.”

Or US Attorney Decker who said: “Stolen money that is subsequently used to purchase interests in music companies, artwork or high-end real estate is subject to forfeiture under U.S. law. … All of us are committed to sending a message that we will not allow the United States to become a playground for the corrupt, a platform for money laundering or a place to hide and invest stolen riches.”

Or the FBI Deputy Director McCabe who said: “The United States will not be a safe haven for assets stolen by corrupt foreign officials. Public corruption, no matter where it occurs, is a threat to a fair and competitive global economy. The FBI is committed to working with our foreign and domestic partners to identify and return these stolen assets to their legitimate owners, the Malaysian people.”

Or Richard Weber of the Internal Revenue Service-Criminal Investigation (IRS-CI) who said:

“Today’s announcement underscores the breadth of the alleged corruption and money laundering related to the 1MDB fund. We cannot allow the massive, brazen and blatant diversion of billions of dollars to be laundered through U.S. financial institutions without consequences.”

I believe many Malaysians share my shame and sorrow last night that the good name of the country, diligently built up generations of patriotic Malaysians in the past six decades, have been brought so low as to be equated with the most corrupt and the most heinous of global embezzlement, money-laundering and corruption, catapulting Malaysia to one of the top nations in the world in the league of global corruption. Read the rest of this entry »

David J Lynch in Washington
Financial Times
20.7.2016

Van Gogh paintings, Beverly Hills properties and the rights to profits from the hit movie The Wolf of Wall Street were among $1bn in assets US prosecutors moved to seize on Wednesday as part of a sprawling anti-money laundering investigation into Malaysia’s sovereign wealth fund.

In one of the largest seizures in US history, federal law enforcement agents also appeared to link Najib Razak, Malaysia’s prime minister, to a web of corrupt officials receiving stolen funds.

The US justice department case represents the most detailed and sweeping allegations to be brought in the multinational probe into a global scheme to siphon more than $3.5bn from the Malaysian government fund, known as 1MDB.

It is also the first time Mr Najib has been officially tied to the scandal. Mr Najib is not identified by name in court documents but the description of a “Malaysian Official 1” matches his biography and job responsibilities. On several occasions, that official received funds misappropriated from 1MDB, prosecutors say. Mr Najib has repeatedly denied any wrongdoing. Read the rest of this entry »

By BRADLEY HOPE and TOM WRIGHT
Wall Street Journal
July 20, 2016

In 1MDB lawsuit, Justice Department trying to seize more than $1 billion in assets

U.S. prosecutors have linked the prime minister of Malaysia, a key American ally in Asia, to hundreds of millions of dollars allegedly siphoned from one of the country’s economic development funds, according to a civil lawsuit seeking the seizure of more than $1 billion of assets from other people connected to him.

The assets, purchased by the stepson of Prime Minister Najib Razak and other persons connected to the fund, include high-end real estate and hotel properties in New York City, Los Angeles and London, artwork by Vincent van Gogh and Claude Monet, and a $35 million jet. They also include rights to the 2013 film “The Wolf of Wall Street,” the civil-forfeiture complaints say.

Mr. Najib isn’t named in the filings, which were made public Wednesday, and he isn’t directly accused by U.S. prosecutors of any wrongdoing. But there are 32 references in the complaint to “Malaysian Official 1,” who allegedly received hundreds of millions of dollars in funds siphoned from 1Malaysia Development Bhd. Read the rest of this entry »

I am reminded of the first SSS Lge (Support, Sympathy, Solidarity with Lim Guan Eng) campaign 19 years ago when Guan Eng was disqualified as Member of Parliament and jailed for 18 months for defending the dignity and human rights of an under-aged Malay girl.

In that period, Guan Eng was first imprisoned and Anwar Ibrahim attended one of the SSS Lge ceramahs together with his wife Dr. Wan Azizah Wan Ismail and his daughter Nurul Izzah, before Anwar was himself imprisoned.

This time, Anwar is in prison and there are people who want Guan Eng to be jailed for one, two, three or even five years.

The common thread of the SSS Lge campaign and the SSS Lge 2.0 campaign spanning a period of some two decades is the need to change the system of governance to ensure that the national institutions in the country are independent, efficient and professional in upholding the values of justice and integrity.

What happened at the other of the world, which has a 12-hour time differential with Malaysia, illustrates the need for the change of our system of governance. Read the rest of this entry »

By LOUISE STORY
New York Times
JULY 20, 2016

The United States government plans to move Wednesday to seize more than $1 billion in assets purchased with money that it believes was stolen from a Malaysian sovereign wealth fund by people close to the country’s embattled prime minister.

Hidden in the United States in real estate, art and other luxury goods, the money was embezzled from the fund and moved around the world using secretive shell companies that masked its trail, a person familiar with the Justice Department plan said.

The $1 billion that prosecutors will allege was laundered in the United States is but a portion of the billions that international investigators suspect was siphoned off by high-level officials at the fund and their associates. The fund — called 1Malaysia Development Berhad, or 1MDB — is overseen by the prime minister, Najib Razak, and has become a focus of rising popular discontent with Mr. Najib’s government amid several investigations at home and abroad.

The forfeiture complaint, to be issued by a unit known as the Kleptocracy Asset Recovery Initiative, will be the largest such case brought by the Justice Department. The United States is among several governments, including Malaysia, Singapore and Switzerland, that have investigated the fund. Read the rest of this entry »

Did the Cabinet this morning discuss the breaking news at about noon Malaysian time of the Wall Street Journal (WSJ) report that the US authorities are set to seize assets linked to 1MDB “in the largest asset seizure in US history” in the war against global corruption?

This seizure, under the US Kleptocracy Asset Recovery Initiative, is expected to exceed the previous record of US$850 million in assets which the US authorities sought to seize from three telecom firms in an unrelated case.

Citing sources, WSJ said the Justice Department’s Kleptocracy Asset Recovery Initiative is expected to file civil lawsuits seeking to seize the assets as soon as Wednesday morning in the US.

It claimed the seizure will involve properties and other assets bought with “money allegedly misappropriated from the Malaysian fund.” Read the rest of this entry »

Shamim Adam and Laurence Arnold
Bloomberg
July 20, 2016

Malaysia’s state-owned investment fund, 1MDB, was supposed to attract foreign investment. Instead, it has spurred criminal and regulatory investigations around the world that have cast an unflattering spotlight on financial deal-making, election spending and political patronage under Prime Minister Najib Razak. A Malaysian parliamentary committee identified at least $4.2 billion in irregular transactions.

1. What is 1MDB?

It’s a government investment company — full name, 1Malaysia Development Berhad — that took shape in 2009 under Najib, who went on to lead its advisory board. Its early initiatives included buying privately owned power plants and planning a new financial district in Kuala Lumpur. The fund proved better at borrowing — it accumulated $12 billion in debt — than at luring large-scale investment.

2. What’s the issue?

Investigators have been trying to trace whether money might have flowed through and around 1MDB and illegally into personal accounts. Some of the money is alleged to have ended up with Najib and his family. That includes $681 million that landed in the prime minister’s personal bank account, according to the Wall Street Journal. Najib has denied wrongdoing, and Malaysia’s attorney general said the $681 million was a donation from the Saudi Arabian royal family, much of which was returned. Another $700 million in 1MDB funds meant for a joint venture with a company known as PetroSaudi International was found to have landed in an unrelated offshore account. Read the rest of this entry »

By BRADLEY HOPE
Wall Street Journal
July 20, 2016

Authorities are expected to file civil lawsuits as soon as Wednesday

Federal prosecutors are poised to launch one of the largest asset seizures in U.S. history as they step up their investigation into billions of dollars siphoned away from a Malaysian government investment fund, according to people familiar with the matter.

Authorities are expected to file civil lawsuits as soon as Wednesday morning seeking to seize assets, which are expected to include properties and other assets purchased with money allegedly misappropriated from the Malaysian fund, according to people familiar with the matter.

The Wall Street Journal has reported that people linked to the fund have invested millions of dollars in real estate and businesses in the U.S.

Agents from the Federal Bureau of Investigation’s international corruption unit have also been conducting a wide-ranging criminal investigation into people and institutions connected with 1Malaysia Development Bhd., known as 1MDB, a sovereign-wealth fund set up by Prime Minister Najib Razak in 2009 to drive the country’s economy. Read the rest of this entry »

BY A. ANANTHALAKSHMI AND SAEED AZHAR
REUTERS
16th July 2016

Singapore’s central bank is scrutinizing several banks, including UBS (UBSG.S) and DBS Group Holdings (DBSM.SI), to see if they broke anti-money laundering rules in handling transactions linked to scandal-hit Malaysian state fund 1MDB, three people with knowledge of the matter said.

The Monetary Authority of Singapore (MAS) is looking at several aspects of the banks’ operations including whether they were diligent enough in knowing who their customers were and what the source of their funds was, and whether they were particularly careful in screening politically-exposed persons such as government officials, banking and legal sources aware of the review said.

The probe could lead to fines and other penalties if lapses are found, said the sources who declined to be identified due to the sensitivity of the matter. It is unclear which transactions by the banks are being examined.

Switzerland’s Falcon Private Bank and Coutts International, which is owned by Geneva-based Union Bancaire Privee, are also among the banks under review, they said.

UBS, Coutts, and DBS, which is Singapore’s top lender, all declined to comment. Read the rest of this entry »