The Great Big Lie Of 1MDB

1MDB has been lying through their teeth to the Malaysian public that PetroSaudi injected US$1.5 billion of “assets” for their 60% share of the “1MDB Petrosaudi Limited” joint venture.

On 29 September, the Prime Minister issued a statement that “Malaysia and Saudi Arabia today entered a new era of economic cooperation with the setting up of a US$2.5 billion joint-venture company, which will spearhead the flow of foreign direct investments from the Middle East as well as make strategic investments in high-impact projects here”.

The statement said, “the joint-venture company ("JVC") is the result of a partnership between 1Malaysia Development Berhad ("1MDB") and PetroSaudi International Limited ("PSI").”

"More or less, it will be a 50:50 venture, but for now, Malaysia will put in US$1 billion in the fund while PetroSaudi will contribute US$1.5 billion,” Dato’ Seri Najib Razak added, as reported by The New Straits Times on 1 October 2009.


Since the 1MDB Petrosaudi joint venture agreement was exposed last, we have know that US$700 million out of the US$1 billion injected by 1MDB was immediately siphoned out of the joint venture (JV) company due to pre-existing “advances” from PetroSaudi.

Despite the above, the then CEO of 1MDB, Datuk Shahrol Halmi when questioned by The Singapore Business Times on the 16 December 2014, confirmed that none of the US$1 billion committed by 1MDB in the JV has been “utilised”, clearly lying to the public at large.

It was then discovered from the documents exposed yesterday in The Sarawak Report, that the US$700 million wasn’t just taken out from the joint venture company to repay PetroSaudi, it was actually deposited into an account with RBS Coutts in Switzerland owned by Good Star Limited whose Chief Investment Officer was Seet Li Lin.  Seet Li Lin is the Vice-President of Jynwel Capital Limited, which is the private investment company belonging to the infamous Jho Low.

The above have proven that the entire JV arrangement was set up by Jho Low to scam funds from 1MDB, with the complicit participation of 1MDB and Petrosaudi International.  After all, the CEO of PSI, Tarek Obaid was personally paid a handsome US$85 million in “broker fees” immediately after the JV agreement was signed.

However, what makes the entire transaction even more nauseating, is the fact that the purported US$1.5 billion contribution by PSI to the JV proclaimed by the Prime Minister was in fact another fraudulent exercise.

The JV agreement stated that PSI would inject assets worth an estimated US$2.7 billion into the JV company as contribution to its US$1.5 billion equity. PSI claimed in the agreement that it had the legal and beneficial interest of these “assets”.

However, based on documents exposed by The Sarawak Report yesterday, PSI had no legal or beneficial interest to these so-called US$2.7 billion of “assets”.  What PSI had was a “farm-in” with a Cyprus company, Buried Hill Energy which in turn was awarded a Production Sharing Agreement (PSA) with Turkmenistan to explore oil and gas production in Block III of the Serdar Fields located in the Caspian Sea.

The “farm-in” agreement signed on 4 July 2009 basically said that PetroSaudi will fund the entire oil exploration project and will in turn possess the rights receive 50% of the returns from any successful exploration and subsequent production.  PetroSaudi did not at any time own the PSA agreement with Turkmenistan.  Even if it did, the Serdar Fields is located in a maritime disputed territory with Azerbaijan. This meant that no exploration activities could be conducted until both countries are able to come to an agreement on their disputed territorial rights.

But what was ultimately most shocking was the fact that Petrosaudi Turkmenistan 1 Ltd, terminated the “farm-in agreement” with Buried Hill Energy on 24 November 2009, less than 2 months after the JV agreement was signed.

This meant that the supposed US$2.7 billion asset injection by PSI as its contribution to the 60% of shares in the JV company was immediately wiped out.  Essentially, PSI got its 60% share of the JV company, and Good Star Limited received US$700 million from the money injected by 1MDB, for absolutely nothing in return.

1MDB was clearly aware and complicit in the entire transaction and exercise as the JV company was already the parent of Petrosaudi Turkmenistan 1 Ltd which signed and subsequently terminated the “farm-in” agreement.   They had wilfully witheld these damaging information from the public and continued lying to Malaysians.

We call upon the relevant authorities - the Royal Malaysia Police, the Malaysian Anti-Corruption Commission (MACC) and even the Auditor-General to immediately investigate the serious crimes involved in the above scam.  There must be no stones unturned to ensure that all the officers in 1MDB and other parties involved in the above fraudulent transactions are charged in the Court of law and made to pay for their crimes of robbing the Malaysian tax-payers.

In addition, Dato’ Seri Najib Razak must answer for the sheer audacity and scale of the scam which happened under his very nose and must immediately take stern and concrete actions to return confidence to the integrity and competence of his tattered Government.