Tuesday, July 12, 2016

Arul Kanda must explain why 1MDB Global Investment Limited paid US$1.279 billion to Aabar Investment PJS Limited when these entities had no business relationships

The Sarawak Report yesterday exposed another set of banking transaction documents separate from the classified Auditor-General’s Report on 1MDB which showed that 1MDB Global Investment Limited (GIL) paid a total of US$1,279,347,500 between 12 September and 4 November 2014 to the British Virgin Islands (BVI) incorporated Aabar Investment PJS Limited.

1MDB GIL is a wholly-owned foreign subsidiary of 1MDB while Aabar (BVI) has been exposed as a fraudulent entity pretending to be the subsidiary of Abu Dhabi’s International Petroleum Investment Corporation (IPIC).

The Sarawak Report rightly highlighted the failure of UBS Bank Singapore which received the money on behalf of Aabar (BVI) to properly ascertain the purpose, source and recipient of the funds.  The Monetary Authority of Singapore has already shut down another Swiss Bank, BSI Singapore in May for serious breaches of anti-money laundering requirements, poor management oversight of the bank’s operations, and gross misconduct by some of the bank’s staff.  The latest exposé hence raises the question as to whether UBS Singapore will be similarly investigated and have action taken against the Bank.

However, a bigger question mark arising from the above is why did 1MDB GIL make the US$1.279 billion payment to Aabar (BVI) in the first place?

1MDB GIL had borrowed US$3 billion in March 2013 purportedly to form a joint venture company with Abu Dhabi’s Aabar Invesmtent PJS to develop the Tun Razak Exchange in Kuala Lumpur.  However, the joint venture did not materialise.

If the joint venture is as good as dead, as testified by Arul Kanda himself to the Public Accounts Committee in January 2016, why did 1MDB GIL make the US$1.279 billion payment to Aabar (BVI) in 2014 which he did not disclose to the Committee?

Furthermore, according to 1MDB’s financial statements, 1MDB GIL was left with only US$1.56 billion invested “in various investment portfolios under the custody of a licensed financial institution”.  The rest of the funds have already been used up “for working capital and debt repayment purposes” by 31 March 2014.

Arul Kanda had also testified that the US$1.56 billion of 1MDB GIL investments were intact and will be possibly utilised as part of 1MDB’s rationalisation exercise.  However, if US$1.56 billion was indeed intact, then how did 1MDB GIL make the US$1.279 billion of cash payments to Aabar (BVI)?

The exposé of the latest documents by Sarawak Report has caught Arul Kanda with his pants down and proved that he has lied and withheld crucial information from the PAC.  This would be the real reason why Arul Kanda has refused to produce simple bank statements of 1MDB GIL to even the Auditor-General despite repeated requests to do so.

We call upon the local and international authorities to investigate all parties involved in the above transactions – Aabar Investment PJS Limited, 1MDB and UBS Bank for a international money laundering operation involving Malaysian tax-payers funds. 

Action must be taken against all parties who approved and abetted the above illicit transactions to ensure the integrity of our local and international financial system.
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