Malaysians are now thoroughly familiar with how 1MDB has misappropriated some US$7 billion of investment funds, of which approximately US$731 million has ended up in the Prime Minister’s personal bank account at Ambank, as exposed by the US Department of Justice (DOJ).
One of the key modus operandi which was used by 1MDB to launder the funds was to first move the money into seemingly legitimate investment funds. Subsequently, these funds will then pass through the money to special purpose vehicles created by Jho Low and his associates to be utilised or further disbursed to third parties.
For example, the 2013 and 2014 financial statements of 1MDB which were previously audited by Deloitte Malaysia, showed that nearly US$1.6 billion were invested in overseas funds without the provision of any details.
From the US DOJ filings, we now know that 1MDB, via its subsidiary, 1MDB Global Investment Limited, had in 2013 invested the funds with Devonshire Growth Fund (US$646 mil), Enterprise Emerging Markets Fund (US$415 mil) and Cistenique Investment Fund (US$531 mil). From these funds, a total of US$1.265 mil was transferred to two British Virgin Islands incorporated companies, Tanore Finance Corporation and Granton Property Holdings, owned by Eric Tan Kim Loong, an associate of Jho Low. From Tanore, US$681 million was transferred to Dato’ Seri Najib Razak.
For SRC International which was funded with RM4 billion from Kumpulan Wang Amanah Persaraan (KWAP), the March 2014 financial statements audited by Deloitte Malaysia had disclosed a whopping sum of RM3.81 billion categorised as “investment portfolio outside Malaysia”.
Other than a US$60 million failed investment in Mongolia’s Gobi Coal and Energy Ltd which we have discovered via past parliamentary replies, Malaysians have been left in the dark as to where and what exactly these funds have been invested in.
Malaysians’ worst fears were realised when the Switzerland Attorney-General issued a public statement on 5 October 2016 that “the sum of US$800 million appears to have been misappropriated from investments in natural resources made by the SRC sovereign fund.”
“Secondly, it is suspected that a ‘Ponzi’ scheme fraud (i.e. paying the returns on initial investments from funds obtained from subsequent investors rather than from legitimate revenue from the investments) was committed to conceal the misappropriations from both the SRC fund and from 1MDB,” he further disclosed.
Last week, we have received confirmation from the Singapore courts where the trial of former BSI banker, Yeo Jiawei was being held, the money from SRC International have been launder throught the same vehicles used to mask the transfer of the 1MDB investment funds above.
Testifying at his own trial, Yeo said the scheme devised was for SRC International, to invest in a fiduciary fund called Enterprise Emerging Market Fund (EEMF) in 2011. This is the same exact fund which was used by 1MDB to misappropriate US$415 million as mentioned above.
He explained that a fiduciary fund was one where the client, in this case SRC, will direct the manager of the fund on what to do with the money invested.
He also informed the court that SRC asked that EEMF extend a loan of US$100 million to a company called Blackstone Asia Real Estate Partners whose beneficiary owner is Eric Tan Kim Loong, like Tanore and Granton. He further disclosed SRC then gave an indemnity that shielded BSI from responsibility should all the money be lost.
The revelations at the Singapore courts are explosive. They not only lend credence to the suspicions and allegations that the RM3.81 billion “investments in overseas portfolios” in SRC International have effectively all been siphoned away, just like what has happened in 1MDB; they exposed the fact that these “investment funds” like EEMF received direct instructions from SRC as to how the funds are used and provided an indemnity to the relevant parties.
It above has proven firstly that EEMF, Devonshire and Cistenique investment funds are sham investments which 1MDB and SRC has participated in, secondly and more damagingly, that SRC directly given instructions for the funds to be siphoned to vehicles such as Blackstone.
We call on the Minister of Finance to come clean with the transactions which have taken place in SRC International. We also call upon the authorities – the Police, the MACC and Bank Negara Malaysia to carry out full investigations, particularly on the Directors an Management of the company for the crimes of theft, criminal breach of trust and money-laundering.