Tuesday, March 10, 2015

Bank Negara Malaysia To Investigate Jho Low For Potential Money Laundering

Low Taek Jho and his associates must be investigated for possible money laundering in the acquisition of UBG Bhd via PetroSaudi International (Seycelles) Ltd using illicitly obtained funds from 1Malaysia Development Bhd (1MDB)

Over the past few days, both the Sarawak Report and The Edge Malaysia exposed how a 28 year old Low Taek Jho (Jho Low) had engineered the acquisition of Utama Banking Group Bhd (UBG) via PetroSaudi International (Seychelles) Limited (PSI Seychelles) in 2010.  UBG was a company owned by the former Chief Minister of Sarawak, Tun Taib Mahmud.

PSI Seycelles via its wholly owned subsidiary, Javace Sdn Bhd made a general offer to acquire all UBG shares for a total of RM1.4 billion on 29 September 2010.  AmInvestment Bank Bhd had provided RM700 million to finance this acquisition.

For the balance, PSI Seycelles transferred US$260 million (RM850 million) to Javace Sdn Bhd. However, this amount originated from 1MDB’s US$500 million loan to “1MDB PetroSaudi Limited” on 8 September 2010 via the subscription of additional Murabaha notes.

Earlier on 14 June 2010, 1MDB had converted its shares in “1MDB Petrosaudi Limited” to US$1.2 billion worth of Murabaha loans.  As a result, the latter became a wholly-owned subsidiary of Petrosaudi International Limited (PSI Caymans) which provided the guarantees for the loans.

It should also be noted that based on documents unveiled by the Sarawak Report, out of the additional US$500 million additional loan extended, US$160 million was transferred directly to Good Star Limited, a company which is controlled by Jho Low and his associates.

What was more pertinent however was that some of the documents exposed by the Sarawak Report points towards the fact that funds under PSI Seychelles were actually controlled by Jho Low and his associates.

Firstly, in an email from Tarek Obaid, on behalf of “1MDB Petrosaudi Limited”, to PSI Seycelles

…We write to confirm that we shall have no rights, title or interest whatsoever in and to the Transferred Amount or any part thereof which shall be paid by the Company to PetroSaudi International Limited and we shall make no claims whatsoever in respect thereof (whether in respect of PetroSaudi International Limited or any of your affiliates) and we hereby expressly acknowledge that henceforth PetroSaudi International Limited is the only person entitled to the legal and equitable title and interest on and to the Transferred Amount which shall be paid by 1MDB PetroSaudi Limited to PetroSaudi International Limited pursuant to the abovesaid letter.

The PetroSaudi International Limited above referred to PSI Seycelles which is located at the same address as Good Star Limited – PO Box 1239, Offshore Incorporations Centre, Victoria, Mahe, Republic of Seychelles.

There was also a separate mysterious “Investment Management Agreement” which surfaced, between PSI Seychelles and Panama Investment Manager, a company led by Mr Seet Li Lin, who is the Vice-President of Jynwel Capital Limited.  Jynwel Capital is in turn, owned by Jho Low.  The Agreement lays out that

During the continuance of its appointment hereunder, the Investment Manager… shall have full discretion to manage and to invest or divest the whole or part of the investments of the Client… as it deems fit.

For the initial investment, the Client shall subscribe for 610 million non-voting ordinary shares of USD1.00 each in the capital of the Manager

What these two email and document revealed are the consistent intention behind the set up. Jho Low and his associates had complete control the funds, even if they were nominally spent “via” PetroSaudi (Seychelles).  In essence, PSI was acting as a front for Jho Low.

The entire complicated structure smells of one designed to conceal or disguise the establishment of the true nature and origin of the funds utilised for the acquisition of UBG.

Hence the above certain raises sufficient suspicions for the Malaysian authorities to initiate investigations for money laundering under the Anti-Money Laundering and Anti-Terrorism Financing (Amendment) Act 2013 (“AMLA”).

Under Section 4 of the Act, any person is deemed to have committed an offence if he or she:

a)    engages, directly or indirectly, in a transaction that involves proceeds of an unlawful activity or instrumentalities of an offence;
b)    acquires, receives, possesses, disguises, transfers, converts, exchanges, carries, disposes of or uses proceeds of an unlawful activity or instrumentalities of an offence;
c)     removes from or brings into Malaysia, proceeds of an unlawful activity or instrumentalities of an offence; or
d)    conceals, disguises or impedes the establishment of the true nature, origin, location, movement, disposition, title of, rights with respect to, or ownership of, proceeds of an unlawful activity or instrumentalities of an offence,

Therefore given that the entire 1MDB-PetroSaudi joint venture was designed specifically for Jho Low and his associates to siphon billions of ringgit from the Ministry of Finance owned subsidiary, and how in collusion with their foreign counterparts in PetroSaudi, they designed highly sophisticated layering transactions to disguise the audit trail and provide anonymity.

Bank Negara Malaysia, as the competent authority under the AMLA, in collaborations with the other investigation agencies including the Police and Malaysian Anti-Corruption Commission (MACC) must immediately commence investigations into the above highly suspicious transactions for all relevant offences under the Act.

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