New Jho Low-1MDB ‘expose’: All garbage or more to come?

By Ng Kee Seng (The Ant Daily) – 26 September 2014

Malaysians have every right to demand accountability and transparency in the management and use of funds by 1Malaysia Development Berhad (1MDB).

1MDB is the country’s second national sovereign fund, after Khazanah Nasional Berhad (Khazanah), and thus its survival depends on its support from the federal government (read as tax payers) and its business investments.

Just like Khazanah having to do “national duty” by coming up with a RM6 billion bailout to save Malaysia Airlines (MAS), the same would apply to 1MDB if needed.

Of course what’s happening in 1MDB, Prime Minister Datuk Seri Najib Razak’s pet project to help the country’s development, is the concern of all Malaysians.

That’s because 1MDB has raked up a RM37 billion debt at the financial year end of March 2013. This is no meagre amount!

On June 3, 1MDB denied a Reuters report that 1MDB’s debt poses significant risk to the sovereign’s rating and stability of Malaysia.

1MDB had said, as a limited liability company, it poses limited liability risks to the government as its shareholder.

The government guarantees RM5.8 billion of the Group’s total loan, on which 1MDB has significant interest cover. 1MDB has never missed any payment schedule.

All of 1MDB’s debts are backed by the Group’s operational assets, with healthy cash flows and strong growth potential beyond their finite life.

There is sufficient asset cover by 1MDB’s group assets.  The Group’s total assets stood at RM46 billion at the financial year end of March 2013, compared to total debt of RM37 billion.

But, what’s worrying is the rakyat (people)’s perception of 1MDB in failing to address clearly and convincingly persistent allegations of abuse or misuse of funds.

It will do well for 1MDB to put a stop to the many detrimental allegations by taking convincing action to address such haunting financial issues.

Failing to take tough and convincing action only serve to legitimise the allegations and public perception.

And such allegations, if allowed to fester, would in the long-run affect the credibility and accountability of 1MDB and its reputation as a viable development enterprise for Malaysia.

Whistleblower Sarawak Report (SR) in its latest “Exclusive” titled “More Links – Jho Low’s Spending and Malaysia’s Development Money” is nothing new but the fact remains 1MDB is unable to respond effectively with stern action to dismiss such allegations of misuse of funds.

SR claims the record level spending on the world’s most expensive Cristal champagne in San Tropez, accompanied by events girl Paris Hilton; was this Malaysia’s “development” money going pop?

After years of denials, SR claims it has accessed documentary evidence showing the spendthrift tycoon, Taek Jho Low, has been enjoying a hands-on role in the management of the controversial 1MDB.

SR alleges the evidence further indicates that the huge sums that the young man has ostentatiously spent on record purchases of Cristal champagne; yacht hire; parties with film stars in Las Vegas; fleets of Cadillacs; multi-million charity donations and the purchase of up-market apartments in the US originated from Malaysian public borrowing.

Jho Low’s involvement with 1MDB has been over a prolonged period, according to the documents, which included email exchanges between Low and top managers of the fund relating to investment decisions.

SR claimed to have privy to a series of communications between leading managers of 1MDB and Jho Low, which clearly supported the claim of this insider.

The exchanges allegedly showed that Jho Low was copied into the details of investment decisions, along with a handful of senior 1MDB management figures and partners to major transactions.

Yet for years Jho Low and the managers of 1MDB have denied he has any involvement whatsoever. Why the denials?

Seeking out new investments? Jho Low obtained sudden access to enormous funds to impress the world’s rich and famous in 2009.

The new evidence, accessed by SR from sources close to 1MDB, exposes as untrue numerous protestations by Jho Low and statements from 1MDB, all denying his involvement.

1MDB has utterly rejected the widespread speculation about the young tycoon’s links to the fund and his close personal ties with the Najib, his wife Datin Seri Rosmah Mansur and stepson Riza Aziz.

In May, Jho Low released a formal statement saying he had no involvement whatsoever in 1MDB, beyond what he described as early “advice” to the Prime Minister over the initial setting up of the Terengganu Investment fund, which was the fore-runner of 1MDB.

Jho Low claimed he only gave this advice between January and mid May 2009 and has always indicated his contributions were voluntary and unpaid:

“Clarification regarding 1MDB: Mr. Low and/or any company in which Mr. Low wholly owns has never received any compensation or patronage directly from any entity wholly owned by the Government of Malaysia.

Mr Low has never held any position in 1MDB or in the Malaysian government. Mr. Low was appointed as one of the many advisors invited by the stakeholders of Terengganu Investment Authority (TIA) to provide advice from Jan 2009 to mid-May 2009 given his market-based knowledge. Mr. Low has not been involved in TIA since mid-May 2009.“ [Statement by Low’s PR company Edleman in May]

This was in spite of the fact that the documents and extensive emails seen by Sarawak Report were exchanged well after early 2009.

1MDB has also continually echoed Jho Low’s version of events, with CEO Shahrol Halmi claimed on record that Jho Low’s involvement in the fund’s investment decisions was “zero”:

“The role of Jho Low as far as 1MDB is concerned is zero,” said 1MDB CEO Datuk Shahrol Halmi, denying that Low has received compensation for his previous role in the firm.

“I’ve heard talk that he is advising the government on Middle Eastern investors but it’s not true. What he does is help promote Malaysia to investors.” [statement by Shahrol Halmi]

However, Jho Low was included extensively in 1MDB emails relating to such deals, according to the material accessed by SR.

Now that it is evident that Jho Low, who describes himself as a ‘global investor’ and private equity expert, has played a pivotal role in the spending decisions by the fund, there arises an inevitable question as to why he would not have benefited from his involvement in these investment deals?

“Travels about town with his entourage in a fleet of Escalades. Spent US$160,000 (RM512,000) in one night at Avenue this September during Fashion Week. Routinely spends between US$50,000 (RM160,000) and US$60,000 (RM192,000) at Pink Elephant.

“Bought Lindsay Lohan 23 bottles of Cristal at 1OAK when she was celebrating her 23rd birthday. Just celebrated his 28th year starting last Wednesday with a four-day bash at Ceasar’s Palace in Las Vegas. Megan Fox was flown out to Vegas to hang out with the birthday boy, who routinely surrounds himself with models. The hotel pool was surrounded by caged lions and tigers and filled with girls in bikinis. Later, at a nightclub, Jho Low bought 120 bottles of Cristal for the revellers.” [New York Post 2009]

Jho Low himself was forced to concede earlier this year that 1MDB did move in as a backer of his attempted buy out of the London Claridge’s Hotel group, after SR pointed out that it has been recorded openly in court that the wealth fund had financially supported his bid.

However, in his statement Jho Low sought to distance himself by claiming 1MDB had been brought in by Aabar investments, the Abu Dhabi wealth fund whose CEO has now been cited as the major funder of Najib’s step son Riza Aziz’s Hollywood production company Red Granite.

Recently, former Prime Minister Tun Dr Mahathir Mohamad criticised the enormous exposure of 1MDB, expressing concern that Malaysian taxpayers are ultimately liable to repay the money borrowed to fund “development”.

SR understands that the former PM was prompted in this criticism after also being made privy to the material, accessed from an insider close to 1MDB’s investment activity.

This latest attack by SR on Jho Low and 1MDB is, however, quite dicey.  Why was Mahathir mentioned by SR?

The only worthwhile “new” expose is SR’s claim of “intercepted” email communications between Jho Low and 1MDB senior officials. Why then is there not a single revelation or reproduction of the emails?

Hmmm … all SR garbage or more to come?

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