Deadly Najib Razak ‘gift’ scandal rocks Malaysia

Amanda Hodge
South East Asia correspondent
The Australian
APRIL 2, 2016

On November 1, 2011 Malaysian Prime Minister Najib Razak received a personal windfall pledge so astonishing in size and nature that even close political allies have described it as “too good to be true”.

In language akin to that of a classic Nigerian email scam, Saudi Prince Saud Abdul Aziz Majid Al Saud praised Najib for his work in “governing Malaysia using Islamic principles”.

“In view of the friendship we have developed over the years and your new ideas as a modern Islamic leader, in addition to my earlier commitment, I hereby grant you an additional sum of up to $US375 million only (‘Gift’) which shall be remitted to you at such times and in such manner as I deem fit, either directly through my personal bank or through my instructed company bank accounts (such as Blackstone Asia Real Estate Partners limited),” the mystery prince wrote on private office letterhead.

“You shall have absolute discretion to determine how the Gift shall be utilised …. This is merely a token gesture on my part but it is my way of contributing to the development of Islam to the world.”

“For clarification, I do not expect to receive any personal benefit whether directly or indirectly as a result of the Gift,” he added.

In an act of extraordinary foresight — that someone might eventually question the hundreds of millions flowing into the Malaysian Prime Minister’s personal bank account — the letter goes on to indemnify him from suggestion of wrongdoing.

“The Gift should not in any way be construed as an act of corruption since this is against the practice of Islam and I personally do not encourage such practices in any manner whatsoever.”

The letter, obtained by Four Corners and published for the first time this week, is signed HRH Prince Saudi Abdulaziz Al Saud, but there is no further clarification of who he might be in the sprawling pantheon of Saudi family dynasties. No address, no email, no telephone number.

This was the verification offered up to worried executives at Malaysia’s AmBank, almost a quarter owned by ANZ, when vast sums of money started pouring into the Prime Minister’s personal accounts from donors as varied as the Saudi Ministry of Finance, another Saudi prince Faisal bin Turkey bin Bandar Al Saud, and two Virgin Island companies.

While the letter has sparked derision in some quarters it has delivered a moment of triumph for the embattled Najib government.

“The Four Corners report confirms what the Prime Minister has maintained all along, and what multiple lawful authorities concluded after exhaustive investigations: the funds were a donation from the royal family of Saudi Arabia,” it said this week.

That the letter was ultimately deemed sufficient explanation raises obvious questions about AmBank’s regulatory and compliance procedures, which at the time were being overseen by Australian banking executives on secondment from ANZ, its largest shareholder.

Under the terms of its 2006 partnership agreement ANZ has the power to appoint its own people to the AmBank board and into key management positions.

The agreement also obliges AmBank to follow ANZ rules of probity and core policy, and to consult ANZ before approving business plans, mergers, disposals, acquisitions or changes in structure or direction.

Bank management this week said; “ANZ is not involved (and not permitted to be involved) in the day-to-day operations of AmBank which is a listed company on the Malaysian Stock Exchange” — apparently even in the face of transfers so suspect they reportedly triggered internal money laundering alerts within AmBank.

Whether it was Australian-seconded executives that alerted Malaysia’s central bank governor Zeti Aziz to the vast sums pouring into Najib’s accounts, neither Zeti nor ANZ will say.

She told Four Corners the central bank was limited in what it could investigate, but that it always reported information it received to relevant authorities.

Malaysia’s central bank hasn’t entirely sat on its hands. Last October it recommended Najib’s new hand-picked Attorney-General, Mohamad Apandi Ali, initiate criminal proceedings against 1Malaysia Development Berhad for breaches of the Exchange Control Act. Apandi has declined to do so. It has also insisted 1MDB repatriate $US1.83 billion in overseas investments. That has not happened.

Najib’s own bank statements, cited by Four Corners this week, show that between opening AmBank accounts in January 2011 until 2015, he received more than $US1bn.

As chairman of the 1MDB state investment fund advisory board, Najib has ultimately presided over some $US11bn in losses since 2009. Swiss investigators probing the fund estimate up to $US4bn has been misappropriated through accounts, shelf companies and entities linked to 1MDB.

Also looking into 1MDB are authorities in the US, Singapore and Hong Kong. On Thursday Luxembourg authorities announced they too were looking into allegations of money laundering involving hundreds of millions of dollars against 1MDB.

Its judicial inquiry will focus on the origins of four transfers in 2012 and 2013 totalling several hundred million dollars related to two bonds issues in May and October 2012 which raised a total of $US3.5bn but which incredibly cost 1MDB $US2.4bn in options buyback and collateral fees.

Australia has no investigation, notwithstanding ANZ’s partnership with AmBank, and a Gold Coast connection through Avestra Asset Management and Bridge Global Capital Management. Those two companies are linked to a Cayman Islands fund that Malaysian and Singapore media have alleged were used to cover up a $US2.2bn hole in an earlier joint venture between 1MDB and Petro¬Saudi, a company until 2013 co-owned by another Saudi prince Turki Abdullah Al Saud.

Of all the losses, it is the money that flowed into Najib’s accounts that has most incensed Malaysians and led to one of Asia’s most unlikely coalitions, united by their common desire to see him gone.

Two months ago the new Attorney-General cleared Najib of wrongdoing over March 2013 transfers into his account totalling $US681 million via a web of entities that investigators in two countries believe originated with 1MDB.

Apandi was installed last August after his predecessor was removed, allegedly on the eve of pressing charges against the Prime Minister for criminal misappropriation of public funds.

The money received by Najib — transfers that caused his bank such anxiety — had been a no-strings gift from Saudi royals, Apandi said. All but $US61 million was returned.

But The Wall Street Journal reported on Thursday that copies of bank transfers show money from a person in Saudi Arabia and from the country’s finance ministry occurred in 2011 and 2012 and in smaller amounts, totalling $200m. They could not be the so-called “gift”.

The Malaysian government ignored that point Thursday in a statement trumpeting that the WSJ had “for the first time … been forced to admit that at least some funds donated to the Prime Minister came from Saudi Arabia”.

One particularly damaging revelation to emerge from Najib’s leaked bank statements this week is that, despite the Prime Minister’s insistence that none of the money was for personal use, at least $15m from his accounts appears to have gone on clothes and accessories from Chanel and other stores, jewellery and a prestige car, among other items.

According to documents cited by the WSJ, an account linked to Najib’s credit card received two $9m top-ups in late 2014 from SRC International, a former unit of 1MDB now part of the finance ministry. Najib is also finance minister.

While Apandi has demanded all Malaysian investigations into 1MDB and Najib wind up, probes by Malaysia’s central bank, a parliamentary committee, the country’s auditor-general, the Malaysian Anti-Corruption Commission and police continue, in the face of sometimes significant intimidation.

The bodies are piling up in the complicated, sprawling saga involving 1MDB and related scandals; from the murders of senior public prosecutor Kevin Morais and AmBank founder Hussain Najadi, to that of a glamorous Mongolian translator, Altantuya Shaaribuu, linked to a kickbacks scandal involving a Malaysian government submarine deal with a French contractor during Najib’s time as Defence Minister.

Close relatives of both Morais and Najadi have said their murders came days after they confided concerns over grand scale corruption involving 1MDB and the powerful political figures.

This week, Malaysia’s Communications Minister issued a statement denying any link between the murders and Najib or 1MDB. Najadi severed ties with AmBank in the 1980s and “authorities such as the Royal Malaysian Police have confirmed Mr Najadi never lodged any reports related to the Prime Minister’s accounts while he was alive”, it said.

Attorney-General Apandi had confirmed numerous times that Morais was not involved in any investigation related to 1MDB or the Prime Minister, notwithstanding his brother’s claims to the contrary, it added.

“Mr Morais was transferred from the Malaysian Anti-Corruption Commission to the Attorney- General’s chambers in July 2014, a year before the investigation into 1MDB was even launched.” It did not mention that Morais’ transfer also occurred a year before Apandi was installed to replace a man believed to have been preparing charges against Najib.

Likewise, Najib has “made clear he did not know, had never met, had never had any communication with and had no link whatsoever” to Shaaribuu.

The 29-year-old mother of two was abducted from outside the house of her former lover and close Najib confidante, Abdul Razak Baginda, in 2006 by two elite Malaysian police commandos who shot her twice in the head and then blew her up.

Both police officers have been convicted of her murder and sentenced to death but one of them, Sirul Azhar Umar, is sitting in Sydney’s Villawood Detention Centre after he fled Malaysia in 2014 during an appeal against the overturning of his death sentence.

For every accusation in this maze of alleged grand-scale financial crime, political skulduggery and violent villainy is a denial implicitly supported by the threat of legal action, or worse.

Bureaucrats and politicians, including former deputy prime minister Muhyiddin Yassin, have lost their jobs for speaking out over the issue. Lawyers, politicians, journalists and civil society activists face sedition charges for criticising the government. This week three barristers from the Malaysian Bar Association were questioned by police on possible sedition charges after moving a motion, subsequently carried, calling for Apandi’s resignation.

At least three Malaysian media outlets have been shuttered for reporting on 1MDB, most recently The Malaysian Insider.

Last month a Four Corners team were arrested and detained for two days in Sarawak state after trying to question Najib about the $US681m “gift”.

In June last year Australian journalist Mary Ann Jolley, researching a documentary on the murder of Altantuya Shaaribuu for Al Jazeera, was deported from Kuala Lumpur.

So far Najib has not pursued defamation action against international media for its increasingly intense scrutiny of 1MDB and his own financial affairs, resisting the public goading of Mahathir Mohamad, Malaysia’s longest serving prime minister and his former political mentor-turned-nemesis, to sue or step down.

Mahathir’s role in this saga is a story in itself. Depending on the viewer’s perspective, it is variously the late-term redemption of a former strongman many blame for establishing the corrosive patronage networks which now protect Najib and his ruling UMNO party; or the latest move of an ever-wily politician seeking to protect his legacy and political dynasty.

Seventeen years after Mahathir saw his former deputy Prime Minister Anwar Ibrahim jailed on what are widely seen as trumped-up charges of sodomy, the 90-year-old has done the unthinkable and joined forces with Anwar to remove Najib.

At a large gathering of Malaysian leaders last Sunday — UMNO party dissidents, opposition party seniors and civil society activists — Mahathir acknowledged there were many in the audience arrested during his term as PM who “should hate me for what I have done but here they are sitting next to me”.

“Why? Because their hatred of Najib is stronger and until Najib resigns or restores the country’s institutions, change cannot come.”

The coalition hopes to secure a million signatures to petition Malaysia’s council of rulers to oust Najib. That should not be difficult given Najib’s plummeting popularity amid an ongoing scandal that has incensed and embarrassed many Malaysians, who like to think of their country as a beacon of democracy and development in Asia.

But Mahathir himself acknowledges the climate of fear now gripping the country will dissuade many from signing his petition. And even as this disparate coalition seeks unity in its collective outrage, there are gnawing doubts about its durability, let alone chances of success.

“Successful people are 100 per cent convinced that they are masters of their own destiny, they’re not creatures of circumstance, they create circumstance. If the circumstances around them suck they change them.”

The line is Jordan Belfort’s, a former Wall Street stockbroker jailed for stock market manipulation whose memoir, The Wolf of Wall Street, became a Hollywood film starring Leonardo di Caprio, but it could as easily apply to Malaysia under Najib Razak today.

His government’s move to stifle dissent, through arcane sedition laws and potentially also new legislation empowering him to impose a state of emergency, has been criticised by human rights groups and the US State Department which last month issued a stern rebuke over Malaysia’s media crackdown.

But Martin Scorsese’s cinematic allegory on America’s greed culture might resonate with Malaysians for reasons beyond the corruption scandal embroiling its highest office holders.

The film was produced by Red Granite, a company co-owned by Najib’s stepson Riza Aziz. Its credits give “special thanks” to Jho Low, a school friend of Aziz and playboy financier who helped set up the precursor to 1MDB and is now being investigated by Singapore authorities over $US530m of transfers into his accounts from entities suspected to be linked to 1MDB. He has denied all wrongdoing.

Singapore investigators have begun connecting the dots on Jho Low and 1MDB through his Singaporean banker relationship manager, Yak Yew Chee, who signed an affidavit in February confirming he also managed 1MDB Global, its subsidiary BrazenSky, SRC International, and the Aabar Investments PJS company based in the British Virgin Islands.

The US Justice Department is reportedly also investigating funds that have flowed into and from the Red Granite production house and Jho Low, whose real name is Low Taek Jho.

Investigators with the department’s Kleptocracy Initiative are said to be examining up to $US150m worth of real estate tied to Aziz and Low. If Red Granite’s funds can be traced to corrupt use of Malaysian state funds, it too could be seized.

The company says; “There has never been anything inappropriate about any of Red Granite Pictures or Riza Aziz’s business activities.”

But an earlier admission that Red Granite’s biggest backer is Mohamed Ahmed Badawy al-Husseiny, chief executive of Abu Dhabi’s Aabar Investments, definitely raised eyebrows given 1MDB and Aabar Investments signed a strategic partnership agreement in 2012 that allowed the Malaysian fund to raise $US6.5bn.

In June last year Aabar’s parent company International Petroleum Investment Company, the Abu Dhabi government-owned sovereign wealth fund, announced a multi-billion dollar bailout for its Malaysian partner which must be repaid in June.

IPIC’s former chairman Khadem Al Qubaisi stepped down last April, followed a few months later by the resignation of Aabar chief Mohamed Ahmed Badawy al-Husseiny.

This week Husseiny was placed under house arrest by Abu Dhabi authorities, who are now processing a US extradition request relating to charges concerning 1MDB, according to the London-based online Sarawak Report which cited sources close to the US Justice Department.

Many now believe the US investigations, also examining the $US681m Saudi “gift” routed through America’s Wells Fargo bank, could pose the greatest threat to Najib’s political survival.

IPIC is investigating what happened to at least $US1.4bn in collateral 1MDB said it paid to IPIC via its Aabar Investments subsidiary in exchange for its guarantee on the $3.5 billion bonds issues, but which IPIC never received.

Some $US850m was however paid to the British Virgin Islands incorporated Aabar Investments PJS Ltd, closely resembling the name of IPIC’s wholly owned subsidiary Aabar Investments PJS, according to wire documents cited by The Wall Street Journal.

Clare Rewcastle-Brown, the journalist who runs Sarawak Report, reported yesterday that the Virgin Islands Aabar PJS Ltd was incorporated by Khadem Al Qubaisi and Mohamed Al Husseiny, the man now detained in Abu Dhabi.

It is not the only offshore company linked to 1MDB set up to look like a bona-fide financial corporation.

Investigators in two countries are said to be looking into money from Blackstone Asia Real Estate Partners — the same BVI company Najib’s mystery Saudi donor mentioned in his letter — and whether any of it came from 1MDB. The giant US Blackstone Group says it has no knowledge of the similarly named offshore company.

It was Rewcastle-Brown who first revealed Najib’s Saudi benefactor, reporting the name Saud Abdul Aziz Majid al Saud was provided to the bank to explain an original payment of $US100m into Najib’s AmBank account in February 2011.

So who is Najib’s mystery Sheikh?

An internet search shows some close matches, but nothing exact.

One option would have been Abdul Majeed bin Abdulaziz al Saud, the former governor of Medina, if only he hadn’t ruled himself out of contention by dying in 2007.

Less reputable possibilities include Prince Majed bin Abdullah bin Abdulaziz Al Saud, a 29-year-old sheik who made headlines last year as the “cocaine-soaked Saudi royal” who reportedly held three female staff hostage at a Beverly Hills mansion. Over three days he allegedly forced them to watch as he was pleasured by a male aide, made unwanted sexual advances and threatened to kill one of the women if she refused to “party” with him.

The closest match appears to be the son of another Medina governor, Abdulaziz bin Majid, himself a grandson of the late King Abdulaziz and vice chairman of the Majid Society founded by his father for charitable purposes.

Questions to a Malaysian government spokesman seeking further details on what the Sarawak Report has dubbed the “Fake Sheikh” brought no further clarity.

As opprobrium for Najib Razak builds within and outside Malaysia, it seems almost inconceivable that he should hold on to power much longer.

“This seriously must be the straw that breaks the camel’s back,” an exasperated Ambiga Sreenevasan, a prominent Malaysian lawyer and activist, said of the latest Wall Street Journal revelations over the First Couple’s alleged spending sprees.

“For me this is an international embarrassment for the country,” she said. “If this doesn’t move people to do something, I really don’t know what else will.”