Why the media scam of the century – creating the myth that the PAC Report on 1MDB marks the closure of Malaysia’s first global scandal in nation’s history – collapsed after five short days

It was to be the media scam of the century – to create among Malaysians the myth that the Public Accounts Committee (PAC) Report on the 1MDB marks the closure of Malaysia’s first global scandal in the nation’s history.

But it collapsed within five short days – the coup de grace delivered in London when the Abu Dhabi-state owned International Petroleum Investment Company (IPIC) sent a statement to the London Stock Exchange that neither itself nor its unit Aabar Investments PJS have any links to a British Virgin Islands-incorporated firm named in a report in the RM50 billion 1MDB scandal – Aabar Investments PJS Limited (Aabar BVI).

It said: “Both IPIC and Aabar confirm that Aabar BVI was not an entity within either corporate group.

“Further, both IPIC and Aabar confirm that neither has received any payments from Aabar BVI nor has IPIC or Aabar assumed any liabilities on behalf of Aabar BVI,” the statement added, noting that according to publicly available records, Aabar BVI was wound up and dissolved in June 2015.

Four days earlier, in the PAC Report on 1MDB tabled in Parliament, Malaysians were told that 1MDB had paid RM4.24 billion (about US$1.367 billion) to Aabar Investments PJS Ltd (Aabar Ltd) as security deposits in 2012, without approval of 1MDB’s board of directors.

The PAC, however, said 1MDB had not proven that Aabar Ltd is actually linked to Abu Dhabi firm Aabar Investment PJS, or the International Petroleum Investment Corp (IPIC) as 1MDB has yet to furnish confirmation that Aabar Ltd is a subsidiary of IPIC or Aabar Investment PJS.

The Wall Street Journal had previously alleged that 1MDB funds had been paid to Aabar Ltd, a British Virgin Islands firm which it claims is not linked to the real Aabar Investment PJS.
Quoting those familiar with the matter, WSJ said executives at IPIC and Aabar investigating the transfers concluded neither of the two Abu Dhabi funds ever owned or controlled the British Virgin Islands company.

Besides the US$1.367 billion, it was reported that 1MDB had paid another US$993 million to Aabar in 2014, to cancel options given to IPIC to buy a stake in its power plants.
The WSJ had reported that IPIC never received this US$2.4 billion, according to the company’s officials.

Now what the PAC had not been able to ascertain after a year’s investigation had been resolved by an IPIC statement to the London Stock Exchange yesterday!
A day after the tabling of the PAC Report on 1MDB, the United Arab Emirates central bank told banks in the country to freeze the assets of two former senior officials in Abu Dhabi’s state-owned International Petroleum Investment Co (IPIC) group i.e. Khadem al-Qubaisi and Mohamed al-Husseiny.

Qubaisi was one of the most prominent executives in the UAE until he was abruptly replaced as IPIC’s managing director in April last year. In subsequent months he stepped down as chairperson of IPIC’s unit Aabar Investments and from senior posts at several other firms in the region.

Husseiny was replaced as chief executive of Aabar last year after holding that post since 2010.

IPIC has close business links to Malaysia’s scandal-hit 1MDB, which is at the centre of corruption and money-laundering investigations in the United States, Switzerland, Singapore and Luxembourg.

Last year, IPIC came to the aid of debt-laden 1MDB, agreeing to provide it with US$1 billion (about RM4 billion) in cash and to assume US$3.5 billion of 1MDB debt in exchange for some of the fund’s assets.

Responding to IPIC and Aabar’s statement to the London Stock Exchange yesterday, 1MDB stated that the substantial sums paid to Aabar BVI have been clearly recorded in the publicly available and audited 1MDB financial statements dated March 31, 2013 and March 31, 2014.

1MDB said it found it curious that IPIC and Aabar have waited until April 2016 to issue such a statement.

With IPIC and Aabar now denying ownership of the entity named Aabar BVI, “the chickens have come home to roost” and Malaysian tax-paying public are likely to be the “suckers” who will have to pick up the multi-billion-ringgit tab of such 1MDB escapades.

Will the PAC now re-open investigations into the 1MDB scandal, as it is now as clear as daylight that the PAC Report on 1MDB tabled in Parliament last Thursday was a partial and incomplete investigation as many questions and areas remain unanswered and unexplored.

Another international event which took place in the five days after the tabling of the PAC Report on 1MDB which destroyed any pretence that it could mark the closure of the 1MDB scandal was the scathing speech by chief executive officer of the Swiss Financial Market Supervisory Authority (Finma), Mark Branson at the Finma Annual Conference 2016 in Berne, Switzerland last Thursday.

Mark Branson described Malaysia’s 1MDB and Brazil Petrobras scandals as “clear cases of corruption” and prime examples of money laundering risks that Switzerland is facing.
Under such circumstances, how could the PAC Report on 1MDB mark the closure of the 1MDB scandal?

Even if these three international events had not taken place in the past five days, the myth that the PAC Report on 1MDB tabled last Thursday was the final definitive word to bring about the closure of the RM50 billion 1MDB scandal would have been debunked, although it would have taken a bit more time.

Those who have taken the trouble to read the 106-page PAC Report would have discovered that the PAC Report only revealed the “tip of the iceberg” of the RM50 billion 1MDB scandal, and that it is most unfair to make the former 1MDB CEO Shahrol Azral to be the sole “scapegoat” for the 1MDB scandal.

This is why Transparency International Malaysia (TI-M) president Akhbar Satar has said that the ‘ghost’ of 1MDB scandal will never be laid to rest unless further investigations are carried out based on findings of the PAC report.

He said the PAC findings and report have been a step in the right direction but more questions have been raised which demand further probing and investigation especially as to how the funds were ultimately used.

I agree with Akhbar when he said: “Let the right, independent and professional people finish the job or the ghost of 1MDB will never be laid to rest.”

The human rights group Proham is spot-on when it said that allegations of criminal breach of trust surrounding 1MDB is not the sole responsibility of its former chief executive officer and called for the speedy release of the Auditor-General’s final audit of the 1MDB.

I am glad that former Cabinet Minister, Tan Sri Rafidah Aziz has added her voice for the immediate release of the Auditor-General’s final audit report, and she cannot be more correct in saying that it is pointless to try to classify information in a borderless world – “when others outside the country can so easily get any and all information… and that information can, and is, expeditiously transmitted globally” as illustrated by the Panama Papers exposures.

In the final analysis, the question is the one posed by the Institute for Democracy and Economic Affairs (Ideas) chief executive officer Wan Saiful Wan Jan: whether Prime Minister Najib had played the role of puppet-master in the 1MDB scandal.

I have said that DAP MP for PJ Utara Tony Pua and PAC member was over-generous to give 80 marks to the Public Accounts Committee (PAC) Report on 1MDB as I would give it at most 60 marks.

This is because at least 40% of the first global scandal in the nation’s history has still to be disclosed.

Will PAC re-open and continue with its 1MDB investigations to unveil this hitherto hidden 40 per cent of the 1MDB scandal, or will it have to be done by other agencies or personalities?