1MDB global embezzlement and money-laundering scandal – more and more questions without a single answer so far!

The 1MDB global embezzlement and money-laundering scandal is a real “wonder” – turning Malaysia overnight into a global kleptocracy with more and more questions with unending international developments every passing day but without a single answer so far!

The latest contributor to this “wonder” of a 1MDB global embezzlement and money-laundering scandal is the Inspector-General of Police, Tan Sri Khalid Abu Bakar with his revelation that the Malaysian police have completed the first phase of their investigation into 1MDB, which is restricted to the five recommendations by the Public Accounts Committee (PAC) as ordered by the cabinet.

Last month, Khalid said police have recorded statements from 25 individuals into the PAC Report on 1MDB in the first phase of the investigations, and that the police would start the second phase – sending investigators overseas to obtain documents and record the testimonies of witnesses who are abroad.

Khalid said yesterday that the police are waiting for further orders from the Attorney-General’s Chambers (AGC) regarding the matter, and estimated the instructions to be issued in a week or two.

Khalid’s statement sent me back to the PAC Report on 1MDB, as I never knew that the PAC had made five recommendations for police investigation, let alone the Cabinet decision to restrict police investigation to the alleged five PAC recommendations.

Re-reading the PAC Report on 1MDB has confirmed me that my memory had not failed me, that the PAC had never made five recommendations for police investigation.

The PAC Report only made one specific recommendation for police investigation, that 1MDB’s former Chief Executive Officer Datuk Shahrol Azral Ibrahim Halmi must bear responsibility for the 1MDB management constraints and weaknesses and that he and others in the management should be investigated.

The five recommendations made by the PAC Report on 1MDB had nothing to with police investigation, but concerned the lessons that should be learnt from the 1MDB debacle and the actions that should be taken vis-a-vis 1MDB, viz:

(i) Principles of governance – 1MDB should adopt principles of good governance like the guide issued by the Putrajaya Committee on GLC High Performance Through the Green Book: Enhancing Board Effectiveness And Blue Book: Intensifying Performance Management Practices.

(ii) Avoid excessive debt – The use of excessive debt in the capital structure should not be allowed at all, especially when the cash flow is insufficient.

(iii) The Board of Directors should practice strict control – The board failed to carry out responsibilities and take care of the interests of the company and shareholders. They also did not take any proactive measures in monitoring the management’s activities and cash flow. More intensive regulations required of the board of directors, including the price of asset purchases and costs of liabilities.

(iv) Abolish the Advisory Board – The Advisory Board should be abolished, together with Article 117 in Memorandum and Articles of Association. All references to the Prime Minister should be changed to the Minister of Finance.

(v) Transfer Subsidiary companies – Subsidiaries and assets held by 1MDB such as TRX, Bandar Malaysia, Tanah Air Itam, Tanah Pulau Indah should be transferred to the MOF, supervised and managed properly.

Have the Cabinet and IGP misunderstood the PAC Report on 1MDB as to cause the Cabinet to restrict police investigation to five non-existing recommendations to the police?

In any event, many questions are spawned by these circumstances, including:

1. Why is there need for “first phase”, “second phase” (and other “phases”) of police investigation into PAC proposal for probe as to whether 1MDB’s former CEO Shahrol Azral had committed criminal offences, when all the evidence and documentation are given not only in the PAC Report, but in the Auditor-General’s Report on 1MDB (although not appended to PAC Report) and most recently, in the 136-page US Department of Justice (DOJ) single largest kleptocracy asset forfeiture action arising from US$3.5 billion stolen, embezzled, misappropriated or money-laundered from 1MDB funds?

2. Why more than four months have elapsed and there are still no outcome of police investigation into Shahrol Azral as specifically proposed by PAC?

3. When did the Cabinet issue the order to restrict police investigation into the PAC Report on 1MDB to the so-called “five recommendations” of the PAC Report on 1MDB, is such Cabinet directive valid and lawful, or in the words of Tony Pua (DAP National Publicity Secretary and PAC member), “tantamounts to an obstruction of justice”?

4. Is it proper for IGP Khalid to head the police investigation team into the PAC Report on 1MDB, when he is the remaining member of the Special Task Force on 1MDB formed in March 2015, which had comprised three other Tan Sris, namely Tan Sri Gani Patai (then Attorney-General) as Chairman, Tan Sri Abu Kassim Mohamed (then Malaysian Anti-Corruption Commission chief commissioner) and Tan Sri Zeti Akhtar Aziz (then Bank Negara Governor) but which was dissolved immediately after the high-level government purges by the Prime Minister in July last year?

5. Are the Police using the Auditor-General’s Report on 1MDB as a basis of investigation especially as the Auditor-General Tan Sri Ambrin Buang said in May this year that his Report on 1MDB is a sufficient basis for investigation and he stands ready to assist authorities in their investigations?

6. Why is the Police unwilling to make use of the information in the DOJ forfeiture suit revealing a series of criminal conduct resulting in some US$3.5 billion theft, misappropriation and money-laundering of 1MDB assets and funds in its current investigation?

7. Will the police investigate as to who is “MALAYSIAN OFFICIAL 1” in the DOJ filings?”

8. Will the police investigate the real relationship between “MO1” and the Penang billionaire Jho Low, as to who was making use of whom in the 1MDB global scandal? The DOJ filings described three phases of 1MDB embezzlement and kleptocracy – 1) the Good Star Phase 2) the Aabar/BVI Phase and 3) the Tanore Phase, alleging that “MALAYSIAN OFFICIAL 1” embezzled US$731 million via 1MDB. DOJ enumerated over US$1 billion from September 2009 to 2011 were siphoned off from 1MDB to Good Star which belonged to Jho Low under the first “Good Star” phase; in the second “Aabar/BVI phase” in 2012 approximately US$1.367 billion in 1MDB funds raised in two separate bond offerings were “misappropriated and fraudulently diverted” to bank accounts in Switzerland and Singapore controlled by Jho Low; and in the third “Tanore phase” in 2013 more than US$1.26 billion in 1MDB funds raised in a third bond offering were “misappropriated and fraudulently diverted” to bank accounts in Switzerland and Singapore controlled by Jho Low. Who was the main beneficiary of the 1MDB scandal – “MO1” or Jho Low?

Malaysians want answers to the teeming questions about the 1MDB global embezzlement and money-laundering scandal which had overnight converted Malaysia into a global kleptocracy but it would appear that more questions would only be piling up before any answer would be forthcoming.