Category: Financial Scandals

By Editorial Board
Washington Post
April 7

BACK IN January, Malaysia’s autocratic-minded prime minister, Najib Razak, tried to decree the end to a scandal involving the appearance of $681 million in his personal bank accounts. After an attorney general he installed reported that the money was a donation from the Saudi royal family, and did not involve wrongdoing, Mr. Najib declared: “The matter has been comprehensively put to rest.” Malaysians who argued otherwise, officials suggested, risked prosecution under the country’s draconian sedition law.

Fortunately for the rule of law in Malaysia, the strongman’s gambit failed. Revelations about alleged misappropriation of funds from a Malaysian state investment fund set up by Mr. Najib continue to pour forth, and investigations in half a dozen nations appear to be gathering momentum. Malaysia’s scandal appears likely to implicate financiers in the United Arab Emirates, Saudi Arabia, Singapore and the United States as well as some big Western banks. Perhaps most important, the chances that Mr. Najib will himself face legal and political consequences are steadily growing. Continue reading “Malaysia’s leader is a friend Mr. Obama should lose”

Tom Wright
Wall Street Journal
April 7, 2016

Board offers to resign; some allege an attempt to shield leader from damage in corruption scandal at fund he set up

By TOM WRIGHT

A Malaysian state development fund’s board of directors offered to resign after a report that found billions of dollars went missing from the fund but which made no mention of Prime Minister Najib Razak, prompting critics to accuse officials of shielding him.

The findings of the parliament’s Public Accounts Committee, released Thursday, mark the first time a Malaysian investigating body has leveled allegations of fraud connected to 1Malaysia Development Bhd., or 1MDB, which is the focus of corruption probes in Malaysia and at least six other nations.

Still, the report appeared to take pressure off Mr. Najib, who founded 1MDB in 2009, heads its separate board of advisers and has been the target of criticism over the scandal. Critics suggested the committee’s findings against 1MDB management, the absence of Mr. Najib’s name, and the directors’ offer to resign were orchestrated moves designed to protect the prime minister.

“It’s all planned that way; so we could attribute blame on [the board] but exonerate the prime minister. It means nothing,” said Zaid Ibrahim, a former cabinet minister and leader in an alliance opposed to Mr. Najib. Continue reading “Critical 1MDB Report Spares Malaysia’s Najib Razak”

by Justin Baer and Bradley Hope
Wall Street Journal
April 6, 2016

Regulator raised concerns about risk to firm’s reputation from work on 1MDB transactions

Regulators at the Federal Reserve have raised concerns with Goldman Sachs Group Inc. that deals it helped put together for a controversial Malaysian government investment fund could have put the firm’s reputation at risk, according to people familiar with the matter.

Those deals are increasingly under a brighter spotlight, as additional details emerge about the alleged actions of the firm’s former Southeast Asia head who handled transactions for the fund, 1Malaysia Development Bhd. or 1MDB.

People familiar with the matter said the partner, Tim Leissner, was suspended from the firm for writing a letter vouching for a financier with ties to that fund. Mr. Leissner was suspended and later quit early this year after a review of his email found he had allegedly written an unauthorized reference letter on behalf of Jho Low, a Malaysian investor who helped found 1MDB and was involved in some transactions done by the fund, people familiar with the matter said.

When it disclosed Mr. Leissner’s suspension, Goldman didn’t name Mr. Low. The fact that Mr. Leissner wrote a letter of reference to another financial institution for someone involved in 1MDB puts the firm deeper into the controversy surrounding the fund, lawyers say.

People familiar with the matter said Mr. Leissner’s letter had included details on Mr. Low’s finances, while overstating the extent to which Goldman had done due diligence on him. Continue reading “Fed Warned Goldman on Malaysia Bond Deals”

Leo Shanahan
THE AUSTRALIAN
APRIL 4, 2016

ANZ’s deputy chief executive and acting chief financial officer has been quizzed over the bank’s holdings in Malaysia’s AmBank amid the multi-billion dollar 1MDB corruption scandal engulfing that country’s government.

Appearing at a Senate committee looking into constructive default loans, Graham Hodges defended the role of ANZ in sitting on the board of Malaysian bank AmBank which held billions in the 1MDB funds at the centre of a global financial scandal.

With ANZ holding almost a 25 per cent shareholding in the Malaysian bank, ANZ has three permanent positions on AmBank’s board, which will soon include Mr Hodges himself and, formally, ANZ’s chief executive Shayne Elliott.

Under questioning from senators Mr Hodges described as “simplistic” allegations ANZ had governance questions to answer over AmBank and the scandal involving state investment fund 1MDB.

“Clearly the directors on that board are not at liberty to talk about what goes on … we do not control that bank. We are directors on that bank, it is a separately listed public company,” Mr Hodges told the committee in Sydney.

“As an ANZ executive and one which is a shareholder in that are we happy with that? Certainly not. But that’s different to implying that the culture or the integrity of one of the people who sat on the board is less than it should be because they’ve sat on the board.” Continue reading “ANZ quizzed over AmBank link to Malaysia’s 1MDB corruption scandal”

Nicholas Spiro
Nikkei Asian Review
March 29, 2016

Commentary

Emerging Asia’s central banks are sitting pretty, especially when compared with their Latin American counterparts.

Many of South America’s monetary guardians have been forced to raise interest rates aggressively over the past several months to combat a sharp rise in inflation, but emerging Asia’s central banks have been able to loosen monetary policy, with rate cuts in India, Indonesia, Taiwan and, most conspicuously, China.

Yet for Bank Negara Malaysia, the country’s central bank, these are challenging times. Continue reading “Malaysia’s big central bank challenge”

by Praveen Menon and Saeed Azhar
Australian Financial Review Weekend
Apr 3 2016

US Department of Justice officials have asked Deutsche Bank and JPMorgan Chase & Co to provide details on their dealings with 1MDB, as global investigations into the troubled Malaysian state fund widen.

US Department of Justice officials also travelled to Kuala Lumpur to speak to senior bankers and other people with close links to the state fund, three people with direct knowledge of the matter told Reuters. They said JPMorgan and Deutsche were not the target of investigations at this stage, but had only been asked to provide details.

Deutsche Bank and JPMorgan declined to comment. The Department of Justice also declined to comment. Continue reading “World’s top banks in US government cross-hairs over dealings with Malaysia’s 1MDB”

Edward Helmore
Guardian
2 April 2016

The FBI reportedly believes that $100m of the Leonardo DiCaprio-starring film’s budget came from a Malaysian state fund for local economic development

Sources within the FBI have confirmed to the Wall Street Journal that more than $100m of the production budget for Martin Scorsese’s The Wolf of Wall Street came from a Malaysian state fund connected to a scandal that has damaged a senior Goldman Sachs banker and led investigators to examine the lifestyle of a notorious New York playboy.

According to the Journal, FBI investigators believe much of the cash used to make the Leonardo DiCaprio-starring film was never intended for the movie business. Instead, it originated with 1MDB, a Malaysian state fund meant to boost local economic development.

1MDB, the Journal reported, passed the money to Red Granite Pictures, a Hollywood production company controlled by Riza Aziz, stepson of the prime minister of Malaysia, Najib Razak, who set up 1MDB seven years ago.

1MDB also appears to be behind the lavish lifestyle of Low Taek Jho, known as Jho Low, a notorious New York party boy and friend of Aziz. Continue reading “Murky Malaysian money trail that funded The Wolf of Wall Street – report”

By Bradley Hope, John R. Emshwiller And Ben Fritz
Wall Street Journal
April 1, 2016

Investigators believe much of the cash used to make the Leonardo DiCaprio film about a stock swindler originated with embattled Malaysian state development fund 1MDB

LOS ANGELES—Despite the star power of Leonardo DiCaprio and director Martin Scorsese, the 2013 hit movie “The Wolf of Wall Street” took more than six years to get made because studios weren’t willing to invest in a risky R-rated project.

Help arrived from a virtually unknown production company called Red Granite Pictures. Though it had made just one movie, Red Granite came up with the more than $100 million needed to film the sex- and drug-fueled story of a penny-stock swindler.

Global investigators now believe much of the money to make the movie about a stock scam was diverted from a state fund 9,000 miles away in Malaysia, a fund that had been established to spur local economic development.

The investigators, said people familiar with their work, believe this financing was part of a wider scandal at the Malaysian fund, which has been detailed in Wall Street Journal articles over the past year.

The fund, 1Malaysia Development Bhd., or 1MDB, was set up seven years ago by the prime minister of Malaysia, Najib Razak. His stepson, Riza Aziz, is the chairman of Red Granite Pictures.

The 1MDB fund is now the focus of numerous investigations at home and abroad, which grew out of $11 billion of debt it ran up and questions raised in Malaysia about how some of its money was used. Continue reading “The Secret Money Behind ‘The Wolf of Wall Street’”

Rob Crilly, New York
The Telegraph
2 APRIL 2016

Even with Leonardo DiCaprio on board, The Wolf of Wall Street – an 18-rated film about financial corruption – struggled to find the backing it needed.

It took a little known production company, Red Granite, to take the gamble on such explicit material and come up with the $100m or so needed to bring the film to cinema screens.

Now that company has been swept up in a corruption investigation amid allegations that some of the money used to make the film was laundered from a scandal-hit Malaysian firm founded by the country’s prime minister. Continue reading “The Wolf of Wall Street dragged into Malaysia corruption scandal”

Nigel Aw
Malaysiakini
2 Apr 2016

Malaysians may be wondering why a tiny European country is joining the growing global investigation into 1MDB, but the outcome of the Luxembourg probe could have great bearing on Prime Minister Najib Abdul Razak.

To begin with, the Luxembourg investigation does not indicate that it has anything to do with Najib.

But the Luxembourg probe is significant as it may solve an important missing link – the connection between 1MDB and a number of entities which have generously pumped billions of ringgit, claimed to be donations, into Najib’s personal bank accounts. Continue reading “Donation or 1MDB funds? Luxembourg probe may uncover missing link”