Report claims PetroSaudi, 1MDB deals were a scam

KUALA LUMPUR — A Malaysian financial newspaper has published what it claims to be an exposé detailing an elaborate scheme in which US$1.83 billion (S$2.51 billion) was creamed off 1Malaysia Development Bhd (1MDB), which immediately dismissed the report as baseless.

In a front page report yesterday, The Edge Financial Daily claimed that evidence it had put together showed that various transactions between the state-owned investment firm and Middle Eastern oil company PetroSaudi International were nothing more than a scheme to steal billions of ringgit from Malaysia.

The business paper, which is currently being investigated by Malaysian authorities for its previous articles on the debt-laden 1MDB, said that controversial Malaysian billionaire Low Taek Jho was allegedly behind a scam involving a US$1.83 billion investment by 1MDB into PetroSaudi International between 2009 and 2011.

The joint venture was eventually called off but 1MDB never got back its cash, The Edge claimed, adding that the US$1.83 billion cash 1MDB had put in was transferred into several individual accounts at several global banks in New York, Switzerland, London and Singapore.

The banks reportedly included JP Morgan, RBS Coutts, Credit Suisse, HSBC and BSI Bank. The newspaper also produced a large flowchart of the money flow put together from bank statements of senders and receivers.

In a note to readers, the Edge’s publisher, Mr Ho Kay Tat, said the media outlet had a public duty to report the alleged scam. He said this was likely to be its last report on the matter and it would be handing over whatever it had to the agencies investigating 1MDB. “How can what we have done be deemed as political conspiracy?” he asked.

The daily and its sister publication The Edge Weekly have been issued a show-cause letter by Malaysia’s Home Ministry over its reporting of 1MDB.

In a statement yesterday in response to The Edge’s latest report, 1MDB accused the paper of sensational journalism by regurgitating “old and unproven” allegations against it even as investigations on the firm are ongoing.

“We are surprised that these old and unproven allegations are being recycled yet again, when in fact there are multiple ongoing investigations being conducted by the lawful authorities on the issues raised previously,” said 1MDB. “Any party which can assist investigators should do so under the purview of the law, without resorting to such irresponsible and unnecessary sensationalism,” the company wholly owned by the Finance Ministry said in its brief statement.

1MDB, which has an RM42 billion (S$15.1 billion) debt, is under probe by the bipartisan parliamentary Public Accounts Committee, and the Auditor-General. Allegations in a July 5 Wall Street Journal report that some US$700 million was funnelled from 1MDB into the personal account of Prime Minister Najib Razak is being probed by a special task force comprising top civil servants.

Mr Najib, who is 1MDB’s advisory board chairman, has denied taking any money for personal gain and accused former Prime Minister Mahathir Mohamad of working with foreign media in a plot to unseat him.

Dr Mahathir has made allegations against 1MDB as the cornerstone of his campaign to remove Mr Najib from office, and has claimed that the firm’s funds have gone “missing”, “vanished”, or “disappeared”. AGENCIES