The game-changing asset seizure filing issued September 16th by the Department of Justice has zeroed in on key players in the 1MDB scandal, who after several years of keeping below the radar have been seeking to escape censure and punishment.
These entities include some of the most powerful individuals and companies in the Middle East and one of the world’s most expensive super-yachts, Topaz (now renamed “A+”), registered as belonging to Man City Football Club owner Sheikh Mansour.
It also claims seizure of a clutch of further assets from Riza Aziz’s collection of rare posters and film memorabilia, just weeks after the PN government effectively let him off the hook with a ‘plea deal’ that demanded nothing further from him.
The accumulated filing, which now stretches to 300 pages, states that it is an update on several previous 1MDB asset seizures related to the money laundering of billions stolen from the Malaysian fund following the biggest ever joint investigation by the FBI and DOJ’s joint kleptocracy unit.
The new targets, mainly featuring the 1MDB ‘join venture partner’ PetroSaudi, address corrupt practices that have so far escaped the main spotlight of the investigation, despite numerous articles by Sarawak Report. These are named at the top of the indictment as “PetroSaudi International; PetroSaudi Oil Services (Venezuela) Ltd.; 1MDB PetroSaudi, Ltd.; Tarek Obaid; and Patrick Mahony.”
It is the first time that the two directors of PetroSaudi, Tarek Obaid and Patrick Mahony, have been specifically named as top targets of the criminal affair, despite having been identified as key players in the original billion dollar heists using the so-called joint venture between their company PetroSaudi and 1MDB.
Significantly, the DOJ cites the fraudulent deal in which PetroSaudi invested money from 1MDB in Venezuela through its company PetroSaudi Oil Services (Venezuela) Ltd. Thanks to alleged bribery and corruption involving Venezuelan officials PetroSaudi was able to reap vast profits which have been subsequently contested by the Venezuelan authorities.
“These assets include four dozen promotional movie posters that Riza Aziz acquired with more than $4 million in funds traceable to assets embezzled from 1MDB as well as an escrow account maintained in the United Kingdom holding more than $300 million. As alleged in the complaint, the funds in this escrow account are traceable to a line of credit extended by Petroleos de Venezuela S.A. (PDVSA) to PetroSaudi Oil Services (PetroSaudi) in connection with the use of two drill ships that PetroSaudi acquired with funds fraudulently obtained from 1MDB. [DOJ press statement]
The timing is of immense significance for Malaysia’s in that it comes just as the country is seeking to confiscate those profits made by PetroSaudi, none of which were ever returned to 1MDB which had provided the original investment money.
Owing to locked in profit agreements and an agreed Letter of Credit Venezuela has found it impossible to get the UK courts to return the millions of dollars de-frauded back to their country, however Malaysia is in the middle of a court battle to extract the cash from PetroSaudi itself.
Over $300 million is sitting currently in a client account of the law firm Clyde & Co in London and just this week PetroSaudi’s lawyers sought to get the UK courts to agree to a secret hearing to hide the details of those Venezuela agreements. All of this manoeuvring ought to be thrown into disruption by the rival bid by the United States Justice Department to seize the same profits on grounds of money laundering in the first place.
It’s all good news for Malaysia which stands to obtain the money either way, although Najib’s position in the coup coalition and lack of accountability are now clouding whether the current government will use the money to refund 1MDB debt as it is obliged to do.
Equally helpful for those Malaysians who want to see proper accountability from Abu Dhabi is that the filing also moves significantly against the 1MDB related corruption involving senior figures at Mubadala, one of the oil state’s largest sovereign wealth funds. The case has even started to entangle senior royal figures – and their super-yachts.
This could undermine moves for a settlement signalled by the new government in Malaysia with Abu Dhabi. Sarawak Report has recently flagged up warnings that the present coup coalition appears to have reverted to the Najib government’s previous policy of cover-up and secret arbitrations at Malaysia’s own expense.
However, the DOJ action now includes a claim of $160 million against one of the world’s largest yachts, Topaz, on behalf of 1MDB, which could leave the Gulf state and its royal owner, the IPIC boss Sheikh Mansour, further exposed as more details emerge.
So far, Abu Dhabi has sought to distance the emirate from the case by claiming that only two officials, namely Khadem Al Qubaisi and Mohamed al Husseiny were involved from the funds Aabar/IPIC, which have since been merged into the mega-fund Mubadala which is one of the biggest sovereign wealth funds in the world. Both Al Qubaisi and Al Husseiny have been jailed and Abu Dhabi has treated its criminal case as closed.
However, the DOJ filing has now identified another senior official who continues at this very moment to hold a top senior position in Mubadala itself as having received 1MDB funded bribes from Jho Low, apparently relating to the fund’s engagement in Jho Low’s now notorious purchase of interests in the New York Park Lane hotel.
According to the DOJ filing, Ali Eid Khamis Thani Al Mheri received US$10 million stolen from the $975 million loan granted by Deustche Bank in 2014.
The loan has been the subject of testimony just this week during the trial of ex-PM Najib Razak over 1MDB, as the former CEO of the fund disclosed he was not even consulted over the raising of the vast sum that was signed off by Najib and processed by Jho Low and his legal side-kick, Jasmine Loo (appointed as legal counsel to the company).
MUBADALA EXECUTIVE RECEIVED FUNDS DIVERTED FROM THE 2014 DEUTSCHE BANK LOANS
1042. In or around November and December 2014, Ali Eid Khamis Thani Al Mheiri (“Al Mheiri”), Chairman of the Board of the Viceroy Hotel Group (“VHG”) and head of Mubadala Real Estate and Infrastructure (“MREI”) who directly participated in Mubadala’s deal team for the Park Lane Partnership, received over $10 million from the Vista Equity Account. These funds are traceable to the $975 million loan that Deutsche Bank made to 1MDB in September 2014. As set forth above in Sections VI.J and VI.U, respectively, LOW acquired an interest in both the Park Lane Partnership and VHG with misappropriated 1MDB funds. [Dep of Justice filing – Case 2:20-cv-08466 – 09/16/20]
The purpose given for the loan was to assist in buying out options in preparation for an 1PO of 1MDB subsidiary power companies, launched under a code name Project Virtus by Deutsche Bank, which was brought in on the deal by Goldman Sachs, which is already facing criminal proceedings over 1MDB.
Sarawak Report has further questioned the presence of two brothers of Najib on the board of the Deutsche Bank (Malaysia) subsidiary at the time and questioned if connected interests were declared as part of due diligence by the bank.
Far from being used for the purposes declared the money was used for purposes such as this personal bribe, apparently to secure Mubadala’s crucial co-investment in the New York hotel.
Later, as the FBI started moving in 2016, Jho Low off-loaded the share onto Hong Kong’s Greenland Properties thanks to an equally fraudulent arrangement also exposed by Sarawak Report involving Sheikh Sabah of Kuwait.
The money, says the DOJ, was used by Al Mheiri to buy private property in London. Al Mheiri remains in his senior management position at Mubadala to this very day according to researches by Sarawak Report.
It is clearly the case that the new coup administration in Malaysia is scrambling to cut a deal with Abu Dhabi rather than allow the matter into court to extract a proper and full recompense for the damages incurred as a result of the collaboration of corrupt officials from its sovereign funds in the plunder of 1MDB.
However, if Malaysia’s priority is to spare the royal Abu Dhabi friends of Najib and indeed the Agong further embarrassment, it appears the DOJ investigation has proceeded regardless of such sensitivities.
The expanded DOJ filing now confirms evidence produced by Sarawak Report that huge sums were diverted from 1MDB into the purchase of Sheikh Mansour’s super-yacht Topaz via the Khadem Al Qubaisi fronted Vasco Trust account at Edmond de Rothschild Bank in Luxembourg.
According to the investigators the yacht $688 million yacht (5th largest in the world) was bought in 2008 partly funded by a $400 million loan, provided once more by Deutsche Bank. The official investigators now say a total of $160,930,752 of the repayment on that loan was funded by money stolen from 1MDB that was sent to the Vasco account.
“The majority of this $160,930,752 in misappropriated funds followed the following route. From the Vasco Account, the funds were transferred into an account in the name of Tasameem Investments at Rothschild Bank in Luxembourg. The funds then were transferred into an account in the name of Oceanus Maritime at Deutsche Bank in Germany (“Oceanus account”). [DOJ updated filing]
Moreover, the filing says, Jho Low helpfully chartered the yacht on five occasions for just under $20 million, again using 1MDB stolen cash. The yacht is now re-named A+, but the owner is believed to remain Sheikh Mansour:
The Department of Justice has yet to cite the yacht as a target for seizure, pending it would seem resolution of the $160 million claim against Sheikh Mansour.
Likewise, the full details of Mubadala’s engagements with Jho Low have not yet been fully cited, although another joint investment by Jho with Mubadala has already been confiscated, namely into the Electrum Group managed by the billionaire Thomas Kaplan who is at the forefront of the Israeli coalition against Iran in the Middle East.
The role of Jasmine Loo, who was cited as one of the earliest individuals wanted by Malaysian investigators over 1MDB and has been in hiding with Jho Low since 2015, is further highlighted in this latest deposition.
She has already been identified has having received multi-million dollar bribes from Jho and this week she was identified in court as the key agent for Jho Low in raising the fraudulent Deutche Bank funding for the bogus option payments and Project Virtus.
The filing cites more bribes paid into her private accounts including $16 million paid into a so-called River Dee account at Falcon Bank (then directly owned by IPIC now shut following criminal investigations in Switzerland over 1MDB).
According to the DOJ, “Loo used approximately $8,954,258 of the funds in the RIVER DEE ACCOUNT to acquire real estate in London and New York as well as make an investment in a Hong Kong-based company.”
So far, there is no indication that the UK authorities have seized these assets. Loo is believed to be in hiding with Jho Low, probably in China.
Having flagged up its willingness to put pressure and the spotlight on Abu Dhabi (which is continuing to wind down IPIC’s Vegas based Hakkasan hospitality group also linked by Sarawak Report to money from 1MDB) the DOJ filing only so far seeks confiscation of PetroSaudi’s London cash haul from Venezuela and further Hollywood memorabilia identified as belonging to Riza Aziz who has already admitted guilt over 1MDB.
The filings claims seizure of dozens of ‘valuable movie posters’ worth $4 million bought with 1MDB cash, including King Kong and Wizard of Oz posters as well as an original poster for the film Citizen Kane.
Crucially, the deposition cites why the original $300 million that was sent to PetroSaudi in 2009, supposedly as part of its ‘joint venture’ with 1MDB is owed back to Malaysia.
Jho Low had already looted the lion’s share of the bogus 1MDB’s investment (which was meant to exploit a non-existent oil concession in the Caspian Sea) to the tune of $700 million:
“$300 million was insufficient to fund the joint venture that had been proposed to 1MDB. Instead, it was used to purchase two secondhand and aging drillships, the Songa Saturn and Neptune Discoverer (which were built in 1983 and 1977, respectively).
Lacking any remaining working capital, PetroSaudi18 entered into a contract with the Venezulan oil company Petroleos de Venezuela, S.A. (“PDVSA”) for drilling rights in Venezuela. As part of that contract, PetroSaudi obtained a line of credit from PDVSA, which was eventually drawn down by more than $300 million.
Substantially zero oil was ever produced under the Venezuelan drilling contract. PetroSaudi and PDVSA instead entered into Paris-based arbitration under the UNCITRAL rules19 over the failed drilling venture. The arbitration covered, inter alia, the fate of the funds that PetroSaudi had drawn down from the PDVSA line of credit.
Thanks to that arbitration (the details of which PetroSaudi are now fighting to keep secret from an open London court) it is apparent that Venezuela returned the $300 million to PetroSaudi, which is now being held in the Clyde & Co client escrow account in London.
However, the Department of Justice agrees with Malaysia’s current parallel case against PetroSaudi, stating that “These funds constitute the DEFENDANT ASSETS in this case“. In consequence the money should be removed from the clutches of Tarek Obaid and Patrick Mahony, who remain in control of PetroSaudi.
The move has raised the stakes in this London case and also the case against Abu Dhabi, which Malaysia has apparently agreed to suspend pending a settlement also in the London courts.