Has The 1MDB Scandal Hooked Another ‘Professional Enabler’ In The Law Firm White & Case?

As reported in London’s Sunday Observer, it is now confirmed that the $1.83 billion legal suit initiated by 1MDB against the major transatlantic law firm White & Case, which acted for PetroSaudi in the fraudulent joint venture that cost Malaysian taxpayers billions of ringgit, has sparked both regulatory and criminal investigations in the UK.

Following revelations last week that the UK Solicitors Regulatory Authority is examining the actions of White & Case’s London Office, the Chief Commissioner of the Malaysian Anti-Corruption Commission (MACC), Azam Baki, released a statement confirming UK authorities have been engaged in a criminal investigation launched by the MACC into the firm following a mutual legal assistance request.

We can confirm that the Malaysian Anti-Corruption Commission (MACC) is currently undertaking investigations in relation to the law firm concerned. The scope of the investigation includes, among others, the preparation of documentation and payment instructions which are suspected to contain inaccuracies or to have been misleading, and which may have contributed to the misdirection of funds linked to 1MDB.
The investigation is also examining payments made to the firm that are believed to involve funds potentially connected to the alleged misappropriation of 1MDB assets……. In order to support and advance the investigation, MACC is in the process of seeking further information and documentation through formal channels, including via the Attorney General’s Chambers (AGC) and Mutual Legal Assistance (MLA) arrangements with the United Kingdom authorities…. cooperation and communication between the relevant agencies remain ongoing and constructive.”

Enquires by Sarawak Report have established that these ongoing investigations involve the UK’s International Anti Corruption Coordination Centre which comes under Britain’s National Crime Agency.

The NCA has said it does not comment on ongoing investigations and White & Case told journalists that it is not aware of criminal investigations in the UK. However, that statement was followed by a further update from the MACC Chief Commissioner in which he said the agency has now completed its own investigations into the law firm “with a recommendation for charges to be filed against several individuals”.

Sarawak Report has established that at least one of those individuals is among those named in 1MDB’s civil suit currently lodged both against White & Case and Patrick Mahony, the PetroSaudi manager already convicted of fraud in Switzerland.

UK anti-corruption campaigners have told Sarawak Report that any engagement by the NCA would represent a major development in tackling the country’s problem with so-called professional enablers of global corruption.

“This investigation is a significant step towards unprecedented scrutiny of the London lawyers whose services paved the way for corrupt elites to siphon off billions in public funds.
For far too long, major law firms caught up in global corruption scandals have escaped effective accountability for their role as witting or unwitting enablers of dirty money.
Any enforcement action against White & Case would send a shockwave through the legal profession and shatter the illusion of impunity that some law firms may be too big to be called to account by the regulator.”
[Dr Helen Taylor, Dep Director Spotlight on Corruption]

‘Professional Enablers’?

From the day Sarawak Report broke the story of 1MDB’s Heist of the Century, the role of White & Case, the lawyers for the fund’s ‘joint venture partner’, PetroSaudi, has featured at the forefront of much of the fraud uncovered.

Like the bankers Goldman Sachs, who have been fined billions for their enabling role, the prestige law firm provided the conspirators with an invaluable cover and patina of respectability, thereby assisting troublingly hasty and unusual transactions to go ahead, despite the multiple red flags involved.

Testifying in court last year, 1MDB’s CEO described the false sense of security offered by the firm’s involvement as PetroSaudi’s legal advisors and Baker & MacKenzie (Wong & Partners) who represented 1MDB: “I was not suspicious at all of the name PetroSaudi Holdings (Cayman) Ltd that was different from the name PetroSaudi International Ltd as it was prepared by a 1MDB officer who was an expert with the help of famous lawyers”, he said of one such anomaly (Jho Low’s signature sleight was using similar names for connected off-shore companies but with completely different controlling entities to funnel cash).

Now, that Malaysia’s ability to take action and access necessary information has been revived (following years of powerful obstruction) efforts are at last being made to hold the law firm to account, not just for negligence and incompetence but for complicity. 1MDB’s staggering $1.83 billion legal suit against White & Case amounts to the entire sum 1MDB alleges the law firm ‘dishonestly assisted‘ its clients and their co-conspirators in stealing from the sovereign fund.

The case was lodged in KL at the end of 2024, following the conviction of the two prime movers at PetroSaudi itself, shareholder Tarek Obaid and director Patrick Mahony, by the Swiss Courts (the two men are appealing lengthy jail sentences).

White & Case immediately sought to get Malaysia’s case thrown out on the grounds of jurisdiction and delay, however those claims were dismissed by the KL High Court in December on the grounds that White & Cases’ clients, PetroSaudi, had submitted to Malaysian jurisdiction to do business with the sovereign fund and the delay was due to obstruction by fraudsters in high office.

An inevitable appeal against that ruling will be heard in May. Meanwhile, the details of the pleadings against the law firm allege shocking charges of “dishonest assistance” and “conspiracy to injure by unlawful means“, squarely based on the facts originally reported in this blog and the questions we have raised since 2015 about the firm’s baffling insouciance over the suspicious transactions they supported.

W&C Represented PetroSaudi ‘at all Material Times During Fraud’

The nub of 1MDB’s civil law suit is that not only had White & Case “wilfully and recklessly failed to make such inquiries as an honest and reasonable person would make” in their engagement with the initial joint venture deal with 1MDB, where the fund ploughed $1 billion into a worthless PetroSaudi subsidiary which White & Case helped to present as a major oil licensee, but that even after White & Case could hold no remaining doubts that the PetroSaudi vehicle was a fraud, the law firm continued to assist in the raising of a further $833 million in 1MDB loans against the non-existent value of that company.

In the initial joint venture PetroSaudi claimed to have injected a $2.7 billion asset into the shared company through a bogus oil extraction license in Turkmenistan when in fact it did not own the license and, besides, the license had no value in a disputed territory for the foreseeable future.

White & Case ought surely to have realised this at the time they injected the ‘asset’ into the joint venture, not least because it was registered with a Jersey Company that was publicly described as having zero value unless an option to buy into the target oil license was activated.

The same public company documents also pointed out that even if the asset was acquired it would be only worth a maximum of $500m and only after six years, not the value of $2.7 bn that PetroSaudi claimed.

How could lawyers managing the documentation have missed these openly declared facts, which Sarawak Report picked it up from an online enquiry, and why did White & Case not wait for an independent credible valuation to be obtained, which they did not, before signing off on the venture, as had been demanded by the 1MDB board as its prerequisite?

There was a further Argentinian ‘oil asset’ that was likewise injected into the joint venture company by PetroSaudi, which White & Case plainly did know was worthless. In an email to their colleagues a week before the JV was signed a White & Case lawyer specifically described the Argentinian company as having a “disposal value [of] almost nil” for tax purposes.

Yet, the Joint Venture Agreement signed on 28th September 2009 endorsed the value of the joint venture company, set up under the auspices of White & Case, at $2.7 billion based on the portfolio of these two oil assets.

If White & Case were missing red flags others, meanwhile, did not. Another big name, the auditors PWC, had been approached to provide the required independent valuation for the company to be produced before this completion date but refused on the grounds there was not enough time (less than a week) to do an acceptable job.

PetroSaudi would use “another competent authority as PWC is being too slow” Mahony had told the venture’s original BSI bankers who had warned on September 24th that their compliance department had insisted “Valorization of Argentinean and Turkmenistan’s Assets : very important to get please”. White & Case exhibited no such concerns and continued to vouch for their client.

Mahony fell back on a friendly contact, the US banker, Ed Morse, whom he hired for $100,000 to do the lightening valuation job on the basis only of information provided by PetroSaudi and without a site visit: “We are looking for a mid-range of $2.5b” explained Mahony in an email. “OK got it!” responded Morse and added a disclaimer to his one-sided valuation to that effect (he in fact came in at $2.9 billion plus).

Despite this dubious process, the Malaysian suit complains, White & Case, although aware of the requirement for a full independent valuation, nonetheless endorsed the document. Indeed, the valuation was not even delivered by Morse until the 29th September, the day after the Joint Venture was executed on the understanding that the assets were worth at least $2,7 billion.

There is no question that White & Case knew the valuation had not been received, let alone vetted, as their legal team were still asking PetroSaudi for it on 29th September in order to send it on to 1MDB. It arrived that evening. If they had read the valuation document the lawyers would have noted Ed Morse’s disclaimer and the obvious fact that the valuation was neither independent nor verified. Yet, they raised no concerns about continuing with the process of sending demands for payment the following day, 30th September.

It was not just PWC who were too uneasy to go ahead. BSI Bank also pulled out of opening accounts for the joint venture and the PetroSaudi holding company just a couple of days after pressing for the valuation details on September 28th. It seems Mahony had spooked them during the same email exchange by describing the planned diversion of $700 million dollars PetroSaudi from 1MDB’s investment as a “premium” (commission) that the fund had agreed to pay.

A compliance officer from Geneva’s BSI branch wrote at the time “I don’t like the transaction at all! In particular the role and involvement of Mr Low Taek Jho ‘looks and feels’ very subspicious [sic] to me.” [DOJ Complaint].

Jho Low had no official status in the transaction as the bank had ascertained. Indeed, several messages from the fraudster sought to remind the officials at 1MDB and PetroSaudi to keep his name out of official communications and that emails should not be openly copied to him. Sarawak Report has evidence that White & Case lawyers were nonetheless aware of Jho Low’s involvement by this stage, yet appear not to have shared the same concerns.

Jho was present at their London offices (albeit in a separate room) during the key negotiations between PetroSaudi and 1MDB’s top management and legal team on 23rd September. Brian Chia of Wong & Partners has testified he was introduced to him on that occasion by 1MDB’s CEO as Najib’s unofficial advisor.

Emails from Patrick Mahony to the White & Case team confirm the law firm was likewise in the loop. Given the orders by Jho, these mentions were a slip up but they reveal the W&C lawyers knew who Jho and his lawyer Tiffany Heah were. For example, the day following the negotiations Mahony emailed White & Case to gain their consent for Jho’s lawyer, Tiffany Heah to be allowed back into their London offices to look over the resulting documents before they were sent to be signed by Najib.

“Gentlemen – it is becoming quite important that we sign all of the docs and finalise the new structure by end of day tomorrow… Jho has just called and asked that tiffany do a minimum of dd [legal due diligence] on the new structure by at least seeing all of the signed docs (1.5b shares issued, 700m loan, that 1mdb owns PSI cayco). Is this achievable? Can we have all of the docs ready tomorrow for tarek to sign and then she can come and seen them all signed at some point in the afternoon? I have no issues doing this and in fact like it.” [email from Patrick Mahony to White & Case 24th Sept 2009]

The smoking gun email confirms the White & Case legal team knew who Jho and lawyer Tiffany were (indeed had met them the day before in their offices) and understood their role as supervisors of the deal on behalf of Najib.

It is notable that 1MDB’s own lawyers, Wong & Partners (a subsidiary of Baker & McKenzie against whom proceedings have now been dropped by 1MDB) had itself issued a rare Memorandum of Concern to warn the Board just before the joint venture was signed, on 26th September after Brian Chia arrived back from London.

The worries expressed by 1MDB’s legal advisors included that failure to obtain the obligatory independent valuation of PetroSaudi before injecting the billion dollars. The warning was overruled by Najib Razak as prime minister who had taken over all ultimate decision-making at the fund.

It is now well-known that $700 million of the initial billion dollar ‘investment’ made by 1MDB after the signing of that joint venture disappeared straight into the Good Star Limited account at Coutts Zurich belonging to Jho Low, on the pretext of a bogus loan repayment demand sent under the auspices of White & Case (the remaining $300 million would be siphoned out of the joint venture company by PetroSaudi itself and therefore also stolen).

In its briefing to 1MDB and its legal team, White & Case stated that the Good Star Limited account was “in the name of PetroSaudi” thereby falsely implying the company belonged to PetroSaudi and not the prime minister’s own proxy in the deal, namely Jho Low.

This ‘loan agreement’ was the deliberate mechanism “to legitimise prepayment” (as explained by White & Case) by which $700 was extracted from 1MDB’s investment behind the back of the Board.

Further Borrowings Based On Bogus Assets

Even if White & Case failed to spot this initial fraud despite so many red flags, the Malaysian suit argues that all avenues for pleading ignorance over PetroSaudi’s fraudulent claims ended straight after the $1 billion payment was made, at which point PetroSaudi had instructed the law firm to cancel the Turkmenistan ‘option agreement’ under which the company at least held a right to purchase the oil extraction license they had implied they owned.

From that point of cancellation on 24th November 2009, the law suit argues, White & Case were fully aware that PetroSaudi retained no assets of genuine value in the joint venture company. Nonetheless, the law firm continued to help structure a further $833 million in so-called Islamic loans which were made between 2010-2011 by 1MDB to PetroSaudi, guaranteed on the basis of what White & Case knew to be those non-existent assets. The law suit alleges that this was dishonest assistance and misrepresentation of their client.

The board of 1MDB received no notice of the cancellation of the option agreement and continued to sign off on these loans to PetroSaudi’s off shore shell companies owing to the fraudulent claims.

Deal Was Already Done & Dusted Say White & Case

In response to these charges White & Case have issued strong denials. Global Investigations Review reports that in its response to the civil suit the law firm has said it ‘could not have dishonestly assisted and conspired to defraud 1MDB, as claimed, because [it] played no role in negotiating the terms of the commercial arrangements between PetroSaudi and 1MDB, with “all major commercial terms” agreed before White & Case was even hired.‘ Similar arguments have been directed at Sarawak Report.

The claim conflicts with 1MDB’s contention that the firm represented PetroSaudi “at all material times” during the fraud, certainly from September 18th 2009, which was the day that all the formal parties to the deal were themselves being introduced.

That was the date Jho Low connected the director of PetroSaudi, Tarek Obaid, to the CEO of 1MDB through a telling email in which he stated to the key figures from the two companies that “discussions [are] on track with respect to your USd2.5b JVC partnership”.

Further emails show White & Case on the same day assisted PetroSaudi with the incorporation of the two key PetroSaudi subsidiaries to be involved in the joint venture. These were PetroSaudi Holdings (Cayman) Limited and the carefully named 1MDB PetroSaudi Limited (BVI) in which 1MDB was due to buy a minority shareholding for a billion dollars, according to advance plans drawn up by Jho Low’s own team and sent to the PetroSaudi fixer Patrick Mahony and Tarek Obaid four days earlier on September 14th.

Later on that same day, September 18th, the directors of the Board of 1MDB were also first notified of the Joint Venture plan by the management team.

The White & Case claim that commercial terms had already been agreed implies the law firm was indeed aware of Jho Low’s third party role behind the scenes. Documents and emails prove that throughout the negotiations their legal team was working from structures and plans that had already been drawn up by Jho’s team and lawyer in advance which were then forwarded to White & Case on various pretexts.

The key Joint Venture Agreement document that provided for the bogus $700 loan to be defrauded from 1MDB was drawn up by Jho’s lawyer Tiffany Heah on 21st September and sent to PetroSaudi’s Patrick Mahony, who in turn sent it to White & Case. Mahony then arranged with Jho and Tiffany to get the document sent again, this time officially from Wong & Partners as well to give an impression of due process.

White & Case lawyers then revised the document with minor amendments putting the document under the firm’s own official heading.

Other subsequent documents relating to the structure of the deal, the restructuring of the PetroSaudi group, the Loan Agreement and subsequent ‘repayment’ demand were likewise drafted during the period 14-29th September by Jho’s team and sent to Patrick Mahony. The key points in these documents were then incorporated into the official papers then produced by White & Case with their letterhead (see above).

White & Case may seek to argue the firm was unaware that the details they were working from had been supplied by Jho Low. However, correspondence makes clear members of the team were aware by the end of this process of the role of Najib’s informal advisor including the request that Jho’s lawyer should be allowed into White & Case to check off on the final documents.

Verifying A Fraudulent Bank Account?

There was one final key document which White & Case received indirectly from Jho Low and put its stamp on, namely the demand letter for the $700 million ‘Loan Repayment’ containing details for Jho’s bank account under the guise of PetroSaudi.

By assisting in this deception – knowingly or unknowingly – White & Case played a crucial role in sustaining Jho Low’s planned fraud after it nearly fell apart on 28th September (the day the joint venture had been executed with payments due on 30th).

That day BSI Bank formally declined to open two planned new PetroSaudi company accounts, namely the 1MDB Joint Venture account and the PetroSaudi Holdings account to which the ‘repayment’ was due to be made.

This left 24 hours to find new accounts to send 1MDB’s billion dollar payments to. BSI had declined on compliance grounds but Mahony emailed White & Case to say the bank had simply been “too slow”. White & Case apparently did not check on that.

By the following day Mahony, with help from White & Case, had supplied sufficient documentation to open an account at JP Morgan for the 1MDB PetroSaudi Joint Venture Company. However, a new plan was devised to channel the ‘repayment’ straight into Jho Low’s personal Good Star Limited account at Coutts Zurich without the facade of passing through PetroSaudi first.

They would do this by simply giving 1MDB the account number for Good Star Limited under the pretence that it was the account number for a subsidiary of PetroSaudi.

Early on 29th September Tiffany Heah emailed Patrick Mahony a critical legal document drafted on behalf of Jho to achieve this end. The ‘Loan Repayment’ repayment demand contained the details of the Good Star account but left out all identification details as to the actual owner.

Mahony sent this on directly to a contact at White & Case with the sole comment “Letter for 700m Loan”. Clearly there had been a conversation. Within hours, the recipient passed the letter unaltered to the wider White & Case legal team along with proposed amendments to the signed Joint Venture Agreement to accommodate the new bank account details, which needed to be agreed to by 1MDB’s Wong & Partners in KL before demands could be issued to the banks.

At the end of the day White & Case forwarded those documents to Wong & Partners including the Loan Repayment Demand letter which had been drawn up by Tiffany Heah citing Jho Low’s anonymised Good Star Limited bank account details as the destination for the $700 million.

White & Case had not altered that letter in any way.

Another smoking gun email accompanied those documents sent by White & Case to explain the proposed changes and the new bank details. This email added a crucial further piece of false information about the new accounts, which was a written claim that the Coutts Bank account number was “in the name of PetroSaudi Limited (Saudi)”. In fact, the beneficial owner of the account was Jho Low.

(b) Account details for payment of 700,000,000 USD to an account in the name of PetroSaudi International Limited (Saudi)

To:                             J P Morgan Chase Bank, New York, USA.
ABA:                           21 000 021
Swift:                         CHASUS33
Account:                     544-7-44876
In favour of:                  RBS Coutts Bank Ltd
Swift:                         COUTCHZZ
Reference:                  For further credit to account 11116073

Without this false claim having been made to Wong & Partners by White & Case it is clear that the deal could never have proceeded. The 1MDB law firm had demanded extra language in the agreement to ensure that the money being paid into the joint venture would be to the benefit of the venture and its partners and to no third party.

This diversion of the bulk of the investment to Jho Low therefore grossly violated that commitment and constituted fraud. Over the following day 1MDB’s top managers would further lie to the relevant banks confirming the account number did belong to PetroSaudi, as verified by their top London lawyers.

Due Diligence?

Given that White & Case had spent the previous week working with BSI Bank on due diligence requirements for the setting up of the earlier planned accounts, it beggars belief that the law firm had simply accepted without question the account details forwarded by Patrick Mahony on a transaction for $700 million.

As PetroSaudi’s lawyers, it behoved the law firm to check those details with Coutts bank. Unless, of course, the law firm knew who had drafted the legal letter for Patrick Mahony and that the false loan they had been engaged in orchestrating was never due to be repaid to PetroSaudi in the first place?

Should 1MDB’s law suit come to trial these will be interesting questions White & Case will need to find legitimate answers to, quite apart from the allegation that the firm continued to act for PetroSaudi in raising a further $830 million in loans from 1MDB in both 2010 and 2011, even after the firm had cancelled the oil licence option which was the ‘asset’ that had supposedly guaranteed the value of the company.

Sarawak Report put all of the above issues in a detailed list of questions to White & Case last week. The law firm responded by saying:

“We strongly refute any suggestion that White & Case acted in any way inconsistent with the highest ethical and professional standards. We are vigorously defending ourselves against the allegations in the complaint, which have no legal or factual bases.”