The Edge Financial Daily, Malaysia's leading business newspaper, and The Edge Weekly have been suspended from publishing for three months by authorities for reporting on the scandal-tarred 1Malaysia Development Bhd investment fund. Authorities said Edge reporting was "prejudicial or likely to be prejudicial to public order, security or likely to alarm public opinion." The publications' detailed articles on 1MDB, the government said, were "likely to be prejudicial to public and national interest."
The suspension harkens back to the temporary closure of three newspapers in 1987 during what was called Operation Lalang, and it is certain to kick off a storm of protest. Last week, the government also began blocking access to the website, The Sarawak Report, largely written by Clare Rewcastle Brown from the UK. The site has been highly critical of the government and has linked Prime Minister Najib Tun Razak to the scandal directly with reports that US$680 million had been spirited from 1MDB-related companies into his personal accounts.
Tong Kooi Ong, the owner of The Edge Group, and Ho Kay Tat, the publisher, have both been threatened with arrest. Ho was forced to report to the police on July 22 and was questioned for two hours over the paper’s publication of a lengthy July 21 report describing in detail how money had flowed out of 1MDB into PetroSaudi International, a Middle East-based oil exploration company, and that US$1.83 billion allegedly was stolen by company officers and others.
Influential banker Nazir Tun Razak, Najib's brother, was outraged. "I condemn the suspension and my thoughts go out to all the affected staff," he said.
"Sad day. I am in shock," AirAsia boss Tony Fernandes said in response to Nazir's post.
Malaysia’s Center for Independent Journalism said, “For the government to censor a newspaper in this manner is an extremely heavy-handed measure and a breach of freedom of expression and media freedom in particular. To justify such a serious and extreme measure, it is wholly insufficient for the Home Ministry to merely make sweeping, general claims about prejudice to public order, security or alarm. It must specify exactly how The Edge's reporting on 1MDB would jeopardize public order or security.”
Government officials are likely to be even more infuriated by a sensational statement by Tong and Ho on the website of The Malaysian Insider, which the group also owns. The two said they had obtained 400,000 emails and other documents from a Swiss national and former PetroSaudi official, Xavier Andre Justo, who is connected to the 1MDB scandal, by lying about paying him.
Justo has been sitting in a Thai jail, expected to be charged with extortion, since June 22. Tong and Ho met Justo in Singapore in February with an offer to pay US$2 million for the documents related to the scandal. They say they never intended to pay up.
Justo left PetroSaudi under mysterious circumstances in 2011, supposedly with a US$5 million settlement from the company, according to news reports in Thailand. He also left with 90 gigabytes of information on a hard disk, apparently with the intention of selling them to the highest bidder.
In February, according to a story in The Straits Times of Singapore, he turned up in the island republic to meet with Tong and Ho, apparently at the behest of Rewcastle-Brown, the UK-based blogger, who has been a tireless critic for years of both the Sarawak state government and the national government.
According to the Straits Times story, Justo showed them a 22-page confession in which he said the two had agreed to pay him US$2 million for the documents. In The Malaysian Insider story, Tong and Ho said it was true – but they were never going to pay him.
“Justo is obviously an angry man, and understandably so, as we did not pay him what he wanted,” the two wrote. “Yes, we misled him. But that was the only way to get hold of the evidence to expose how a small group of Malaysians and foreigners cheated the people of Malaysia of US$1.83 billion [RM6.97 billion]. His statement confirmed what we have said earlier i.e. we never paid anyone.”
Damaging emails secured
To earlier charges that he had tampered with the information to produce more damaging charges against 1MDB and PetroSaudi, Justo said he had never done so. He was quoted in the Straits Times as saying Tan and Ho had told him they intended to alter some of the documents in an effort to bring down the Malaysian government. But, they said, “surely if we had such intentions we would not tell it to someone we were meeting for the first time. All the more so when we know he will be upset with us because we will eventually not pay him what he wants.”
Once they obtained the hard disk containing the documents, they made a digital fingerprint of it and secured it, the two said. They later gave a copy to Bank Negara Malaysia, the police and the Malaysian Anti-Corruption Commission, which are part of a task force investigating the 1MDB scandal, in which the state-backed investment fund has RM42 million worth of liabilities and is in serious trouble trying to meet its debts.
“[T]he money trail we have put together and passed to investigators showing how money from 1MDB were moved into the accounts of various people at several global banks in several countries can be easily verified by investigators with help from their counterparts in this country,” according to their article.
'We have done nothing wrong'
Justo, they said, is understandably bitter, “but this is not about Justo, neither is it about us. It is about a scheme to cheat the people of Malaysia of US$1.83 billion through the 1MDB-PetroSaudi joint venture. That so many government agencies are now investigating 1MDB and that it is now almost an insolvent company that needs to be bailed out validates all the work The Edge Media Group has done to expose what had happened. We have done nothing wrong and we are here to assist investigators unlike some who seem to have disappeared.”
In his confession, given to the Thai police and quoted by the Straits Times, Justo said he had tried to open an account in Singapore to have the money paid directly from the buyer’s account, but was refused. Tong and Ho apparently stalled, refusing to pay the money into an Abu Dhabi account in Justo‘s name, and also refused to pay up into his company account in Hong Kong or through a Luxembourg company.
Justo said eventually the two offered to pay him cash, which was supposed to be delivered in Singapore in installments, which he refused. Rewcastle-Brown, he said, agreed to receive the US$2 million from the buyer and send him US$250,000 a month for consultancy services, according to the Straits Times.
But, he said, he never learned if she had received the money, because he was arrested on June 22.
Rewcastle-Brown said said allegations of her involvement are nonsense. Contacted by The Straits Times, she called the idea "bunkum."
"What I have presented on 1MDB and has been clarified by The Edge and corroborated by several other official sources is a coherent explanation of events, versus the dodging, changing stories of 1MDB," she told the Straits Times.