Whistleblower on Malaysia’s 1MDB Arrested in Thailand

A Swiss businessman who allegedly leaked thousands of emails to the Sarawak Report has been arrested in Thailand at the behest of a controversial oil exploration company connected to the1MDB scandal in Malaysia.

The Swiss national, Xavier Justo, has been held in Thailand for the past two days on charges of blackmail and extortion at the request of PetroSaudi International, which claims that Justo, a former PetroSaudi director, stole the emails and passed them to Clare Rewcastle Brown, the British blogger who operates the Sarawak Report and who has mounted a no-holds-barred campaign to expose alleged wrongdoing at 1MDB.

PetroSaudi officials also released a report by a UK-based technology firm called Protection Group International (PGI) that alleged the stolen data was subsequently edited before Sarawak Report published it.

In an interview, Brown called the charges of blackmail and extortion “bollocks” and said allegations that the data was subsequently edited were merely an attempt to make something sinister out of the fact that she had used excerpts from the emails in stories about 1MDB-PetroSaudi transactions rather than printing them wholesale.

The charges brought by Brown in Sarawak Report are to some extent a sideshow to the main event, in which four government agencies are investigating allegations of wrongdoing and misuse of funds at 1MDB, which was established in 2009 by Najib Tun Razak, the prime minister and its chief financial advisor, and Low Taek Jho, the flamboyant young financier who is close to Najib and his wife, Rosmah Mansor. Sources in Kuala Lumpur say that as much as RM25 billion of the RM42 billion in liabilities may be unrecoverable.

Minutely detailed stories in the New York Times and the Wall Street Journal have called into question many of the financial dealings revolving around the fund.

Over the past several months Brown has alleged, on the basis of the emails she received from Justo, that PetroSaudi diverted as much as US$1.9 billion of Malaysian public money into a company called Good Star Ltd. and Low’s hands. The state-backed investment firm has been under fire for months over its unfunded liabilities while government officials scramble to find money wherever they can to pay off massive interest payments.

The arrest of Justo at his home on the Thai island of Koh Samui appears to have been carefully orchestrated by PetroSaudi, the Malaysian government and Thai authorities. Prior to the arrest, reporters and photographers from the New Straits Times, owned by the United Malays National Organization, Malaysia’s biggest political party and the lead party in the governing coalition, were flown to Thailand for Justo’s arrest.

In a public statement issued on June 23, PetroSaudi said numerous computers, hard drives and other evidence were seized from Justo’s home and that the investigation is continuing.

A Swiss government official issued a statement saying the government is “in contact with the local authorities. The individual is receiving assistance in the framework of consular protection from the competent Swiss representation. For reasons of data protection and to protect the privacy of the individual, no further information can be given.”

In December 2014, according to a Sarawak Report story in February, 1MDB called in all of its computers and records at the fund and wiped them clean of all information, including not only personal computers belonging to staff, but also the mainframe servers as well. It is unknown if the move to destroy the thousands of emails was linked to the realization that Justo and Brown had 3 million of them from PetroSaudi’s servers. However, Brown said, apparently PetroSaudi called in all of its own servers as well and transferred them to Saudi Arabia. But the entire contents ended up with Brown in any case.

Brown said she has offered the huge trove of 3 million documents in her possession to Swiss and British authorities in an attempt to get one or the other of the two countries to investigate what she and others charge is massive wrongdoing as a result of the funneling of 1MDB funds guaranteed by the Malaysian government into unauthorized and possibly illegal channels. That follows unsuccessful attempts to interest officials last year and it is uncertain if the documents could be presented in court because of the possibility they violate search and seizure regulations. Nonetheless, a Malaysian lawyer connected to UMNO told Asia Sentinel that PetroSaudi may have blundered by engineering Justo’s arrest in Thailand because it internationalizes the case and brings out the possibility that the PetroSaudi transactions could be investigated by impartial justice organizations in either Switzerland or the UK – outside of Malaysia, where the courts are closely aligned with the government.

According to the PetroSaudi release, Justo left the company four years ago. The oil exploration firm paid him Bt140 million [US$4.1 million] when he left, according to Thai Police Colonel Akaradech Pimonsri, acting commander of Thailand's Crime Suppression Division, after he was found to have "behaved against the company's rules and regulations."

That in itself is a strange statement. If he had behaved contrary to the company’s operations, it seems likely in most companies that he could have been fired outright without any compensation.

Brown said charges against Justo of blackmail and extortion were a sham but that shortly after he was discharged, he wrote PetroSaudi a letter threatening to expose wrongdoing, which may have been the basis of the extortion charge.

Last month, based on emails she had been given access to, Brown alleged in Sarawak Report that the entire 1MDB-PetroSaudi joint venture deal was initiated by Low on September 8, 2009, less than a month before the deal was signed. Tony Pua, a Democratic Action Party lawmaker who has been deeply involved in investigating 1MDB’s activities, said PetroSaudi had created a shell company, 1MDB-PetroSaudi, from scratch on September 18, 2009, just 10 days before its subsidiary received US$1 billion from 1MDB.

Brown asked Swiss authorities to investigate allegations that Low diverted the money into the purchase of a bank in Singapore.

“There is a mass of corroborative evidence to show that this Swiss/ UK based company was involved in the disappearance of nearly two billion US dollars of Malaysian public money that went to Good Star,” she said. She demanded that the Swiss authorities fully investigate the claim.

“I strongly believe that [Justo] is being made subject to revenge and harassment regarding a matter over which the Thai courts have no valid jurisdiction,” she said in her letter to the Swiss Foreign Ministry. “I am concerned that corruption and or the misleading of the Thai authorities are behind this malicious arrest.”

By acknowledging that Justo’s material had been stored in the PetroSaudi servers, she said, they are also acknowledging that it was authentic.

“So far, PetroSaudi International have sequentially claimed the emails were ‘forged,’ then that they were ‘hacked’ and now that ‘stolen’ emails were ‘tampered with.’ However, there is a mass of corroborative evidence to show that this Swiss/ UK based company was involved in the disappearance of nearly two billion US dollars of Malaysian public money that went to Good Star Limited.”