Malaysia’s auditor general is expected to deliver a long-delayed report on the debt-strapped and scandal-ridden 1Malaysia Development Bhd fund. tomorrow, April 7 to the parliament’s Public Accounts Committee. But nobody will see it. It is being released to the committee under the Official Secrets Act, which makes anybody who divulges the information liable to criminal prosecution.
Classifying the document under the Official Secrets Act is the latest in a long string of gambits by Prime Minister Najib Razak to keep the wraps on what arguably is the biggest scandal in Malaysian history. The Public Affairs Committee has concluded its own probe into the affair, and has been waiting for the auditor general’s report before releasing its own findings, which skeptics say are unlikely to produce any fireworks. Opposition figures have speculated that the committee’s own report would be a whitewash.
The scandal over the state-backed entity, however, involves allegations that the funding of the movie studio that produced the film Wolf of Wall Street came from 1MDB, that Najib’s young financier friend Jho Taek Low’s vain attempt to buy some of London’s classiest hotels including Claridge’s, the Connaught and the Berkeley was with the backing of a 1MDB guarantee letter, and allegations that hundreds of millions of US dollars were diverted from the fund into the pockets of the Penang-born Jho Low, as he is known. 1MDB officials have repeatedly denied wrongdoing and said they have been cooperating with authorities.
The delivery of the report comes at a time when at least five countries – the United States, Switzerland, Singapore, Luxembourg and the United Arab Emirates have launched investigations into allegations of spectacular diversion of money from the investment fund, which is said to face US$11 billion in unfunded liabilities. The Swiss government in January said at least US$4 billion has been misappropriated from the fund.
The 100-page report, written in Malay language, is not expected to be directed at Prime Minister Najib Razak himself despite the fact that he has been under fire for more than a year over revelations that US$681 million had mysteriously appeared in his personal accounts prior to the 2013 general election and that most of it had mysteriously been transferred out to a Swiss bank outlet in Singapore months later.
It is unlikely to contain information that hasn’t been leaked to a long list of newspapers and websites since the scandal blew into the open in 2014, in particular the Sarawak Report, the New York Times, The Wall Street Journal and Asia Sentinel. Instead, according to a Kuala Lumpur source, it deals in detail with the 7.69 percent commission earned by Goldman Sachs in raising US$6.5 billion for 1MDB as well as netting as much as US$500 million for Goldman. Tim Leissner, the former head of Goldman’s Southeast Asia unit, is already under investigation in the United States over the transaction.
The probe, however, is also said to center on 1MDB’s acquisition of a string of steeply overpriced independent power producers from the Genting gambling interests and Ananda Khrishnan, the country’s richest businessman and an UMNO crony, for RM11 billion to generate cash flow, at what were described as astounding valuations. Some of the IPPs were subsequently sold to Chinese interests in an effort to generate cash to pay back the gigantic loan arrears, which at one point were said to threaten the country’s financial system. The sale of government-backed utilities to Chinese entities has raised other concerns over Malaysia’s sovereignty.
The report, months in the making, was supposed to be released in February, but that was delayed until the first week of March, then delayed again to this week. As the investigation has ground slowly on, spectacular allegations of misdoing have emerged in the Sarawak Report, the Wall Street Journal, the New York Times, the Guardian and Australian newspapers. More recent ones detailed millions of dollars from a 1MDB subsidiary that poured into Najib’s own pockets via a company credit card used to buy jewelry and other items in Italy and Monaco.
In an effort to stem the leaks, Najib fired his deputy prime minister, Muhyiddin Yassin, Attorney General Abdul Ghani Patail, the deputy director of the police Special Branch investigative united, and neutralized or otherwise defused a long list of investigating bodies and critical members of Parliament. Opposition members have been threatened with sedition and violation of the Official Secrets Act for a variety of revelations about the scandal. Rafizi Ramli, the secretary general of the opposition Parti Keadilan Rakyat, was arrested earlier this week for revealing documents that showed the Armed Fund Board had poured money into 1MDB coffers. He is being under the Official Secrets Act and is to be held until April 8, according to local reports..
While the prime minister has largely managed to stifle all discussion of the affair in Malaysia, the investigations outside the country are almost certain to damaging, if the torrent of revelations in the foreign press is any indication. Preet Bharara, the US Attorney for the Southern District of New York, has sent FBI agents to Malaysia to interview a string of bankers and other officials and, according to sources in Kuala Lumpur, frightened some of them badly by their depth of knowledge of details of the scandal, down to the time and date decisions were made and by whom.
In addition, the US attorney’s office is said to be looking into money-laundering charges involving the purchase of opulent New York and California properties said to have been purchased on the Najib family’s behalf by agents believed to be connected to Jho Low, the flamboyant young Penang-born financier that helped Najib set up 1MDB in the first place. Jho Low in the meantime has made himself scarce, operating out of his gigantic yacht.
Reportedly attempts have been made by Najib’s wife Rosmah Mansor to seek through the foreign service to get the US government to call off Bharara’s investigation. US Ambassador to Malaysia Joseph Y. Yun has denied that he received any calls from the wife of Prime Minister Najib Tun Razak, asking that the investigation into family financial dealings in the US be called off, however.