Police raid 1MDB’s offices in Kuala Lumpur on July 8, seizing computers and other equipment.
[size=0.6875]Photograph: Mohd Rasfan/AFP/Getty Images
In a similar vein, Low’s role at 1MDB involved “OPM”—other people’s money, says a former business associate in Kuala Lumpur. By now, Low had assembled an impressive array of connections. On Sept. 7, 2009, Low met Patrick Mahony, an executive of PetroSaudi International, in New York, according to a report in The Edge. Tarek Obaid, a co-founder of PetroSaudi, had introduced them to each other via e-mail on Aug. 28, the report said. It didn’t take long for 1MDB and PetroSaudi to cobble together a $2.5 billion joint venture. Mahony didn’t respond to e-mailed questions. Obaid couldn’t be reached for comment. As it got off the ground, 1MDB worked with more than a dozen financial institutions, but it forged especially close ties with Goldman. A helping hand came from Roger Ng, Goldman’s head of Southeast Asia sales and fixed-income trading, a Malaysian national well-known for his connections to politicians and tycoons, according to two people who know him. Leissner, then based in Singapore as Goldman’s co-president for Southeast Asia, played a key role in expanding the bank’s business in Malaysia. He declined to comment for this article. Ng, who left Goldman last year, didn’t respond to phone calls or a text message. In December 2009, Goldman won a license from Malaysia’s Securities Commission to set up fund management and corporate finance advisory operations in the country. “The future outlook for Malaysia’s capital markets and its asset management industry is very positive,” Leissner said in a statement released by the commission at the time. “Through our local presence, we look forward to playing a larger role in their development.” For 1MDB, Goldman played multiple roles. In 2012, it advised the firm on its acquisition of Tanjong Energy Holdings from Malaysian billionaire Krishnan and domestic power plants from Genting, a conglomerate. The following year, the bank helped 1MDB purchase the Jimah Energy Ventures power plant in Selangor, Malaysia, a deal that was completed in 2014. The true extent of the trouble at 1MDB didn’t become apparent until late last year. Scandal aside, 2014 was a difficult year for Najib and his government. First came the disappearance of Malaysia Airlines Flight 370 and all 239 people on board in March. Then, in July, Flight 17, also operated by the state-owned airline, crashed near Donetsk in strife-torn eastern Ukraine, possibly after being hit by a surface-to-air missile; all 298 passengers and crew died. It was around that time that the Sarawak Report and The Edge, under longtime editor Ho Kay Tat, began their exposés of 1MDB, adding to Najib’s woes. The Sarawak Report was founded by Clare Rewcastle Brown, who was born in Sarawak, a state on the island of Borneo, of British parents and now runs the site out of London. (Her husband, Andrew Brown, who recently retired as the head of media relations at EDF Energy, is the brother of former U.K. Prime Minister Gordon Brown.) Earlier this year, the website claimed to have obtained e-mails and other documentation showing how Jho Low and several business associates siphoned $700 million from 1MDB’s venture with PetroSaudi Holdings, which was registered in the Cayman Islands in the Caribbean. Low, who has denied playing any role in 1MDB after the work he did for the TIA, didn’t respond to requests for an interview or to e-mailed questions. The government, without giving any details, has tried to discredit the e-mails as reported by the Sarawak Report, saying the communications may have been tampered with. Then on July 19, the Malaysian Communications and Multimedia Commission said it had blocked the Sarawak Report’s website in Malaysia for publishing content that could "destabilize the country." Rewcastle Brown said she won’t be impeded by the government’s action, describing it as the “latest blow to media freedom.” In an unprecedented crackdown, Malaysian authorities this year have arrested more than 150 journalists, activists, opposition politicians, and lawyers on sedition charges or under a peaceful assembly act that strictly regulates public protests. One of Malaysia’s best-known political cartoonists, who goes by the name Zunar, has been charged with nine counts of sedition and faces up to 43 years in prison. On June 22, Thai police arrested a tattooed Swiss national named Xavier Justo, a former executive at 1MDB investment partner PetroSaudi International, on the resort island of Koh Samui. Police said they suspected Justo of trying to extort money from PetroSaudi and leaking e-mails about the oil company’s dealings with 1MDB. Justo denied the allegations, the Bangkok Post reported. 
Adding to a climate of fear and tension, the Malaysian police launched an investigation into whether government officials, including central bank personnel, were behind the leaking of documents that allegedly showed 1MDB money turning up in Najib’s accounts. The central bank on July 12 denied any impropriety.
As allegations swirl around him, the stakes for Najib are high. Not only is he prime minister and finance minister; he’s also president of a political machine, UMNO, that has been in power since Malaysia’s independence. What’s more, he’s chairman of the Khazanah Nasional sovereign wealth fund, which had $29 billion under management at the end of 2014. “Power is too concentrated to one person,” says Zaid Ibrahim, a former law minister who built the country’s largest law firm. He says the total lack of checks and balances in Malaysia has led to abuse of power. In the early days of Najib’s rule, Malaysians had more cause for optimism than now, says Danny Quah, an economics professor at the LSE. Like many successful Malaysians overseas, Quah has maintained ties with his native country. He served on Malaysia’s National Economic Advisory Council from 2009 to 2011, and he still vividly recalls a day—March 30, 2010—when Najib stood in front of global investors and promised a “1Malaysia” where all Malaysians of different races would work together toward one goal—turning Malaysia into a developed nation by 2020. At the time, Najib had enough popular support to aim high. “Right then, it was a golden opportunity,” Quah says. “It’s a moment that passed.” Mahathir, 90, shows no signs of letting his erstwhile protégé off the hook. After a poor showing by UMNO in the March 2008 elections, Prime Minister Abdullah Ahmad Badawi stepped down the following year and was replaced by his deputy prime minister, Najib. Over time, Mahathir said later, he became disillusioned with Najib’s management of the economy. He said he expressed his doubts first privately and then publicly. With the 1MDB scandal gaining momentum, outright war broke out between Mahathir and Najib. Najib, Mahathir said in June, had crossed the line. “1MDB is the straw that broke the camel’s back,” said Mahathir, who has repeatedly called for Najib to resign. Najib, who says he won’t step down, lashed back at Mahathir, known by the honorific Tun. “The ‘mess’ that Tun refers to is largely of his own making as a result of his attacks and his echoing of opposition lies and slander,” Najib wrote on his website. As words flew between Mahathir and Najib in June, the Malaysian Volunteer Lawyers Association organized a forum to hear from Najib on 1MDB. It was called Nothing2Hide. Mahathir saw a chance to speak his mind about 1MDB and the money he said was missing. “I feel obligated to explain to the people what really happened and why I’ve decided not to support Najib any longer,” he said to the gathering. “This is not about me or Najib. It’s about the whole nation because what was lost belonged to all of us. I am just a spokesperson. Many people have come to me, asking me to do something.” About 10 minutes into Mahathir’s speech, uniformed police moved in and stopped the aging but still spry former prime minister from speaking. Whatever Najib thought of the action taken against his mentor-turned-rival may never be known. Amid police concerns about “public order and national harmony,” he didn’t show up. This story appears in the September issue of Bloomberg Markets magazine. With assistance from Ye Xie in New York.
| 
Author
Post time 22-7-2015 01:37 PM
