Deposits into personal accounts of Malaysia’s prime minister totaled more than $1 billion (around RM4.2 billion) —hundreds of millions more than previously identified—and global investigators believe much of it originated with a Malaysian state fund, people familiar with the matter say.
The investigators’ belief contradicts a conclusion reached recently by Malaysia’s attorney general.
The attorney general said $681 million deposited to Prime Minister Najib Razak’s account—identified by The Wall Street Journal last year—was a legal donation from a member of Saudi Arabia’s royal family, and most was returned. The attorney general said there was nothing improper and it was time to stop scrutinizing the deposits, a notion echoed by Mr. Najib.
Investigators in two other countries, while agreeing most of the $681 million ultimately was returned, believe the money originated with aMalaysian state development fund called 1MDB that the prime minister founded, according to people familiar with the probes.
The investigators believe the money moved through a complex web of transactions in several countries and with the help of two former officials of Abu Dhabi, a Persian Gulf emirate with which 1MDB has deep ties.
The investigators are focusing on an entity they believe was a crucial conduit: a firm with a name almost identical to that of a state-owned Abu Dhabi company called Aabar Investments PJS.
In filings, the 1MDB fund has reported paying more than a billion dollars to Aabar—not specifying a full name. Rather than going to the state-owned Abu Dhabi company, investigators believe the money flowed to the similarly named firm, which was registered in the British Virgin Islands, and $681 million made its way circuitously from there to Mr. Najib’s account.
Prime Minister Najib set up 1MDB—short for 1Malaysia Development Bhd.—several years ago to spur economic growth. He heads its board of advisers and often has been involved in its decision making, according to board minutes from several years.
The fund became the subject of investigations about a year ago after it ran up $11 billion of debt. Probes began not just in Malaysia but eventually also in the U.S., Switzerland, Singapore, Hong Kong and, said people familiar with the matter, in Abu Dhabi too.
The Journal reported last year that some of the fund’s money went for projects that helped Mr. Najib’s party retain power in a close 2013 election. Mr. Najib dismissed this description as a claim by political foes, and 1MDB denied playing a role in politics.
In a rare public comment about an active investigation, the Swiss attorney general said in January he suspected that $4 billion had been misappropriated from 1MDB through “complex financial structures.” The 1MDB fund said it hadn’t been contacted by any foreign investigators but stood ready to cooperate.
Mr. Najib has denied wrongdoing or taking any money for personal gain.
His office declined to comment on the assertion the money deposited in his accounts exceeded $1 billion. Most money beyond the previously identified $681 million arrived in 2011 and 2012, said two people familiar with flows into his accounts and a person familiar with one overseas probe. The $681 million arrived in 2013.
Mr. Najib’s office also wouldn’t comment on overseas investigators’ belief that the $681 million originated with 1MDB. That description of its origin is based on bank transfer and loan documents, on interviews with people familiar with the probes in two countries, and on interviews with one of the people familiar with the flows into Mr. Najib’s accounts.
The 1MDB fund declined to comment for this article. It said in a separate statement Feb.19 it “has not paid any funds to the personal accounts of the Prime Minister.”
Malaysia’s attorney general, Mohamed Apandi Ali, didn’t respond to requests for comment.
Mr. Najib unveiled 1MDB during a 2009 visit to Abu Dhabi. Aabar Investments PJS, the state company there, later pledged to help 1MDB acquire power plants and build a finance center in Kuala Lumpur.
Little of that investment flowed, according to financial statements of Aabar’s parent company, International Petroleum Investment Co., or IPIC, which is an Abu Dhabi sovereign-wealth fund. IPIC guaranteed billions of dollars of 1MDB bonds, though.
The Journal in December reported the transfer of some money from 1MDB into the firm with a name similar to Aabar’s. The 1MDB fund then said it stood by its financial reports, which show payments to Aabar.
The fund’s website and financial filings said it paid $1.4 billion to Aabar—without specifying a full name—as a cash deposit in 2012. The fund also paid nearly $1 billion in 2014 to extinguish options given to IPIC for guaranteeing bonds, according to a draft report by Malaysia’s auditor general.
IPIC has denied to 1MDB that either IPIC or Aabar ever received this nearly $2.4 billion, said people familiar with the matter.
The whole amount moved to the similarly named British Virgin Islands firm, according to the person familiar with flows into Mr. Najib’s accounts. This is also the belief of overseas investigators, said the people familiar with the probes.
From there, $681 million moved indirectly to another British Virgin Islands firm, this one called Tanore Finance Corp., investigators believe.
And they believe this money then moved on to Mr. Najib’s account—transferred out of an account that Tanore held in Singapore with a Swiss private bank called Falcon Bank.
The investigators believe that sometime later, most of the $681 million was sent back into the web of offshore entities through which it had arrived.
The firm with a name similar to Aabar’s was set up in 2012, global investigators believe, by Aabar’s chief executive at the time, Mohammed Badawy Al Husseiny, and by Khadem Al Qubaisi, then managing director of IPIC and chairman of Aabar.
This similarly named firm was called Aabar Investments PJS Ltd.; the established Abu Dhabi company’s name has no “Ltd.”
Abu Dhabi’s president removed Mr. Al Qubaisi last year. Soon after, IPIC’s new management removed Mr. Al Husseiny. In both cases, no reason was given.
A representative for Mr. Al Qubaisi declined to comment. Mr. Al Husseiny and his lawyer didn’t respond to requests for comment.
Spokesmen for IPIC, Aabar and Abu Dhabi all declined to comment, as did Falcon Bank in Switzerland. Falcon is owned by Aabar, the Abu Dhabi firm.
The two British Virgin Islands firms—Tanore and the one with a name similar to Aabar—have shut down.
As for the Malaysian attorney general’s conclusion that the $681 million deposited to Mr. Najib’s account was a Saudi royal-family donation, the international investigators have found no evidence any of this came from Saudi Arabia, according to those familiar with their probes.
A person familiar with 1MDB’s dealings also said the deposit didn’t come from Saudi Arabia. A Saudi official said in January the kingdom’s ministries of finance and foreign affairs had no knowledge of such a donation to Mr. Najib. - http://www.wsj.com/
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