The first 1MDB related arrest has taken place at the request of the United States, in a move that will send shock waves and shivers through the Malaysian political establishment and also in related businesses in Hollywood and Las Vegas.
Sources close to Department of Justice officials in the United States have confirmed to Sarawak Report that the former CEO of Aabar, Mohamed Al Husseiny (top right), has been placed in detention by the authorities in Abu Dhabi, who are now processing an extradition request by the US Department of Justice, relating to charges concerning 1MDB.
Al Husseiny, who originated from Kenya, holds US citizenship, despite having moved to Abu Dhabi.
This is the first outward move in an investigation that has been ongoing in the United States and other jurisdictions for several months, into the disappearance of billions of dollars from the Malaysian development fund.
Meanwhile, Prime Minister, Najib Razak, who is the sole shareholder and signatory of the fund, has solidly denied that any wrong-doing took place.
Whilst CEO of Aabar (a subsidiary of IPIC) until July of last year, Al Husseiny was a key player in a number highly controversial deals involving 1MDB, from which billions of ringgit appear to have disappeared.
He also fronted a massive bail-out of 1MDB’s debts, in a surprise move last June. It was one of his last actions in the post, from which he was summarily dismissed the following month.
There are numerous other questions concerning the management of Aabar, where Al Husseiny was regarded as a right hand man of the ex-Chairman, the high-rolling nightclub supremo, Khadem al Qubaisi, also CEO of IPIC.
Al Qubaisi was thrown out of all his official posts some weeks earlier in April of last year and following a period under house arrest he fled to the South of France, where he has considerable property.
Sarawak Report has identified that Al Qubaisi has also been removed from a number of his private business positions over the past fortnight – in the same period IPIC has mysteriously removed all reference to a number of key subsidiaries of Aabar (which were linked to Khadem) from its websites.
US dimension
The effects of the news has already caused an apparent major loss of confidence in related businesses in the United States.
The previously burgeoning Las Vegas-based Hakkasan nightclub empire, which is owned by Al Qubaisi and fronted by its British born CEO, the Head of Mergers & Aquistions, Neil Moffit, has shown signs of panic over the past few hours, according to contacts.
Rumours circulating Las Vegas that three top executives, including Moffit, were about to jump ship have been quashed by Khadem’s New York law firm Greenberg Taurig.. for now.
However, there are equal concerns in Hollywood, where Mr Al Husseiny had revealed himself as the major investor in none other than the high-profile new movie production company Red Granite, which is owned by Najib’s step-son, Riza Aziz.
At the time of the announcement in August 2014 Sarawak Report questioned the apparent conflict of interest over a major business partner of 1MDB investing hundreds of millions in films commissioned by the shareholder’s own son.
How the former Abu Dhabi fund manager – a public servant – acquired such huge sums was another question that has gone unanswered.
Perhaps Mr Al Husseiny will be able to address these issues if he is indeed brought to the United States, as now formally requested. If so, the position of Rosmah’s son and Najib’s step-son Riza Aziz, who has been subject to much speculation over his ostentatious living and property acquisitions, might start to look somewhat precarious.
It is widely known in Hollywood that before Sarawak Report queried Red Granite’s connections to Malaysia’s public funds, Riza and his partner, Joey McFarland, had told their colleagues and connections that their funding came from Jho Low (rather than Al Husseiny).
Their blockbuster Wolf of Wall Street even carried a credit thanking Low.
Riza’s funding comes under the spotlight, just as Red Granite prepares to launch the production of its next planned Scorcese blockbuster, The General, a bio-pic of America’s hero George Washington, starring (of course) the Oscar-winning Leonardo di Caprio, a close party pal in Jho Low’s circle.
Al Husseiny’s dealings with the fugitive billionaire, his former boss Khadem Al Qubaisi, and their mutual business contact Jho Low are therefore likely to be top of the agenda during any questioning by law enforcers.
Aabar, once a wealthy investor with a US$70 million equity base, appears to have lost the bulk of its money. It has been struggling to raise sufficient lending in recent weeks on the London, largely to cover these commitments to 1MDB – the authorities in Abu Dhabi must be wondering why?
The authorities in the US are likely to be more interested in the extensive private investments made in property and businesses by these players, in particular record price breaking penthouses in New York and homes in Beverley Hills, plus the multi-million dollar investments in the Hakkasan chain managed by Moffit.
– Sarawak Report
NAJIB-1MDB EMBEZZLEMENT OF THE CENTURY: UAE, LUXEMBOURG, SWISS NOW FOCUSING ON MISSING BOND PROCEEDS
Authorities in three countries investigating a Malaysian government investment fund appear to be focusing on what happened to the proceeds of $3.5 billion in bonds sold by the fund in 2012, according to people familiar with the matter.
Investigators in the United Arab Emirates, Luxembourg and Switzerland are looking at the trail of cash from Malaysia to Abu Dhabi and to offshore bank accounts for a portion of the bond proceeds that appears to have gone missing, the people said.
Authorities in the U.A.E. have frozen the personal assets of and issued travel bans to two former executives of an Abu Dhabi sovereign-wealth fund that had extensive dealings with the Malaysian fund, 1Malaysia Development Bhd., known as 1MDB, the people said.
The UAE’s actions indicate authorities have moved ahead in their probe into the dealings of Khadem Al Qubaisi and Mohammed Badawy Al Husseiny, both of whom had close connections to 1MDB, the people said. Mr. Al Qubaisi is an Emirati who was the managing director of an $80 billion Abu Dhabi investment fund, International Petroleum Investment Company. Mr. Al Husseiny, an American, was chief executive of another government investment company, Aabar Investments PJS, which is owned by IPIC.
The U.A.E.’s central bank issued the asset freezes, the people said, though it isn’t clear which U.A.E. government agency is running the investigation.
Lawyers for both men and a spokesman for IPIC and Aabar declined to comment.
Separately, the Luxembourg unit of Edmond de Rothschild Group, a private bank that manages money on behalf of wealthy clients, said it is “cooperating” with a government probe into money that may have flowed from 1MDB.
The prosecutor in Luxembourg, a tiny European country that is a hub of private banking, said in a statement that its probe is focused on the movement of funds, related to two bonds 1MDB issued in 2012, through a number of accounts of “offshore” companies in Singapore, Switzerland and Luxembourg. 1MDB, in a statement, said it had not been contacted by authorities in Luxembourg.
In its statement, the Luxembourg prosecutor said its case was connected to Swiss investigations. The Swiss attorney general’s office in January said it believed money misappropriated from 1MDB could amount to $4 billion. 1MDB at the time said it had not been contacted by any foreign legal authorities on any matters relating to the company, but remains committed to fully cooperating with any investigation.
The 2012 bond sales, each for $1.75 billion, were meant to fund the purchase of power plants in Malaysia. The bonds were guaranteed by Abu Dhabi’s IPIC. After the offering, 1MDB sent a $1.4 billion collateral payment to Aabar, according to 1MDB financial statements.
Investigators in Abu Dhabi believe that money and a later transfer by 1MDB of an additional $1 billion never got to Aabar but instead went to an almost identically named company set up in the British Virgin Islands, called Aabar Investments PJS Ltd. The firm with the similar name was set up by Messrs. Al Husseiny and Al Qubaisi, according to people familiar with the matter.
The U.A.E. probe is focusing on whether Messrs. Al Qubaisi and Al Husseiny used the British Virgin Islands Aabar to funnel money from 1MDB into various accounts and companies around the world, some of them connected to Malaysians, the people said.
Executives at IPIC have been examining the activity of Messrs. Al Qubaisi and Al Husseiny since last summer, according to people familiar with the matter. U.A.E. authorities got more involved in the investigation earlier this year, spurred in part by the Swiss investigation, the people said.
The probes into the 2012 bonds are one of several strands of global investigations into 1MDB, which was set up by the Malaysian Prime Minister Najib Razak in 2009 to develop the country’s economy but has accumulated debts of $11 billion that it has struggled to repay.
Authorities in Malaysia and at least six other nations including the U.S. are investigating the fund, including the transfer of more than $1 billion into the prime minister’s bank accounts. Some of the money was used to help the ruling party during a tight national election and some was spent on personal luxury items, The Wall Street Journal reported Thursday. About $620 million was transferred back to the same shell company that sent the $681 million into the accounts in 2013. It is unclear what happened to the money that was sent back.
Mr. Najib and his supporters have maintained the money in his accounts was a legal donation from the Saudi royal family and have denied the allegations. Mohamed Apandi Ali, Malaysia’s attorney general, cleared the prime minister of wrongdoing in January.
1MDB has denied wrongdoing and pledged to assist with any investigations. The fund has said it had not paid any funds to the personal accounts of the Prime Minister.
Separately, U.S. investigators probing 1MDB have traveled to Malaysia to interview banks, including Deutsche Bank AG and J.P. Morgan Chase & Co., and ask for documents related to their interactions with 1MDB, according to people familiar with the matter. Neither is a focus of the Justice Department’s probe, they added.
Deutsche Bank, as 1MDB’s banker, was involved in sending $1 billion of the fund’s money out of the country in 2009 as part of a joint venture with a Saudi Arabian company, according to documents that form part of a probe into 1MDB by Malaysia’s auditor general. Some of the funds have gone missing, people familiar with the matter said. J.P. Morgan was the banker for 1MDB’s joint venture with the Saudi company.
Both J.P. Morgan and Deutsche declined to comment.
The U.A.E. probe, according to people familiar with the matter, is focusing on Messrs. Al Qubaisi and Al Husseiny, who, until last year, were two of 1MDB’s most important contacts in Abu Dhabi. The men are both living in the U.A.E.
Mr. Al Qubaisi was involved in the multibillion-dollar bailout of Barclays PLC during the financial crisis in 2008 as well as several high-profile deals for IPIC and Aabar, including investments in Daimler AG and Virgin Galactic LLC. - WSJ
Both men have been replaced in their positions. The men’s names disappeared earlier this week from the website of Bahrain’s First Energy Bank, where they were previously listed as board members. A spokesman for the bank declined to comment.
Mr. Al Qubaisi also resigned within the last several weeks as a director of Tasameem Real Estate Co. LLC, the personal investment company of Sheikh Mansour bin Zayed Al Nahyan, according to the people familiar with the matter. Sheikh Mansour is chairman of the Abu Dhabi sovereign-wealth fund IPIC and deputy prime minister of the U.A.E. Sheikh Mansour had declined multiple requests for comment and made no public remarks about 1MDB or the men being replaced at IPIC and Aabar.
- WSJ
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