After weeks of avoidance this is the simple question that the former and present Chief Executives of 1MDB must answer.

So too must their boss the Prime Minister/ Finance Minister.

Because now we have received shocking confirmation that, under the rules of 1MDB’s own constitution, Najib Razak is the only individual authorised to sign off investments by the fund.

So, he had to have known about it and approved it personally, in his capacity as the key responsible decision-maker.

As the PM himself said in an official statement in July 2009:

“I’ve had discussions with the King Tuanku Mizan Zainal Abidin. His Majesty has consented for the TIA to be restructured and federalised to become 1MDB which will be wholly-owned by the Ministry of Finance, reporting directly to the Prime Minister,” said Najib – Bernama News Agency.

It was the Prime Minister therefore, who signed off payments of first USD$500 million (2009) then USD$160 million (2010) and finally USD$200 million (2011) all to Good Star Limited, which is a company controlled by Jwo Low.

It was Jho Low who originally drew attention to this state of affairs, well before the details of the fund’s Memorandum and Articles of Association became public yesterday, showing that as of 2nd September 2009 (days before the first meeting with the first joint venture partner PetroSaudi) the PM was in the driving seat.

This is what Jwo To told the magazine Euromoney shortly after Sarawak Report exposed the secret payments totalling $16 billion in March:

‘Guys, it’s very simple, there’s a board, who’s the shareholder?’ … “Are you telling me the prime minister doesn’t make his own decisions?”..  “No one seems to ask the question who is the ultimate decision-maker on 1MDB? No one asks that. No one ever asks about the shareholder’s role.”[Euromoney article on Jwo To]

Well, the Public Accounts Committee are itching to ask that question now, first of the Chief Executive of the time, Shahrol Halmi and then of the present Chief Executive Arul Kandasamy, who were both supposed to come before them yesterday.

But, its seems that this simple question is proving too tough for these gentlemen to answer and they at the last moment absented themselves and begged for a further 30 days to work out what they are going to say.

There is only one conclusion to be made from all this, which is that they cannot think of a single way to justify what happened.

To say they had other more pressing business this week is simply not good enough, as the Prime Minister’s own brother yesterday made plain.

What can be more important than settling this issue, which has put Malaysia’s entire economy at risk, thanks to the debts of RM43 billion run up by 1MDB and now this dreadful uncertainty over the management of the fund?

If Messrs Sharol Halmi and Arul Kanda had any way of explaining the situation in a satisfactory manner then it would be their prime national duty of paramount importance to do so.

Any other business in unspecified regions abroad can only pale into insignificance.

So, these two men are evidently just running away from this simple question, which  they cannot manage to answer.

And neither can their boss the Prime Minister answer it either, or he would have done so many weeks ago, instead of implying things that were later found to be wrong – like the now retracted claim that the money which went to Jwo To has somehow reappeared in a 1MDB bank account in Singapore.

Plain and simple

To re-cap, the investigations by Sarawak Report have revealed some plain and simple facts to the public, which if they were untrue could long since have been contested and disproved.

But they have not been contested or disproved.

Sarawak Report has not received a single formal whisper from any party to this matter throughout all of the many weeks since we revealed the facts about Good Star and Jwo To’s behind the scenes involvement at 1MDB.

No legal letters, no enquiries from the UK police, who allegedly received a crime report from PetroSaudi in London. Nothing.

If we were lying or mistaken Messrs Shahrol Halmi, Arul Kanda and their boss Najeeb Razak would have saved themselves mounds of upset and embarrassment by simply pointing out that Sarawak Report was wrong and then suing us for all our earthly goods.

Yet, they have failed to contest a single thing.  This is because they, we and everyone else knows that our evidence is far too solid and they could never stand a cross examination in the light of it.

The evidence

What we have shown through a series of emails and documents is that in September 2009 Jwo To organised a major deal between 1MDB and a little known company, PetroSaudi International to embark on a joint venture.

We know that 1MDB put its entire reserves of USD1 billion (taken from the sovereign wealth fund of Terengganu) into this one deal

PetroSaudi merely contributed some supposed assets into the venture, which were soon proved to be bogus and worthless.

A spurious report on the worth of those assets was commissioned the day before the deal was signed (according to Malaysian Insider) and this was only actually presented to 1MDB the day after Najeeb Razak had signed off this deal.

Why did Shahrol Halmi as Chief Executive comply with such a disgraceful procedure?

Sarawak Report ventures to suggest that he did so, because his ultimate decision making boss the Prime Minister had told him to comply with the instructions given by his nominee Jwo To in the matter.

But, why, anyone would ask, would the Prime Minister himself rush into such a strange venture with so few checks and guarantees?

The answer to that becomes hard to dispute once it was clear where the money actually went.

Because (as we have shown and no one has contested it) that of the original USD$1 billion, $500 million was diverted into an entirely separate account, unrelated to the deal.

This was Good Star’s Zurich account, controlled by the Prime Minister’s informal delegate in this whole business, Jwo To.

In emails obtained by Sarawak Report, Jwo To constantly refers to his relationship with the Prime Minister, whom he frequently calls “the BB”.

Sarawak ventures to suggest by BB he means ‘Big Boss’.

We have shown that on 29th September 2009 instructions were given to 1MDB’s bankers in KL (Deutsche Bank) to send this $500 million into an RBS Coutts account belonging to Good Star Limited in Zurich.

Only the remaining $200 million of the money actually went into the joint venture, in the hope of building some investment income out of Terengganu’s sovereign wealth.

How could this be possibly justified?

The official excuse for the removal of the $500 million was that there was some kind of loan owed by PetroSaudi, which it was apparently appropriate for 1MDB to pay back.

1MDB thereby lost the lion’s share of its investment money – merely for the dubious privilege of being able to conduct a joint venture with the previously unheard of and ludicrously over-valued company PetroSaudi.

But, even if this could be convincingly argued, the fact is that the money did not even go to paying back PetroSaudi, it went to a completely different company altogether.

It was Jwo To’s Good Star Limited, which received the money and any check at all would have notified 1MDB and the bankers concerned that this company has nothing to do with PetroSaudi.

The only conclusion that can be reached from all this was that the entire transaction was a deliberate conspiracy by all the parties concerned.

Give half a thought, for example, to what would have eventuated if PetroSaudi had genuinely been owed the repayment of a $500 million loan.

They would have cried out blue murder and taken 1MDB and Jwo To to court, because the money had been sent to a different company entirely!

But, they made not a whisper.

Instead they showed themselves entirely happy with their own reward for taking part in this shocking heist, which was the injection of the remaining $200 million of 1MDB’s cash into their previously paltry operations.

This was enough injection of capital (followed by another $200 million paid the following year) to transform their company from a ‘nobody’ into a ‘player’ in the international oil business.

As the British Director of PetroSaudi, Patrick Mahony, had said in an email right at the start of his relationship with Jwo To (8th Sept 2009) in return for such a cash injection PetroSaudi would be happy to “act as a front”.

This meant presumably not squealing when a supposed $500 million loan repayment, which was officially classed by the joint venture documents as being due to PetroSaudi went to a company controlled by Jwo To instead.

Subsequent investigations by Sarawak Report have of course demonstrated that over $500 million of this money was later transferred from Good Star’s Coutts Zurich account into Jwo To’s accounts in BSI Singapore.

Which means that this was money lost forever to the 1MDB PetroSaudi joint venture deal.

Why does anyone think the Prime Minister sanctioned this and why are the CEOs of 1MDB so busy they are unable to answer questions to the highest authority in the land, which is Parliament itself?

Phantom investments

With the initial money gone on the basis of this bogus story of a PetroSaudi loan repayment, the future explanations given by 1MDB for why they have never been able to repay the money (critically needed to service debts) can only be seen for what they are – a series of elaborate lies.

This explains the inconsistencies and twists and turns over the past years with regard to the explanations produced by 1MDB for not returning the money.

By the time the arrangement with PetroSaudi was formally closed in 2012, another $200 million had been ‘loaned’ to the company and another $460 million had ‘gone walkies’ to Good Star.

This brought the total of the money passed to Good Star to at least USD$16 billion.

When public criticism and concern finally ended the PetroSaudi arrangement, 1MDB and their boss the Finance Minister cum Prime Minister, Najeeb Razak announced they had ‘redeemed’ the money with a healthy profit, by selling out their interest in the joint venture to an anonymous third party.

Why anonymous, people asked?

We have the answer now that we know that the money was already long-since gone by that time.  The statement was a lie and there was no third party – who would pay around USD2.3 billion in order to inherit a loan of about $200 million to PetroSaudi?

This was why the money was never brought back to Malaysia and 1MDB.  There wasn’t any.

Instead, it was decided to put this fictitious money into a shady Cayman Islands ‘special purpose vehicle’ fund managed by an extremely strange outfit for a government to choose, called Bridge Partners.

Bridge Partners is a Hong Kong investor, connected to individuals who have had a history of problems with their local regulatory authorities, resulting in jail for fraud in the case of one of them.

This Special Purpose Vehicle was specific about being extremely dangerous and unreliable.

Investors were baldly warned that they could lose every penny of their investment by putting the odd couple of billion into it.

How handy that would have been for the managers of 1MDB, if only critics had been less critical about the whole affair.

A couple of years down the road and they could have announced “poof!”, sorry about that chaps, bad investment and all that.

But, the opposition in Malaysia has got rather more expert and tenacious in recent times, as Najeeb Razak appears to have only belatedly discovered.

Even his predecessor wasn’t having it.  Dr Mahathir can see through a blatant lie as well as the rest it seems and he too has found himself outraged.

So, the tricksters then had to come up with another set of excuses to explain the situation.

They claimed they had returned the money (having paid off non-specified debts with half of it) to the very same bank as the one used by Jwo To in Singapore, BSI.

By the start of this year the new Chief Executive of 1MDB, Arul Kandasamy, was announcing that there was USD$1.103 billion in this BSI Singapore account “in cash”.

How could this be, since the cash all went years ago ($16 billion to Good Star; $260 million to the UBG buy out; $250 for an oil rig for PetroSaudi; $50 million for PetroSaudi running costs for starters)?

After Sarawak Report subsequently revealed that the Singapore authorities had advised the Malaysian authorities that the claim was false: that the BSI account did not have cash in it and Arul Kandasamy had provided a false bank statement* to Bank Negara to imply that it had….. well the story changed again.

By this time the international banks were drawing their money out of course, stating that they had invested on the understanding there was money in the BSI account and that now it had turned out there wasn’t.

This was confirmation of Sarawak Report’s story, originally denied by 1MDB.

The Finance Ministry has therefore had to come back to Parliament to admit there had been a “misunderstanding” about the cash.  The contents of the BSI ban account are merely “units” instead.

The public accounts committee would like to know what these “units” are, naturally.

But, above all, they should be asking why did all that money go to Good Star?

Or maybe they should be leaving such questions to the police instead?

*Update: Mr Kandasamy has now protested it was just a false statement he made, as opposed to his sending a false bank statement to Bank Negara. However, Sarawak Report has evidence that there was a false bank statement used to support the claim that there was cash in the BSI bank account. Kandasamy faxed this false bank statement to BSI Singapore, who confirmed it was false. If Mr Kandasamy did not report this to Bank Negara, WHY did he not report it?  Now that Mr Kandasamy is willing to address some of the peripheral details on our reporting perhaps he would also come forward with clarifications and explanations on the key facts of the matter, which is why did 1MDB pay USD$1.6 billion to Good Star Limited?