RE Javace S/B : Highly unlikely that AMBank/ANZ had no knowledge of PetroSaudi's 1 MDB sourced funds & Jho Low's involvement; SC implicated as well



by Ganesh Sahathevan

In the reporting this far on 1 MDB, PetroSaudi and Jho Low, this detail, extracted from AmBank's 2011 Annual Report has been neglected:


Principal adviser to Javace Sdn Bhd (“Offeror”) for the unconditional take-over offer of UBG Berhad (“UBG”), Perdana Berhad (“PPB”) and Loh & Loh Corporation Berhad (“LLCB”) to acquire all the remaining ordinary shares of UBG, PPB and LLCB not already owned by the Offeror and persons acting in concert with it for a cash consideration of RM2.50 per UBG share, RM4.85 per PPB share and RM4.85 per LLCB share respectively.


The term"principal adviser" has legal significance and is an invention of Malaysia's corporate regulator, the Securities Commissio (SC). . In essence, capital market transactions in Malaysia must be approved by the SC and the SC will only consider applications that are submitted by principal advisers it has approved. The SC takes a highly interventionist role , often seeing itself as a market player, rather than mere regulator, The SC's approval process involves the highest levels of its

hierarchy and transaction worth billions often get delayed, if not indefinitely postponed because of SC's demands for additional, sometimes impossible to obtain, information. For example in a recent matter involving an oil exploration company the SC demand the underlying seismic data on which a prospect evaluation had been based.




In the matter of the Javace acquisitions the SC is likely to have demanded and have been provided all details of the acquirer's source of funds.These events, as reported by The Australian and Sarawak Report (see story below) would not have been left unresolved:


Internal AmBank emails show bank officials were repeatedly rebuffed when they attempted to learn more about the finances and ownership of Obaid’s company, PetroSaudi International (PSI).


While AmBank told the world, through the Malaysian stock exchange, that PSI belonged to Obaid, internal bank emails obtained by The Weekend Australian show it was told the secrecy was necessary because Saudi royals were behind the company.


In the process AMBank and its ANZ managers would also become aware that PetroSaudi's funds came out of 1 MDB. A transaction of this size would have needed board level approval.




All concerned would have also been aware of this fact:

Javace Sdn Bhd, the company that Jho Low used in the 2010 takeover of UBG Bhd, received US$260 million via a loan from PetroSaudi International Seychelles. That money was transferred from the JP Morgan bank account of Tarek Obaid which he received from the US$500 million Murabaha notes subscribed by 1MDB in Sept, 2010.


END




Email trail links banks to Malaysian scandal


AmBank has been drawn into the murky 1MDB scandal
To anyone looking from outside, Project Unicorn seemed a simple enough deal, even if it did involve some of the biggest names in ­Malaysian business.
But a secretive 2010 takeover has emerged as a key episode in the drama surrounding the alleged multi-billion-dollar looting of the country’s sovereign wealth fund, raising questions about whether money from the fund, 1MDB, was used to pay out its well-connected shareholders.
On the surface, it seemed Saudi businessman Tarek Obaid and his PetroSaudi group wanted to spend 1.4 billion ringgit — about $450 million at the time — to buy UBG, a venerable listed investment banking conglomerate with interests in everything from resources to construction from its owners, the wealthy Taib family and an investment fund apparently connected to oil-rich Middle Eastern states.
Financing for the deal was to come from a mix of borrowing and PetroSaudi’s own cash, with loans to be repaid from the proceeds of spinning off some UBG divisions and selling them.
Back in 2010, that was just another day at the office for the investment banking arm of AmBank, the Malaysian bank quarter-owned by Australian major ANZ, which advised Obaid’s company on the deal and provided finance.
But The Weekend Australian has obtained hundreds of emails parties to the deal sent each other between January and November 2010 that show key elements of the transaction were cloaked in mystery even to AmBank.
It is an email trail that raises concerns that AmBank did not properly vet its client, despite assurances to ANZ’s shareholders that the Malaysian bank, whose senior ranks are filled by staff seconded from ANZ, operated to the same high standards as the Australian bank.
The emails appear to add weight to allegations that money from 1MDB, which was PetroSaudi’s partner in a different joint venture, may have been used in the deal.
Together with other information compiled by police in neighbouring Singapore, they also raise concerns that the UBG takeover may have ultimately benefited 1MDB adviser and UBG director Jho Low, who is close to the family of Malaysian Prime Minister Najib Razak, at the expense of ordinary Malaysians. Low did not respond to detailed questions emailed to his Hong Kong company Jynwel, but has previously denied doing anything wrong.
PetroSaudi and its point man on the UBG deal, Briton Patrick Mahony, did not answer detailed questions but, through their lawyer, Isabella Piasecka of London firm Carter Ruck, denied any wrongdoing.
“Any attempt to link the takeover of UBG with 1MDB or our client’s joint venture with 1MDB or to link that deal with any investigation into 1MDB is wholly misconceived,” she said.
She added that previously released documents that have linked Project Unicorn with 1MDB, published by London-based website Sarawak Report, were “taken out of context and published selectively” from a stolen database that “had been tampered with”. Sarawak Report editor Clare Rewcastle Brown denies the emails have been altered.
For AmBank and ANZ, who did not respond to detailed questions, the UBG deal is yet more swampy ground in the morass already surrounding 1MDB.
The two banks are already grappling with ongoing investigations by Malaysia’s central bank and international investigators into how hundreds of millions of dollars allegedly filched from the sovereign wealth fund ended up in Najib’s personal account at AmBank.
Najib, who denies all wrongdoing, last month said the deposits were donations from a Saudi prince, citing a letter leaked to ABC TV’s Four Corners in which the prince told him the money was his, no strings attached, “in view of the friendship that we have developed over the years and your new ideas as a modern Islamic leader”.
Carter Ruck’s Piasecka told The Weekend Australian the UBG takeover was “a matter of public record that required numerous and customary regulatory filings and approvals” which “confirm that all rules and regulations were followed”.
However, the emails obtained by The Weekend Australian show that, after vague promises of a connection to Saudi royalty, AmBank lent its name — and its money — to a company linked to Obaid, apparently registered in tax haven the Seychelles and lacking any financial track record and controlled by whoever had physical possession of its one share certificate from moment to moment.
These so-called “bearer shares” are illegal in most jurisdictions, including Australia. The structures have often been useful to criminals or tax dodgers eager to hide cash from authorities.
Bearer shares weren’t made illegal until late 2013 in the Seychelles, a group of tiny tropical islands that sits 1500km from the African coast in the Indian Ocean and is host to more than 20,000 companies despite having a population of less than 100,000.
Internal AmBank emails show bank officials were repeatedly rebuffed when they attempted to learn more about the finances and ownership of Obaid’s company, PetroSaudi International (PSI).
While AmBank told the world, through the Malaysian stock exchange, that PSI belonged to Obaid, internal bank emails obtained by The Weekend Australian show it was told the secrecy was necessary because Saudi royals were behind the company.
“PSI, a privately held company of the Royal Family of the Kingdom Saudi Arabia, is governed by the strictest confidentiality,” Ambank officer Daniel Lee was told in a March 18, 2010 email.
“As such, it is with regret that we are not able to provide you with access to PSI’s financials.”
Adding to the secrecy shrouding the deal, the email to Lee came from an anonymous Gmail ­account “project.unicorn1@ gmail.com”, operated by a person or persons calling themself “Team Project Unicorn”.
Even now, five years after PSI took control of UBG and delisted it from the Malaysian exchange, the identities of the person or people operating the email account remain unknown.
Saudi Arabian documents obtained by The Weekend Australian show that when PetroSaudi was set up in 2007 it was half-owned by Obaid and half by Saudi royal Prince Turki bin Abdullah. However, there is no indication Prince Turki was ever involved in PSI.
The Weekend Australian was also unable to verify the existence and status of PSI. It’s not listed on the Seychelles publicly available company register, and yesterday the country’s Financial Services Authority had yet to respond to a request for a more detailed search.
It is sometimes hard to tell who was on whose side during Project Unicorn.
In UBG’s corner, Low sat on the board as a representative of the Abu Dhabi-Kuwait-Malaysia Investment Corporation or ADKMIC, which owned a little over half of UBG — a stake it had bought from the Taib family.
Even though ADKMIC carries a name that makes it seem a fund from the oil-rich Middle East, police in Singapore have told Malaysian authorities that Low actually sits behind the British Virgin Islands company.
However, in UBG’s 2009 annual report, Low declared he owned no shares in UBG, either directly or indirectly. At the time of the takeover UBG’s head of legal and compliance was Jasmine Loo. She later jumped ship to 1MDB and is now wanted for questioning by Malaysia’s central bank over her role in the saga.
Loo was last sighted at exclusive French resort Courcheval on New Year’s Eve, celebrating with showbiz friends Alicia Keys and Swizz Beats.
According to the previous year’s annual report, one of Low’s associates, Nik Faisal, also served at UBG as executive director of investments. But by the time the buyout rolled around in early 2010, he was working for 1MDB as chief investment officer.
Working for PSI was its adviser, AmBank’s institutional arm, AmInvestment. And standing behind this was Asia-focused ANZ, whose recently appointed boss, Shayne Elliott quit as an AmBank director in October after two years on the board.
In early 2010, senior ANZ executives occupied three of AmBank 12 board seats. The Australian bank was represented by Asia boss Alex Thursby, Bob Edgar, who’d just retired as ANZ’s deputy CEO, and Asian institutional banking chief Mark Whelan.
ANZ’s Ashok Ramamurthy, who later became AmBank boss, was serving as chief financial officer and deputy managing director of the Malaysian bank, reporting both to AmBank managing director Cheah Tek Kuang and ANZ’s head of south East Asia, Joseph Abraham.
Also on secondment from ANZ at the time were chief risk officer Andrew Kerr and chief operating officer Ross Foden. There is no suggestion of wrongdoing among ANZ staff with roles at AmBank.
An ANZ spokesman said Ramamurthy’s contact with Abraham was for “administrative purposes” and its secondees “do not report on AmBank-related business or customers back to ANZ”.
Ramamurthy, who left ANZ in late February this year, is believed to be overseas and could not be reached. The rules of engagement for the UBG takeover were set by Team Project Unicorn in an email sent on a Monday morning — January 11, 2010 — to Mahony, AmBank executives and lawyers at the firm acting on the deal, Wong & Company. Directors needed to be appointed to a Malaysian subsidiary of PSI that would hold the shares; email contacts were set up for Mahony and Team Project Unicorn, and the first hint of Saudi royal involvement emerged.
“PetroSaudi International Limited is a bearer share, jointly held by Sheikh Tarek Obaid and the Royal Family of the Kingdom of Saudi Arabia,” Team Project Unicorn said.
Later in the year when PSI was mopping up minority shareholders, this would be directly contradicted in a statement to Malaysia’s stock exchange, Bursa Malaysia, describing Obaid as “the sole shareholder and director or PSI Seychelles”.
The email trail shows AmBank executives were initially confused as to PSI’s relationship with the PetroSaudi group. On January 18, AmBank executive Lee asked Mahony and Team Project Unicorn whether PSI was a subsidiary of the Saudi PetroSaudi or “the parent co. of the enlarged PetroSaudi Group of companies?”
A month later, PSI told AmBank Obaid owned the company and its only connection to PetroSaudi in Saudi Arabia was that Obaid was a shareholder in both.
But it seems the royal connection never entirely went away.
According to notes kept by Lee, during a May 4 phone hook-up Mahony told executives from AmBank and Singaporean bank OCBC, which was considering funding the deal, that the lack of a visible link to the royal family was due to the “political sensitivity” of PetroSaudi in Saudi Arabia, “i.e. involving members of the Saudi Royal Family”.
He told the bankers that “transactions involving public ­listed companies are typically undertaken in this manner … minimising unnecessary exposure of the Royal Family to scrutiny and press”. Mahony also invoked Saudi Arabia, and a company belonging to the family of slain terrorist leader Osama bin Laden, when pressed on how PetroSaudi would ensure it had enough money to pay back the loans it wanted within two years.
PSI said it was in advanced discussions “with the large Saudi construction groups (e.g. Saudi Binladin Group) who have expressed keen interest given the ongoing construction boom in KSA and the ability to tap on PSI to secure government related construction projects in KSA”, according to Lee’s notes. KSA is common shorthand for the Kingdom of Saudi Arabia.
By September, PetroSaudi was flush with cash from its joint venture with 1MDB — a deal that is at the centre of investigations in at least three countries over allegations hundreds of millions of dollars was siphoned off to companies linked to Low.
Lee’s notes of the May 4 meeting say the joint venture was “unlikely to be involved directly” in the UBG takeover.
But according to London-based website Sarawak Report, on September 8, 2010, 1MDB loaned PetroSaudi $US500m, using a Sharia-compliant finance instrument. Emails published by the website show that a week later, $US260m flowed from PetroSaudi to the Malaysian vehicle through which Obaid bought UBG, a company called Javace.
Whatever the source of PetroSaudi’s contribution to the UBG deal, internal AmBank emails seen by The Weekend Australian show AmBank and OCBC had already agreed to lend PSI the rest of the money he needed.
“Pleased to advise that OCBC has reverted with their agreement to participate in the Syndicated Facility based on total financing amount of RM700m [$US260m at the time] (to be financed 40:30 between AmBank and OCBC),” Lee told Team Project Unicorn in a May 20 email.
On January 12, 2011, almost a year after Team Project Unicorn set out the outlines of the deal, the UBG takeover was complete. With all shareholders paid out and the company now solely owned by PSI’s Malaysian subsidiary, Javace, UBG was delisted from Bursa Malaysia and dissolved.
At 2.50 ringgit a share, ADKMIC was entitled to 658m ringgit, or about $US195m.
But who got that money? When the UBG takeover was announced at the beginning of 2010, Malaysian state-owned newsagency Bernama reported ADKMIC shareholders included “prominent Middle-Eastern investors”. But police in neighbouring Singapore tell a different story. In March last year, Singapore Police’s Commercial Affairs Department told Malaysia’s central bank that an account held in ADKMIC’s name at the Singapore branch of Swiss bank BSI was “beneficially owned by Jho Low”.
Singapore Police allege that between June 2011 and September 2013 almost $529m flowed into the ADKMIC account from an account at RBS Coutts’ Zurich branch held by another company allegedly associated with Low and embroiled in the 1MDB scandal, Good Star.
As The Australian revealed last week, Singapore Police and the city-state’s banking regulator, the Monetary Authority of Singapore, have begun tracing where money from accounts linked to the 1MDB scandal ended up. Almost 40 banks have been asked to explain transfers, and Australia’s big four haven’t escaped scrutiny.
Transfers to the NAB and ANZ are among those being probed.
ANZ chief executive Shayne Elliott may have stepped down from the AmBank board in October, but it seems the 1MDB scandal won’t end any time soon.

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