Sarawak Report exposed Najib’s secret bail out plan for 1MDB, using the East Coast Rail Project, last July.
Internal documents acquired by this site provided a breakdown of the entire cost of the project negotiated with the Chinese state company CCCC, which has already been banned by the World Bank because of its record of corrupt practice (see base of article).
The information showed that the construction company, together with the Malaysian Finance Ministry (Najib) had deceitfully agreed to inflate the cost of the entire project by over 100%, in order to hide the repayment of US$5.63 billion of 1MDB debt.
The deal included a $315 million purchase price for two companies controlled by Jho Low – his apparent price for negotiating the crooked deal with Beijing.
At the time Najib and his ministers angrily denounced and denied our story, calling it all a bag of lies.
According to the leaked schedule, which formed part of these documents, the Cabinet was due to review the project on 25th July and (of course) agree to it on 27th July. However, the Minister of Public Works, Fadillah Yusof, denied on the 26th July that the matter had ever been discussed.
Yet, only a few weeks later in October, the project with CCCC was announced just as we had reported with only a few cosmetic changes to the overall figures we had pubished (lopping RM5 bn off the projected costs). There had been no public tendering exercise for the mega-construction, which experts unsurprisingly have pointed out is indeed double the cost of equivalent structures.
What’s more, just as the document we released in July had stated, it was confirmed that the entire project will be financed by a ‘soft loan’ from China at 2% interest with an intial 7 year ‘holiday’ from repayments, thereby getting Najib off the hook over 1MDB’s missing billions entirely and leaving all the problems of repayment to his sucessors.
The deal has apparently been guaranteed by unspecified ‘land assets’ promised to the Chinese and cemented by pledges of a new strategic balance towards the nearby super-power, which is already starting to assert its naval presence in the ultra-sensitive Malacca straits and also in Malaysian waters in the South China Sea, where China has been eying fishing and oil reserves and doubtless also the lands and wealth of North East Borneo (East Malaysia).
In short, Najib has sold out his country to China in his attempt to cover up the massive thefts from 1MDB, billions of which ended up in his own accounts or were frittered away in the gargantuan spendthrift extravagances and investments by Jho Low.
The benefits to China are spelt out clearly in the draft document (see entire copy of the document below):
“Direct award on extremely favourable terms by GOM on an accelerated basis”
“Malaysia’s adoption of Chinese rail technology into Malaysia’s mega infrastructure projects”
“Malaysia’s acceptance and expansion of China’s One Belt, One Road strategy”
In other words, there would be no ccompetitive tendering or tiresome due diligence to deal with, since this was to be a classic Najib/Jho Low lightening deal, no questions asked. Also, crucially, the project will now tie Malaysia into China’s sphere of influence in terms of key transportation and trade routes.
Furthermore, Najib has been happy to hand total control over the manning of the strategic project to the Chinese state contractor, meaning that China will be in charge of all procurement and jobs will go to Chinese rather than Malaysian construction workers, even though it will be the Malaysian taxpayer who will be footing the bill:
“10 year tax break from GST and Income Tax”
“GOM will assist by taking responsibility for land acquisition and borne (sic) the cost”
“Allowing CCCC to select partners, suppliers and subcontractors”
“Assist in seeking approval for CCCC to utilize bank guarantee rather than cash retention sum”
It is widely known that Jho Low was spending much of his time in China in the run up to the conclusion of this awful deal for Malaysia. The now notorious deal maker is tied to the hip with the Prime Minister over 1MDB.
So, little surprise that the corrupted secret schedule (“for internal use only”) details what is plainly another handsome pay-off for the Penang born billionaire, who has already purloined billions of dollars from the Malaysian taxpayer.
Written into the deal are not only precise dates and figures for the upcoming payments due on the 1MDB power purchase bonds (controversially shouldered by Abu Dhabi’s IPIC in 2015, which the sovereign fund is now contesting), but also multi-million buy outs of connected shares in two companies inextricably linked both to Jho Low and to the scandal of the payments into Najib’s own bank acounts, Putrajaya Perdana Berhad and Loh & Loh for a total cost of $315 million.
The history of both these companies is closely linked to the unfolding scandal of 1MDB. They were originally purchased by Sarawak Chief Minister Taib Mahmud’s company UBG Group on the advice of Jho Low after Taib made a killing selling off RHB Bank to the government controlled Employee Provident Fund.
Jho Low then took a 50% stake in UBG in 2008.
Later, in 2010, Jho Low used a bogus subsidiary of the 1MDB ‘joint venture partner’ PetroSaudi to buy out the entire group, using US$260 siphoned out of the development fund to leverage the deal.
As Sarawak Report has demonstrated the bogus PetroSaudi subsidiary named Jarvace was in fact controlled by Jho Low, who then later transferred both Loh & Loh and PPB back to UBG Group.
In 2012 both companies were sold on the same day to separate entitities: PPB to Cendana Destini Sdn Bhd and Loh & Loh to Selesa Produktif Sdn Bhd for a total of RM500 million.
However, both evidently remain under the control of Jho Low, whose close associate and former Alternate Director on the Board of UBG Group, Vern Tact, still sits on the board of both companies.
Vern Tact’s alternate on both companies is the same Monica Chin.
Another Director in both companies is Mohd Faizul Bin Ibrahim, again demonstrating the continuing ties between the companies and the remaining link to Jho Low.
Equally indicative has been the string of favourable government contracts which these companies have benefitted from:
“For over a decade PPB has been involved in a multitude of landmark residential and infrastructure projects throughout Malaysia. These include the construction of the majority of government complexes, offices and high-end residential unties within the Federal Government’s administrative capital of Putrajaya”
boasts one of the company’s Annual Reports:
Another tell-tale sign of favour in high places was the decision by the Pilgramage fund Tabung Haji to invest in a hefty 30% share in PPB, thereby injecting a fat sum of public money once again into Jho Lows pockets.
The thread of collusion continues with the revelation that it was none other than the company PPB that the Malaysian Anti-Corruption Commission’s investigation identified as a vital intermediary in the siphoning of funds from 1MDB’s subsidiary SRC International into the Prime Minister’s accounts at AmBank in 2014/15. This was according to the very papers waved before press cameras by the Attorney General appointed by Najib to “clear” him last January.
Close ups of those documents showed that one of the trails employed by the head of SRC International, Nik Faisal Arif Kamil (another associate of Jho Low) to transfer 70 million of ringgit into the Prime Minister’s accounts used payments funnelled through PPB.
Much of the money was used to fund Najib’s credit card expenses and also construction works on his home, the purchase of millions of dollars worth of diamonds and luxury goods and also anti-aging treatment.
So, perhaps little surprise that Najib and Jho Low have colluded to off-load these two tainted companies as part of the deal to pay off 1MDB’s debts via the East Coast Rail Project.
In the process Jho Low appears to have generated a handsome profit by selling the companies two times over using money borrowed by the taxpayer – three time over, if you count the Tabung Haji deal.
Notably, only 70% of PBB is being off-loaded, implying that Tabung Haji is still lumbered with its 30%, whilst 10% of Loh & Loh also remains, presumably in the hands of its original shareholders, with 90% sold on.
The Chairman of Loh & Loh, Y.A.M. Tengku Dato’ Rahimah Binti Almarhum Sultan Mahmud, also has ties with 1MDB: she is the younger sister of the Sultan of Terangganu and used to be on the Board of 1MDB’s predecessor the Teregganu Investment Authority, which was set up on the advice of a friend of the royal family, Jho Low.
Low brought her onto the Loh & Loh Board when he bought into UBG in 2008 through the company Majestic Masterpiece and she says she then bought half the multi-million dollar company in 2012 together with Board Member Rashidi bin Che Omar, who sits on numerous government related companies (including Tadmax Resources, which was bailed out thanks to a land purchase by 1MDB):
“I am pleased to announce that effective on 14 September 2012, Dato’ Che Abdullah @ Rashidi bin Che Omar and myself, being the principal shareholders of Selesa Produktif Sdn Bhd, had successfully completed the acquisition of all the 68,000,000 ordinary shares of Loh & Loh Corporation Berhad representing 100% of the issued and fully paid up shares of the Company. I have been the Chairman of Loh & Loh since 2008 and I am grateful to have the opportunity to bring my association with this great company another step closer as a shareholder” [Annual Rpt 2012]
However, a fellow director and minority shareholder of her holding company Collective Bridge Sdn Bhd, Ishak bin Ahmad, was also appointed as a Board Member of PBB (and as a director of PPB’s shareholder Cendera Destini) on the same day, 13th Sept 2012, confirming the strong remaining connections between Loh & Loh and PBB, which is now reflected in the joint buy out by CCCC.
Apart from the sale of the two tainted Jho Low companies, the CCCC East Coast Rail Project’s secret schedule lays out in clear detail exactly how the Chinese company had contracted to pay off 1MDB’s debts, with specified dates and amounts as repayments became due.
The first of these repayments were planned for October of this year, after the contract was due to be signed and announced. Najib’s ministers had declared that Sarawak Report was lying when it published this information in July. Nevertheless, in December Second Finance Minister Johari duly announced that at last, in the final quarter of the year, 1MDB had indeed managed to take over the settlement of its own debts from IPIC – without offering any other explaination as to how this had been done.
The repayments are clearly and correctly listed in the leaked document, right up till the final due date in 2022, totalling the agreed overspend of RM29.85 billion. Thrown in are the sale of the Jho Low companies, netting him over US$300 million and also a fat “consultancy fee” to be paid through a company of CCCC’s choice of RM79 million, to a yet unknown entitity.
The entire project reeks of corruption and treachery against the people of Malaysia.
And whilst BN ministers have attempted to accuse Sarawak Report of lying with the release of this material they have signally failed to provide their own figures or any transparent break-down of the grossly inflated costs of what has now been recognised as one of the most expensive rail projects ever commissioned anywhere in the world – all behind closed doors and managed by the Prime Minister/ Finance Minister of Malaysia, Najib Razak and his partner Jho Low.
Below are the full draft figures leaked to Sarawak Report in July, which were remarkably similar to the final project announced later in the year.