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Wednesday, 26 April 2017

1MDB-IPIC: Bombshell letter from the British Virgin Islands Govt

Further to my blog post two days ago on the USD6 billion settlement between IPIC and 1MDB, there has been a new development.

In IPIC's announcement to the London Stock Exchange on the settlement with 1MDB dated 24th April 2017, the last paragraph states this:

"The parties have also agreed to enter into good faith discussions in relation to payments made by 1MDB Group to certain entities."

By any account, this is an unusual statement to make as it hints that 1MDB may have paid IPIC or Aabar the disputed amounts but not directly saying it.

The reason is simple.

IPIC cannot say it as they had previously announced to the stock exchange and to the world that they had never guaranteed the fund units and that Aabar BVI does not belong to them.

In fact, they had issued a press statement back in April 2016 that effectively says it didn't receive billions in payments sent by Malaysia fund 1MDB.

IPIC cannot now say "oops, we made a mistake" as it would be a big loss of face and unimaginable damage to their reputation.

It is as good as saying that their two top officials at IPIC and Aabar had cheated another country and pocketed billions.

In fact, it is also very hard for IPIC to answer why a Abu Dhabi Govt owned sovereign fund would want to guarantee a whopping US$3.5 billion worth of bonds issued by another country;;s company in 2012. This guarantee was never disputed by Abu Dhabi.

Imagine if Malaysia Govt had to announce that their top officials of Khazanah and PNB had cheated billions from another country and pocketed billions in their accounts?

This is also the reason why the former IPIC Managing Director and Chairman of Aabar, Qubasi as well as the Managing Director of Aabar Badawy has never been charged for any crime in this whole affair despite all the evidence pointing to them in the signed agreements and payments.

Today, Finance Minister II Johari said again that based on the documents he has seen, he is very confident that 1MDB will win the arbitration.

Of even greater consequence, MalaysiaKini reported today that Johari has revealed that there is an official letter from the Registrar of Corporate Affairs of the British Virgin Islands Government dated Aug 11, 2016 that confirms that the disputed Aabar BVI is officially owned by IPIC.

The existence of this official letter would be a bombshell to IPIC and its arbitration efforts.

On top of that, 1MDB also has in its possession, verified officially signed letters of guarantees by Aabar's top bosses then that they guarantee the fund units totaling USD2.5b, which 1MDB is monetizing now - probably with IPIC's help to honour the guarantees.

On 28th April 2017, the Singapore Straits Times owned by the Singapore government reported:
"To overcome the hurdle, 1MDB agreed to waive its right to claim from Aabar the US$2.43 billion guarantee. In return, Abu Dhabi arranged for an undisclosed entity domiciled in the Seychelles to buy the units from 1MDB at the guaranteed value, to be settled by deferred payments from this month to October 2022, said a senior financial executive familiar with the matter.

This would also mean that it is very likely that IPIC has agreed that by the year 2020, 1MDB can claim back the USD3.5b from them which 1MDB will then use to pay the USD3.5b bonds due in the year 2022.

This was also reported by the Singapore Straits Times in that same article.
"Under the settlement, Malaysia and IPIC will enter into negotiations to resolve roughly US$3.5 billion in cash advances and payments 1MDB made to several Abu Dhabi entities. Should IPIC fail to make full settlement before the deadline of end-December 2020, the Malaysian government can pursue legal claims against IPIC."  

So, the USD2.5b + USD3.5b of 1MDB that was previously in default has been resolved.

This completes the last step of the rationalization plan and prove that not a single ringgit of 1MDB's money is missing.

No RM2.6 billion issue and no Goodstar money being diverted anymore.

Therefore, not a single Ringgit of Government money or tax-payers money has been used to "bail-out" 1MDB.

Yes, the opposition will be very angry at this development as they have attacked 1MDB for more than two years now and it was their main attack weapon against the Government - thus there will be disbelieve and heck of a lot of anger.

But the reality is that the last plank of the rationalization exercise is well in progress.

Despite various Pakatan people lying that Malaysia now have to pay double to IPIC or that taxpayers now have to foot the bill, the foreign investors and the financial markets don't believe them.

If foreign investors believed that Malaysia govt now have to pay USD6b extra to IPIC or have to use tax-payers money to bail-out 1MDB, they would have punished Malaysia and sold down our shares or taken money out. Not put money in.

Over the last two days since the settlement announcement, our Ringgit and our stock-market has gone on quite a rally today and yesterday, which signifies strong investor confidence.

Ringgit Rallies two days ago from RM4.40 to RM4.35 vs the USD
The Sun daily also reports that analysts have said "the arbitration settlement agreement between 1MDB and Abu Dhabi’s IPIC is also seen as a boost for the local market."

Bursa Malaysia also benefits as the stock market continue its rally
UPDATE: As at end of 2nd May 2017, the Ringgit and Stock Market has now entered a FIFTH day straight of strong gains.

1MDB did a lot of good too!

Some may argue that things may have gone wrong with the initial transactions but then hindsight is 20/20. Most importantly is that 1MDB and the govt has delivered in recovering all the money and ensuring all 1MDB's debt has been settled.

On top of all those Corporate Social Responsibility (CSR) exercises such as rural electrification, mini water projects, mobile clinics, scholarship for students and the tens of thousands of people sent for their Haj, 1MDB also have done good stuff including helping Malaysia finally solve the lop-sided Power Plant agreements of Mahathir's that has cost the Rakyat RM200 billion over the past 20 years.

1MDB also paid for to build and upgrade 8 military bases costing billions throughout Malaysia. Watch the video:

And then there is the Tun Razak Exchange, which is progressing fast and includes Malaysia's tallest building (taller than KLCC) to be completed in 2018 and is already half-way completed.

Here is a video of it's progress as at end December 2016.

This is the progress of the KLCC-beating TRX Signature tower earlier this month:

And of course, Bandar Malaysia is also coming up which is deemed as the ASEAN hub of the One Belt One Road initiative that connects Malaysia to the world by rail.

For all of Pakatan's attacks on 1MDB weaknesses, you will seldom see them highlighting the positive side of 1MDB which you can see is very substantial too and crucial to the growth of Malaysia in the coming decades that will generate hundreds of billions in growth and hundreds of thousands of jobs.

The DOJ and Switzerland invetigations

A basic foundation of the July 2016 US DOJ civil suit and the Switzerland investigation was due to the fact that 1MDB said it had paid money ti IPIC but IPIC had then said earlier in 2016 they did not receive such money - thus there is missing money and hence money laundering.

Now that IPIC has admitted that there was such payments then there is no "missing money" and hence no money laundering.

For a more detailed recap on why all those allegedly "missing money" was never legally owned by 1MDB and why I think the USA DOJ civil case and Swiss investigations will now fail  , read my July 2016 post.

Sunday, 23 April 2017

The April 2017 IPIC-1MDB settlement: What you need to know.

The news that 1MDB and Abu Dhabi's IPIC has come to a USD6 billion settlement instead of continuing with their international arbitration has come to a shock to many but not to me.

I had always believed that IPIC had the most to lose should the arbitration continue.

Once clue given by the Singapore Straits Times is this:
"Messy and protracted arbitration over the dispute would have brought into the open serious failings in the management of state-owned entities such as 1MDB, Abu Dhabi's International Petroleum Investment Company (IPIC) and its associate concern Aabar Investments, they said."
But a bigger clue is this:
"Mr Qubaishi, who served as IPIC's managing director, was arrested in the Gulf emirate. He has yet to be charged with a crime."

Mr Khadem Al Qubaishi was IPIC's managing director of IPIC and also the Chairman of Aabar Investments. As late as the year 2015, he was listed as the Arab world's 14th most powerful person.

Qubaishi and the Aabar CEO Mohamed Badawy Al Husseiny, who are also  the targets of the US Department of Justice civil case for money laundering, are he ones most complicit in the 1MDB-IPIC dispute.

Money from 1MDB had entered into their own accounts, their signatures are everywhere in all the agreements between 1MDB and Aabar and they are also the owners and directors of that so-called "Fake Aabar" in the British Virgin Islands.

The evidence on them is overwhelming.

By right, they would be the first ones charged for fraud, corruption and abuse of power and yet both have never been charged.

The reason is simple. If they are charged for those crimes, it is an admission that Abu Dhabi's top officials had defrauded 1MDB with fake companies and unauthorized fund receipts. This would mean that 1MDB would immediately win the arbitration over IPIC.

Qubashi and Badawy being found to be guilty would also be very embarrassing for the Abu Dhabi it would be like our Chairman and CEO of Khazanah or PNB being found guilty of falsifying documents and companies to cheat billions from other countries.

Therefore, it is no surprise that IPIC had agreed to abandon the arbitration and reach a settlement with 1MDB.

For the longest time, IPIC had never recognized that 1MDB had paid them USD3.5 billion and that Aabar had guaranteed 1MDB's two fund units - the so-called Brazen Sky Cayman fund units and the GIL funds.

Now, IPIC has admitted to these payments and said they will work with 1MDB to resolve this as Bloomberg had reported and IPIC had announced:
"The two countries also agreed not to pursue legal action before December 2020 as they negotiate the dispute over $3.5 billion linked to the two bonds, the person said."
As part of this settlement, 1MDB will pay U$2.5 billion through proceeds raised from the sale of units Brazen Sky Ltd. and 1MDB Global Investment Ltd., 

The USD2.5 billion fund units owned by 1MDB

To recap, 1MDB still had two financial assets in the form of units.

1) The Brazen Sky units of US$940m.

This is balance of the US$2.38b profits and capital of the US$1.8b investment in PetroSaudi. where US$1.44 b had already been redeemed and used.

This fund is guaranteed by the real Aabar PJS (although IPIC had initially disputed this).

The initial transfer from 1MDB to PetroSaudi was the source of all those allegations that Riza Aziz and Jho Low had received all those money. Now since 1MDB not only got back all the money but even made a decent profit of USD500 million on the investment in PetroSaudi, it means that no funds were stolen here and all investments made by PetroSaudi was legitimate - hence no crime committed.

2) US$1.5b GIL funds, also guaranteed by Aabar PJS.

This is balance of the US$3b GIL 2013 bonds. where US$1.5b was retained for 1MDB's own use.

It is this US$1.5b GIL fund which people allege the RM2.6b in Najib accounts came from.

If this fund is now redeemed, it means that the RM2.6b cannot possibly be stolen money since no money has been stolen.

It looks like the recent recovery of oil and commodity prices have allowed for the assets under these two funds to recover and to be realized by the fund managers.

It is not clear if IPIC/Aabar had also honoured its guarantee and assisted in redeeming these units but it's highly possible given that IPIC does not want to risk anymore embarrassment. 

1MDB had always had the Deed of Guarantee from Aabar on both these units duly signed by the then Chairman and CEO of Aabar 

Using the USD2.5 billion proceeds 1MDB can now repay the US$1b paid by IPIC in June 2015 plus all remaining interest for the US$3.5b bonds guaranteed by IPIC.

A continuation of the June 2015 USD6 billion Asset-swap arrangement

The entire USD6 billion of payments and guarantees was identified as assets for the June 2015 1MDB-IPIC asset swap agreement in exchange with IPIC was based on the following:

Let's list the individual components as a,b,c,d,e and f.

Assets from 1MDB:
a) USD 3.5 billion cash deposits paid to Aabar BVI.
b) USD 1.5 billion GIL funds (Fund Manager introduced by BSI and guaranteed by Aabar BVI)
c) USD 940 million Brazen Sky fund units (Guaranteed by Aabar Investments ABU DHABI - not the disputed Aabar BVI - this is in the AG report and the PAC report)
Assets from IPIC:
d) 1MDB's USD 3.5 billion bond principal
e) 1MDB's USD 1.5 billion future bond interests until bond maturity in 2022 for the USD3.5 billion bond
f) USD 1 billion in cash advance (paid to 1MDB in June 2015)
Under the latest settlement agreement,1MDB will redeem, probably with IPIC's help due to the guarantee, the  "b) USD 1.5 billion GIL funds". and the "c) USD 940 million Brazen Sky fund units " 

This approximately USD2.5 billion will then be used by 1MDB to settle the "e) 1MDB's USD 1.5 billion future bond interests" and pay IPIC back the "f) USD 1 billion in cash advance"

As you can see, b, c, e and f has been settled.

This leaves a) and d) to be settled.

With that, the dispute with IPIC is now limited to the "a) US$3.5b assets that 1MDB insist it had paid to IPIC, which IPIC denied receiving and was the key issue in their arbitration.

But now IPIC has finally admitted that there was such payments and said that they will work with 1MDB to resolve these payments which would then be used by 1MDB to pay for the dUSD3.5 billion bonds when it eventually comes due in five years time in the year 2022.

That is why IPIC and 1MDB are giving themselves up to the year 2020 to settle this and would not resort to any lawsuits between each other during this period.

The arrangement also means that 1MDB does not give up its right to legally sue IPIC for these USD3.5 billion but can only do so after the year 2020.

This settlement is clearly still within the spirit of the original June 2015 Asset-swap arrangement and is in fact, clearly a progression of that deal.

1MDB has clearly made good progress to recover their money and pay off debts and I can see redemption or sale of the fund units as the second last step. It is hoped that 1MDB and IPIC can take that final step to resolve the final USD3.5 billion.

The fact that IPIC has now finally acknowledged there was USD3.5 billion of such payments from 1MDB to "certain parties" means yet another critical step for 1MDB to finally clear all its controversies and "missing money" allegations.

A basic foundation of the July 2016 US DOJ civil suit was due to the fact that 1MDB said it had paid money ti IPIC but IPIC had then said earlier in 2016 they did not receive such money - thus there is missing money and hence money laundering.

Now that IPIC has admitted that there was such payments then there is no "missing money" and hence no money laundering.

For a more detailed recap on why all those allegedly "missing money" was never legally owned by 1MDB and why I think the USA DOJ civil case and Swiss investigations will now fail  , read my July 2016 post.

Thursday, 20 April 2017

The BIG LIES: Tabung Haji, SRC, Putrajaya Perdana, Rafizi Ramli and Najib

This is not the first time Rafizi has tried to maliciously link Prime Minister Najib, Tabung Haji and SRC.

His previous attack had caused some 3,600 depositors to withdraw RM500 million from Tabung Haji and lose their place in the waiting list to perform their haj. This eventually caused a big backlash against Rafizi - losing him a lot of trust and support as people's lives were affected negatively. But this will not stop him from trying again.

But first, let's look at the latest allegations Rafizi made in his latest two blog entries here and today:

  3.  Sebanyak RM170 juta disalurkan terus dari SRC International Sdn Bhd ke Putra Perdana Construction Sdn Bhd, iaitu RM35 juta pada 8 Julai 2014, RM105 juta pada 14 Julai 2014 dan RM30 juta pada 8 Ogos 2014.
  4. Pada hari yang sama iaitu 8 Julai 2014, sebanyak RM34.99 juta dipindahkan dari Putra Perdana Construction Sdn Bhd kepada Dato’ Seri Najib Tun Razak (sebanyak RM27 juta) melalui sebuah lagi syarikat bernama Permai Binaraya Sdn Bhd.
  5. Jumlah RM140 juta yang diterima oleh Putra Perdana Development Sdn Bhd dalam bulan Julai dan Ogos 2014 kemudian dibayar kembali oleh Putra Development Sdn Bhd pada 12 Disember 2014 kepada SRC International Sdn Bhd melalui Putra Perdana Construction Sdn Bhd.
Assuming (and this is a big assume) all of Rafizi's data and allegation is correct, then the first thing you need to know is this:

FACT 1. Najib is not a board of directors nor in the management of either Tabung Haji, SRC international nor Putrajaya Perdana Bhd or any of their subsidiaries.

This means that under the law, he is not responsible or even aware about the day-to-day transactions and business dealings between the companies,

Also, the second point you must know is this:

FACT 2. SRC International core business IS to invest in companies or projects and make a return.

Knowing this, there is no reason and nothing illegal in what SRC International is doing in having business dealings with Putrajaya Perdana Bhd 

FACT 3. SRC International and other companies in Malaysia DO engage in CSR activities.

Petronas does this, Khazanah does this too. And so do public listed companies such as Genting Bhd, which earlier courted controversy for spending RM190 million in CSR on some foundations in 2013.

Which leads us to this 

FACT 4. That "Najib personal account" is not a day to day personal account. In fact, he does not even manage these accounts himself.

Watch this video where after he was sacked as Deputy Prime Minister, Muhyiddin had admitted himself that there had always been a secret UMNO president account even from way back then which is used for party purposes.

This practise is allowed for under UMNO's constitution as the UMNO president holds a lot of discretionary power due to secrecy and political reasons.

And this is why we come to:

FACT 5. Najib had received at least USD200 million (RM880 million) from Saudi Arabia directly into his account of which at least USD80 million (RM352 million) directly from the Ministry of Finance, Saudi Arabia

The Pakatan people will never highlight this and you are probably not aware of this.

That there were transfer of funds, was also confirmed by the Saudi Arabia Foreign Minister.

Why did the Saudi's give Najib money? Well it was because of Anwar Ibrahim and his past links to terrorists and also due to Saudi's own interest to stop the Arab Spring in their own backyard which took place from 2009 to 2014.

Do you really think that if Najib had lied about the Saudis that their King Salman will still come here to Malaysia, be so buddy-buddy with Najib and invest RM31 billion in Malaysia in Feb 2017?

FACT 6: Rafizi did not dare accuse that Najib had spent any of the alleged RM27 million on Najib himself but paid to 17 parties including allegedly to former PAS Deputy President Nasharuddin Mat Isa

Now, we know Nasharuddin was no longer Deputy President of PAS as of  the year 2011 and in fact, he was no longer anywhere in PAS leadership before GE13 as he was was expelled from PAS's governing council. He did not even recontest his parliamentary seat at the 2013 election.

In fact, Nasharuddin went on to found a NGO foundation called Yayasan Nassar,  which gave its purpose as:
"Yayasan Nassar ("YN") ditubuhkan untuk tujuan mengurus, mentadbir perkara-perkara yang berkaitan dengan pendidikan bantuan kerajaan bagi sekolah harian ataupun agama, kebudayaan, kebajikan dan sosial. Ini adalah untuk menjaga keharmonian agama, kebajikan serta sains social masyarakat setempat mahupun sejagat."
Yup! For education, charity and religious harmony purposes.

This could explain where accusations from Rafizi that Nasharuddin received money from Najib in 2014 is wrong. It probably went to his foundation and not to Nasharuddin personally.

Also, since Nasharuddin had already been kicked off from PAS leadership in 2013. Rafizi's allegations that Najib's money to Nasharuddin had been used to "buy" PAS in order to "cover-up" 1MDB (which only became an issue in 2015) and be friendly to Najib is so slanderous.

This is why PAS President Hadi Awang says Rafizi is a 300% liar and asked him to repent.

Now, back to Tabung Haji and Putrajaya Perdana and so-called "wang pencen":

FACT 7. No WANG PENCEN or wang Tabung Haji was used to pay SRC International.

This fact is actually contained within Rafizi's own postings where he wrote:
"Dalam bulan Mac 2014, Putra Perdana Development Sdn Bhd telah membeli 37.5% pegangan di dalam Iskandar (Holdings) Company Limited dari Unity Capital Partners (Cayman) Limited. Kedua-dua syarikat tersebut iaitu Iskandar (Holdings) dan Unity Capital Partners. "
"Dalam bulan Disember 2014, seperti yang dilaporkan sendiri di laman web Putrajaya Perdana Berhad yang saya tunjukkan di atas, Tabung Haji membeli 30% pegangan di dalam Putrajaya Perdana Berhad dari Cendana Destini Sdn Bhd"
Rafizi even posted the graphic of these milestones.

Right, March 2014 and Dec 2014.

But then Rafizi himself had stated that the first ever dealings between Putrajaya Perdana and SRC international only started in July 2014.

And also, Rafizi himself said that Tabung Haji only invested to buy 30% of Putrajaya Perdana Bhd in December 2014.

Do you see how sotong this is? Back to the future?

Putrajaya Perdana bought those allegedly "Jho Low"-linked companies in March and the first ever dealing with SRC was in July while Tabung Haji came in only in Dec 2014. So, how can it be that any SRC money or wang pencen or Tabung Haji? Back to the future?

In fact, those Jho Low linked companies are holding companies that has 133 million sq ft of gross floor area to be developed in the Medini hub of Iskandar Malaysia, which is worth quite a bit now.

Not to mention that it was Rafizi himself that revealed that Putrajaya Perdana was already a profitable company even in 2013, the year before all those dealings that Rafizi alleges with revenues of RM705 million, current assets of RM445 million and pre-tax profits of RM62 million.

Putrajaya Perdana Bhd FY2013 financial summary taken from Rafizi's blog

And plus, Tabung Haji bought EXISTING shares from the previous owners. Tabung Haji did not invest any money in Putrajaya Perdana, which would mean the money paid by Tabung Haji would got to the existing owners who sold the shares - NOT into Putrajaya Perdana's bank accounts.

Hence, it is impossible for Tabung Haji money to be paid to SRC.


As you can see from the shareholders information above. There was no increase in number of shares after Tabung Haji took a 30% stake in the company - hence it cannot be new shares issued or "injection" (as Rafizi calls it).

In fact, after Tabung Haji bought their stake, the financial performance and profits of Putrajaya  Perdana increased too.

FACT 7. SRC money is not WANG PENCEN 

Not anymore. SRC International may have loaned money from KWAP but this money is guaranteed and the entire loan is being serviced properly and not in default.

So, legally it is not wang pencen at all. What SRC international does with their money and their profits is up to SRC and nothing to do with KWAP.

And plus, as Rafizi pointed out, Putrajaya Perdana paid back RM140 million, the bulk of the proceeds, to SRC International within the same year leaving a balance, which were either paid back later or for work done or for the above-mentioned CSR, which SRC is entitled to do.

FACT 8. Putrajaya Perdana Bhd was a listed company. Tabung Haji did not overpay to buy a 30% stake.

On Jan 31 2008 the then listed UBG bought 49% in Putrajaya Perdana Bhd for RM332 million cash or 16.6 times Price-to-Earnings ratio (PE Ratio). This values 100% of Putraja Perdana Bhd then at RM678 million.

In turn, when Tabung Haji bought 30% of Putrajaya Perdana for what Rafizi says is RM193 .5 million, it would mean valuing 100% of Putraja Perdana Bhd then at RM645 million - lower than in 2008.

And as Rafizi previously showed proof, even in 2013 Putrajaya Perdana already had revenues of RM705 million, current assets of RM445 million, pre-tax profits of RM62 million and after tax profit of RM45 million.

But after Tabung Haji bought the stake, in 2015 Putrajaya Perdana did even better.

Putrajaya Perdana Bhd FY2015 financial summary
In FY2015, Putrajaya Perdana's revenues almost doubled to RM1.2 billion, total assets has almost doubled to RM709 million, pre-tax profits is now RM80 million and after tax profit has grown to RM57 million.

This means Tabung Haji had paid a historical PE of 14.3 or a future PE of just 11.3 times - as compared to the 16.6 times that UBG paid in the year 208.

This is not considered over-valued if you compare to the currently listed construction company on Bursa where the PE ratio of IJM Bhd is 27.28 times or Gamuda (20.14 times) or Binapuri Bhd (100.23 times).

In fact, As of October 31, 2016, Putrajaya Perdana's outstanding order book and tender book stood at approximately RM1.25 billion and RM1.93 billion, respectively.
This suggest that when Putrajaya Perdana Bhd is eventually re-listed as per their plans, Tabung Haji would make quite a good profit and in no way had lost money to Jho Low, Rafizi or anyone.

As you can see from the above, so many of Rafizi's malicious allegations on SRC and Tabung Haji and Wang Pencen have been debunked as mere lies,

Why would you want to trust someone that even a religious leader like Hadi Awang calls a 300% liar?

Which leads us to our final fact for the day:

FACT 9. Rafizi is a court confirmed serial liar and his self-admitted job is "to hasut the rakyat tiap-tiap hari". So there is very little reason to trust him.

5 court cases confirmed lost by Rafizi just within the past year. More on the way...
or you can watch him admit it himself here: