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Friday, 16 June 2017

Ten observations on DOJ's June 2017 1MDB-related civil suit

Here are my thoughts on the latest civil suit based on that 250 pages court submission from the USA's Department of Justice submission:

1. It is still a civil suit for forfeiture of assets and not a criminal suit.

Nothing has changed since last year except that more assets are listed. It is also important to note that civil asset forfeiture lawsuits are filed against the assets themselves and not individuals (such as Jhow Low etc). Owners of the assets can contest the forfeiture, which they are doing.

2. It is essentially a continuation of the previous suit in July 2016.

Nothing has changed since last year except that more assets are listed. However, the one that caught the public's interest is the allegation of a USD27 million (RM118 million) diamond gifted to MO1's wife - which everyone knows it refers to Datin Sri Rosmah, the Prime Minister's wife. We shall go into detail on this later.

1MDB did not borrow or lose any more money since last year July 2016. In fact, 1MDB actually made significant progress in making money and paying off debts over the last year.

3.  None of the money allegedly spent or invest legally belongs to 1MDB. 

This means that those money spent is not 1MDB's money.  I had proven this extensively last year in this post. Events since my post one year ago had further confirmed this - especially the IPIC-1MDB settlement in April this year where IPIC was reported to have arranged a buyer for the USD2.5 billion worth of units while agreeing to the following: "The parties have also agreed to enter into good faith discussions in relation to payments made by 1MDB Group to certain entities."

An example would be this: 

Imagine if I pay you RM1000 to invest and pay to your bank account. In return you give me an IOU saying you owe RM1.000 and you guaranteed that I will get minimum RM1,000 back.

Then you pay RM500 to a gangster.

Can people then say I paid RM500 to gangster?

People would also have to explain why the sovereign fund IPIC took the trouble to guarantee US$3.5 billion worth of bonds of another country's sovereign fund. And why Aabar would want to guarantee another US$2.5 billion worth of fund units of 1MDB.

This is also the reason why 1MDB keeps insisting that none of their money has been lost. 

4.  DOJ's allegations that the BSI or Cayman units were over-valued or wrongly-valued are irrelevant to 1MDB

As previously explained, the value of the units are guaranteed by the real Aabar Investments PJS. As far as 1MDB is concerned, the minimum value of the units is what Aabar had guaranteed it for. As was reported by the Singapore press, Aabar had arranged a buyer for the USD2.5 billion units (which includes the USD940 million units remaining in the BSI funds) and that 1MDB had already started to receive the cash proceeds.

In 1MDB's point of view, they had a certain money in the BSI units guaranteed by the real Aabar. Since the real Aabar had now gotten someone to buy the fund units and pay 1MDB the correct amount then there is no question of whether the fund units are worthless or undervalued or overvalued.

5.  DOJ's allegations that money was siphoned off from 1MDB's Deutsche Bank loan has nothing to do with 1MDB

DOJ reports that the Deutsche Bank loan was to pay for the cancellation of options held by Aabar in return for IPIC guaranteeing 1MDB's USD3.5 billion loan in the year 2012.

According to the DOJ, the money was paid to a "fake" Aabar Seychelles which they claim had nothing to do with the real Aabar in Abu Dhabi.

However, DOJ also confirms that the sole director of Aabar Seychelles was the Managing Director of the real Aabar and that the shareholder of Aabar Seychelles listed in the certificate of incumbency (also known as the company registration) document is the real Aabar.

As far as 1MDB is concerned, they had used the Deutsche Bank loan to pay Aabar for the purpose of cancelling the options.  Whether it is a "fake Aabar" or "real Aabar" does not matter to 1MDB as long as the options were cancelled - and it was.  This is especially so since the party that had dealt with at that time as the official managing director Aabar, Mohamad Husseiny and the company registration documents had clearly stated that the owner of the "fake Aabar" is the real Aabar.

Therefore, if there was any siphoning of money or fraud, it was Aabar PJS in the Abu Dhabi which was defrauded - not 1MDB.

Which brings us to the next point...

6.  Neither Prime Minister Najib, Rosmah nor 1MDB was named as a defendant in the DOJ civil suit. 

This means the US DOJ does not consider Najib, Rosmah or even 1MDB to have committed any wrong-doing. In fact, one Abu Dhabi's sovereign USD125 billion fund Mubadala Investment Company which owns IPIC and Aabar now has now been named as an involved party whose interests will be affected.

7.  There is no evidence that Rosmah ever received the US$27 million diamond

First of all, receiving a gift is not illegal. According to the DOJ lawsuit, Jho Low had purchased USD200 million worth of jewelry over the years and had given it to various parties including to his mother.

Jho Low was also alleged to have given millions in jewelry to his alleged girlfriend, the super-hot Australian model Miranda Kerr who recently married the SnapChat billionaire founder .

So, if receiving a gift is illegal then Jho Low's mother and Miranda Kerr will have to go to jail too.

However, the circumstances which the DOJ says that Rosmah was alleged to be the recipient of the diamond is very suspicious.

Firstly, the DOJ alleges that Rosmah viewed the diamond with a group of people on board of the yacht called Topaz.

The Topaz is not any ordinary yacht but at that time was the largest yacht in the world and was and is still owned by Sheikh Mansour bin Zayed.

Sheikh Mansour is not only among the world's richest man with a fortune estimated at USD38 billion (RM162 billion) in the year 2014 but he is also the deputy prime minister of the United Arab Emirates, minister of presidential affairs and member of the ruling family of Abu Dhabi. He is the brother of the current President of UAE,

And plus, he is also the Chairman of IPIC and the boss of both Aabar Chairman Khadem Al-Qubaisi and also Aabar CEO Mohamed Badawy Al-Husseiny - the two persons most implicated in fraud and receiving funds in this entire 1MDB affair.

Both persons have never been charged for any crime. In fact, it was recently reported Khadem Al Qubasi is still in the UAE and under the protection of Sheikh Mansour Zayed.

This leaves us with two other possibilities.

1) The diamond may have been a gift from Sheikh Mansour to Rosmah. Arab royalty has a habit of giving expensive gifts to members of the leadership of other countries. After all, US$27 million is barely 2 days of interest for Sheikh Mansour's US$38 billion fortune. 

This is assuming that Rosmah even received the diamond in the first place. After all, a VIP from another country does not simply go on to the world's largest yacht owned by Arab royalty and one of the world's richest persons without the owner knowing.

However, if Rosmah did receive the diamond as a gift from Sheikh Mansour then I think she should return it as it is inappropriate to receive such an expensive gift.

2) Rosmah never received the diamond at all and DOJ was misled by the false information fed by the opposition.

According to the DOJ suit, it is important to note that Rosmah did not make the order for the diamond, pay for the diamond nor personally received the diamond.

It has also never been proven that she even posses the diamond.

DOJ's allegation is that a Malaysian friend had collected the diamond and she was supposed to then hand over the US$27 million (RM118 million) diamond to Rosmah. But there is never any proof that the diamond was handed over to Rosmah.

This brings us to the next point...

8.  The whole diamond necklace and DOJ lawsuit seems suspiciously politically-motivated

Firstly, the DOJ had no evidence that Rosmah ever received the diamond but proceeded to include that story in all its juicy details in the suit anyway.

Secondly, the story has always been consistent with the opposition story about Rosmah buyting diamonds and cincin - until PKR's Rafizi Ramli was sued by Najib and said to the court that he was "just joking"

Thirdly, the timing is suspicious as it comes a week before Malays balik kampung for the Hari Raya where such a juicy story would be discussed. 

It is no secret that Pakatan is hoping for a "Malay Tsunami" and such a story at such a timing would benefit Pakatan the most.

It is also no secret that Pakatan is working with and has received funding from George Soros to help topple the BN government and Najib.
Late last year, the famous expose website Wikileaks had leaked details of a March 2016 lobbying by George Soros to the US Government to remove Najib and replace him with Anwar Ibrahim.

please don't call Anwar as a "barua" Amerika
One reason why the USA should remove Najib: China!

The secret documents from Wikileaks showed that Soros told the US Government that PM Najib is not fully loyal to the USA and plays both sides with China.

Soros also told the USA Governmetn that Anwar would be instrumental as the new leader of Malaysia if Najib falls. And even if Najib doesn't fall, Anwar can provide the USA Govt with "insight and strategic leverage" on Malaysia.
Four months later after that lobbying, the USA Government's DOJ launched a civil suit against 1MDB and popularizing the MO1 name to cause maximum damage to PM Najib and BN.

How coincidental and convenient!

That led me to this particular excerpt in the DOJ court document regarding where the DOJ seeks to recover movie collectibles purchased by the owners of Red Granite, Riza Aziz and McFarland.

Rather than saying "we seek to recover memorabilia purchased by Aziz and McFarlane as we believe it was paid for using illicit funds", the DOJ chose to sensationalize it by publishing excerpts of email exchanges between the two persons who were merely joking about their shared hobby.

I have asked several legal professionals and they say that this is highly unusual, unprofessional and totally unnecessary for a legal writ.

It seem to be designed to incite hatred and to provide sound-bites - like the one done by MalaysiaKini.

Nowhere was it also mentioned that Riza Aziz and McFarland had been highly successful and made a lot of money in their movies - which would have allowed them to finance their future movies directly and with other investors.

Certainly this DOJ writ does more political damage than actual legal damage - especially since the previous case in July has not moved since.

And more shockingly this diamond that DOJ had written so extensively in the civil suit IS NOT the subject of the items that DOJ says they want to seize due to alleged money laundering.

Yes, the much talked about diamond is not a subject of the DOJ's civil suit!

Is this because there is no such proof that the item exist nor gifted to DS Rosmah nor in the possession of DS Rosmah or was it because it simply cannot be linked to money laundering?

This is a proper legal document - not a Robert Ludlum fiction novel.

Serious questions now have to be asked of the DOJ as to why did they even bother writing such sensationalized details of the diamond in their civil suit if it is not even a subject of the civil suit.

Can anyone answer? Can Mahathir or Matthias or Soros answer?

Writing such details in a legal civil suit without a legal basis or aim other than to inflict political damage on behalf of Pakatan means there is a sure sign of collaboration or deliberate feeding of misleading stories from here to the USA.

Strangely, some pro-opposition individuals in Malaysia are even proud and prepared to be called a CIA agent or foreign agent as was reported just last week in MalaysiaKini.

Why would Malaysians and our opposition leaders want to work with foreign powers to launch propaganda attacks and bad-mouth Malaysia just so they can be the ones in power?

That is sabotaging your own country, bro. It's treason.

9.  1MDB's profitability and progress is unaffected. No Malaysians or their future generations will end up paying for 1MDB's debts.

Due to the April 2017 IPIC-1MDB settlement and also the past rationalization efforts, 1MDB now has assets of RM60 billion compared to still outstanding long-term (up to 2039) debts of an estimated RM41.7 billion.

If you can believe MalaysiaKini then the profitability of 1MDB will be even more as the forecast that the value of Bandar Malaysia is RM90 billion instead of RM26 billion.

Hence the value of 1MDB's assets is RM124 billion compared to RM41.7 billion debt.

For so long, Pakatan and their friendly portals have been saying that govt will go bankrupt because of 1MDB's debts (which is already substantially repaid with the rest taken care of) and that govt has to use GST, use fuel subsidies, use sugar price bla bla bla to bail out and that this debt will be a burden on your next generation and the generation after that.

But now the Pakatan folks are saying that Govt will make huge profits on 1MDB and there is no more debt that will be a burden on your next generation and the generation after that or need to bail-out?

So, there is no question of anyone having to pay for 1MDB's debts. In fact, the possibility of 1MDB being very profitable is high.

10.  Unlike in the past, the financial markets did not react to the news of this DOJ suit. Neither are many Malaysians

The Ringgit did not weaken substantially and the stock market did not drop.

In fact, the Bursa stock market went up today despite the news. It continued its rally as Malaysia's economy continues to perform well and our prospects continue to brighten. Investors continue to believe in the transformation agenda under Prime Minister Najib.

Unlike in the past, Malaysians now seem indifferent to the DOJ-1MDB news

As Uber-Blogger Rocky Bru observed today:

"It's been a year since the US Department of Justice made that explosive lawsuit announcement involving 1MDB. Since then, the Americans have elected a new President, Dr Mahathir Mohamad has confirmed his desire to be Prime Minister of Malaysia once again, and the DOJ's lawsuit hasn't moved an inch. The department's latest "action" has similar elements and juicy bits that featured in its "action" of last July's. So why aren't Malaysians not debating it like they did last July? I belong to several dozens of WhatsApp groups but only one is discussing the DOJ's action and by "discussing" I mean one individual has been providing all the links to DOJ news that might be spun against PM Najib Razak. Does that mean we are immune to news involving alleged corruption and stealing of billions from our coffers? 
Or are Malaysians generally not buying what the DOJ's claiming, especially since nothing has come out of their last action?"
To most people and also thanks to the successful rationalization of 1MDB and its tangible evidence of its progress, most people feel that the 1MDB story is stale or "basi".

Pakatan's continued attack on 1MDB did not help them in the Sarawak elections last year where they had lost their pants. Neither did it helped them in the twin by-elections at Kuala Kangsar and Sungai Besar.

So, you must wonder why Pakatan is behaving like the (oft-misquoted) proverbial definition of idiots who "do the same thing over and over again and expecting different results"?

Wednesday, 7 June 2017

Part 2: BN "sold" Jelutong Highway land in Penang for RM20psf? Here are the facts.

Continuing on from my previous posting where Penang Chief Minister's Lim Guan Eng's accusation that the previous BN Penang Govt sold land for a ridiculous RM1psf for the Tanjung Tokong/Pinang project, I go on to his second allegation.

Here's Guan Eng's much repeated (but lying) table again.

This time, it's the alleged sale of 325 acres of land at "Jelutong Expressway" for a total of RM325 million or RM20 per square feet (psf).

Again, this is an outright lie by YAB Lim Guan Eng.

The first thing that would tip you that this is not land is the fact that the land is named "Jelutong Expressway" by Lim Guan Eng.

I mean, which developer would go buy land which a highway is sitting on, correct?

This is because it is not actually land but was a privatization project signed 20 years ago in 1997.

This project is extensively researched in an article in the February 2014 issue of the International Journal of Construction Management.

Ignoring the fact that land prices would have cost much lower 20 years ago in the height of the Asian Economic crisis would be much lower than now and should not be even used for comparison like what Guan Eng did, let's go to the details of this project.

Firstly, this privatization project was awarded based on an open tender by the previous BN Penang Govt and involves asking a contractor to build a much-needed highway in return for land reclamation rights (not land). 

A company called Jelutong Development Sdn Bhd (JDSB). JDSB was initially owned by IJM Properties Sdn Bhd (40%), Hume Industries (Malaysia) Sdn Bhd (40%) and Kumpulan Pinang Holdings Sdn Bhd (20%).

IJM Properties Sdn Bhd later took up Hume Industries (Malaysia) Sdn Bhd’s share in October 2002 for RM3.02 million, making JDSB effectively a wholly owned subsidiary of the listed IJM Corporation Bhd

The Privatisation Agreement was signed on August 22 1997. In exchange for the 4.7 km Jelutong Expressway (JE) constructed on 81.04 acres of land which would be handed over to the Penang State Government at no cost, 324.9 acres of land (partly existing but mainly reclaimed from the sea) would be alienated to JDSB. 

All costs pertaining to reclamation would be borne by JDSB. 

JBSD was required to pay the Penang State government RM1.3 million upon signing of the privatisation agreement and a further RM24.1 million in instalments. 

JDSB was expected to develop new integrated precincts (for commercial, retail and light industrial use) on the reclaimed land. 

It was also expected to build 5,500 units of low cost and low middle cost dwellings, and over 4,000 units of other types of residential units. The entire real estate development associated with the JE was expected to take about 15 years to complete.

The JE project was awarded in 1997 and was expected to be completed at the end of 1999. It was originally valued at RM350 million, including squatter compensation, land acquisition and all direct costs pertaining to the project.

JDSB however was contractually bound to maintain the JE for two years after its completion. JDSB also guaranteed the expressway design for seven years and had to ensure that the design life of the interchanges was 20 years following construction, while that of intersections was 10 years following construction.

The JDSB was allowed to reclaim land totaling 324.9 acres, partly for the expressway, but mainly for residential (partly to resettle affected populace), recreational, commercial and industrial development from which JDSB could recover its investment. Half of the land to be reclaimed was given freehold status, while the remaining portion was on 99-year lease. In addition, JDSB was allowed to convert a 30 acre piece of land which had been previously been used for agriculture and refuse dumping, also for real estate development.

At that time in 1997, land in the middle of Georgetown was selling for RM150-RM200 psf while reclamation cost was estimated to be RM20 psf.

In a nut-shell under the so-called "sale", IJM:

- will get 350 acres of land, of which the majority is reclaimed by themselves at their own coast, 
- has to build the 5km dual three-lanes on grade Jelutong highway with 5 intersections at their own cost of RM350 million mostly on land that they reclaimed themselves,  (compare this to the 5km Lim Chong Eu to Air Itam by-pass dual two-lane roads that the DAP Penang Got wants to build that will cost RM1 billion)
- has to hand-over the highway back to the state govt including the 81.04 acres which the highway sits on.
- pay RM25.4 million to the state govt.
- has to pay for land acquisition, compensation and resettlement of the squatters including temporary housing
- has to maintain the JE for two years after its completion;
- guarantee the expressway design for seven years and had to ensure that the design life of the interchanges was 20 years following construction
- has to build 5,500 units of low and low-medium cost housing units (RM25,000 - RM50,000 type) on their reclaimed land, many of which were also given as compensation to the squatters.

The last part is even more telling when you compare to the so-called affordable housing of up to RM400,000 built by the DAP Penang Govt using their RM500 million state fund - the first 520 units of which is scheduled only to be completed next year, a staggering 10 years after DAP had taken over.

After 10 years, the first 520 units of affordable housing built by DAP Penang Govt costing up to RM220,000 on the mainland will be ready.

Imagine this. The IJM consortium that was claimed to have gotten land cheap by Lim Guan Eng actually built 5,500 affordable homes costing between RM25,000 to RM50,000 on the island - compared to 520 units costing between RM72,500 to RM220,000 on the mainland.

Again, just like the alleged RM1psf "land" sold at Tanjung Tokong, YAB Lim Guan Eng's allegation that RM20psf "land" sold to IJM in 1997 for the Jelutong Highway without tender (it was open tender) is yet another pack of lies that he uses to defend and divert attention away from his 500% increase in Penang operational expenses and his tens of billions of state land, land rights and assets that he has sold or traded away since taking power in 2008.

Monday, 5 June 2017

BN Penang Govt's RM1 per square feet land sale? Here are the facts.

Recently, Penang Chief Minister has been under fire for selling land without open tender and also for increasing the yearly operating expenses of the Penang Govt by an astonishing 500% since 2008, which is covered mostly by sale of state land and assets - until there is little left.

In return, the Chief Minister continues to roll out his umpteenth-times repeated cover-line to say that BN sold 36 times more land and got  less money, which is of course untrue.

By now, most people would have seen the following table from Lim Guan Eng multiple times:

Much of these land were "sold" decades ago when prices on the mainland was cheap. In fact, it was not even land. Most were land reclamation rights.

I had written about this before here: 'BN sold more land than Pakatan in Penang and collected less' ??

But today, let's focus on item 1 Tanjung Pinang  where 980 acres of land was supposedly "sold" for RM1psf  under the previous BN Penang Govt - netting just RM42.7 million.

This is certainly a serious allegation - "selling" state land for just RM1psf.

But here are the facts:

This is not even a land sale but a 30 years land reclamation concession agreement awarded in1992 by the then BN state govt to a Joint-Venture that is 60% owned by the state agency Koperasi Gabungan Negeri Pulau Pinang  (KGN) and 40% owned by the 100% state-owned Penang Development Corp (PDC).

There is not a single inch of Penang land sold. On top of that, the concession was awarded by the BN Penang Govt to 100% state agencies.

In the interest of not coming up with capital to reclaim the land, the KGN-PDC partnership then formed a joint-venture company called Tanjung Pinang Development Sdn. Bhd. (TPD), with a company called  Permaijana Ribu (M) Sdn. Bhd. (PR).

Permaijana Ribu is owned 72% by UEM, 18% by Mechmar corp and 10% by Yayasan Bumiputera Pulau Pinang 

At this stage, the project has become 70% PR-owned and 30% KGN-PDC owned - with KGN-PDC getting it's 30% shareholding for free while PR has to bear the cost of the shares and  most of the reclamation expenses.

After UEM fell into difficulties due to the Asian Financial Crisis, it sold its stake to a private company called Bridgecrest Resources Sdn Bhd (Bridgecrest).

Therefore the effective ownership of the project is as folows

Note: Over the years, there were various changes in shareholdings as some of the shareholders sold out. As of today, the project is now 78.2% owned by listed Eastern & Oriental Bhd,, which Sime Darby is a major shareholder and 21.2% owned by the Penang Development Corp (PDC).

As you can see, fully 37% of the so-called RM1psf "sale" is owned by state-owned company which has already benefited by getting free shares and capital injections by the private companies who partnered with them.

This also means that when the land is fully-reclaimed, these state agencies will own an effective stake in 37% of the reclaimed land.

Wait... there's more!

Under the terms of the agreement. other than the 37% owned by the state agencies, a certain percentage of the land reclaimed has to be surrendered back to the Penang State Govt directly.

Under phase 1 of the reclamation (called STP1), which ended in the year 2006, a total of 240 acres of land was reclaimed.

And out of this 240 acres of land, 47 acres of land was handed back to the state govt free of charge.

Under phase 2 (called STP2), the remainder 760 acres of land will be reclaimed - out of which 191 acres will be handed back to the Penang Govt free of charge.

In fact, the STP2 was approved by the current DAP Penang Govt in 2011 and generously gave a 3 years extension to the concession too.

The Penang Govt has used 110 acres out of these 237 acres to pay for the RM6.34 billion Penang Tunnel project. - which values the entire land handed back FOC to the Penang Govt to be at least RM14 billion.

To summarize, not only is this not a RM1 psf land sale by the previous BN Penang Govt, but the Penang people benefits from the following:

1) State agencies own 37% of the reclaimed land for both phases of Gross development value (GDV) of RM21 billion
2) Penang Govt got roughly RM14 billion of land handed back FOC to them.

So, YAB Lim Guan Eng: How can you call this RM1 per square feet sale of land?

How can you claim the total sales proceed of 980 acres of land is only RM42.7 million?

How can you even claim this is sale of land?

Because of your repeated lies, many Penang people have the wrong perception that the previous BN Penang govt had sold land at RM1 per square feet to a private company.

What a liar that you are.

A lie that you have repeated umpteenth times over the last few years to justify your incredible sale of tens of billions of state land and assets.