Archive for April 5th, 2017

It can’t be both.


That, above, was Arul Kanda’s early handiwork: those numbers didn’t lie, but the words did. ‘Brazen?’ ‘Deposits?’ ‘Funds?’

Hi, Arul, what you’re working on now? Haven’t heard from you for a while. Anything good happening?


1MDB’s 50 Billion: Where to, where from

Let’s settle this once and for all: how much, by who? (Answer, table below.)


When Mahathir Mohamad started on 1MDB, he said the money was missing. Today, it had been stolen. Sometimes, actually most times, the Opposition says the 1MDB’s ‘debt‘ is… yada, yada, yada. That is, someday, somebody will have to pay it off: sob, sob…. And, of course, listeners to this sort of ceramah talk don’t listen. Who gives a shit for the future when the present is problem enough: No wonder few people care.

The challenge with 1MDB wasn’t proving that its money was missing or stolen or even if it is debt which, according to Malaysiakini’s P. Gunasegaram, was going to grind the country to the ground. How does that happen, Guna, ‘grind’? All of which weren’t just unreal, the effect of Anglophile philistines trying to be literary on matters of bread and butter.

Here’s the latest from C4 which it has titled, The 1MDB Chronicles – Exposed:

It’s a tale which is so fantastic that it will make a Hollywood scriptwriter proud. It has a cast of a king/sultan, princes, a prime minister and his stepson, Arab sheikhdoms, and a deal making, baby-faced whizz kid who was in his twenties when it all started – the apparent brains behind the deals, who cavorts with actors and other luminaries, has a proclivity for grand parties and yachts, exorbitant tastes, runs philanthropies and is close to the very top echelons of political leadership in Malaysia. The loot is large with assets involved of about RM50 billion.

A tale? Hollywood? A cast of kings, princes and politicians? Whizz kid? No wonder those kampung types in Kelantan and KL can’t make head and tail of what this is all about.

It gets worse. To be writing about 1MDB is a political badge of courage, the requisite for being anti-Najib Razak and therefore pro-Opposition. Being politically correct extracts a price, though. It is called Distortion.

To be political with 1MDB, therefore exaggerate; indeed, the worse the case the better for the points. Here’s how to inflate the gravity of 1MDB: count the same thing twice. Figure 5 (near the bottom of this post) is a case of double counting from donplaypuks: the IPIC USD6.5 billion claim on 1MDB had arisen directly from the Goldman Sachs USD6.5 billion bond issuance. That is, they are one and the same; if IPIC wins, 1MDB settles; if IPIC loses, it settles.

Unless two and two equals one, doubling 6.5 bn in the debt drives up the 1MDB numbers from MYR51 bn to 95 bn. Seeing it soar, the Great Syed Akbar Ali roars with delight. Here’s a man who thinks himself as cleverer than everybody else but, for him, inflating the 1MDB numbers is the political correct thing to do. Akbar then offers the justification that ‘Donny’ had combed through the accounts although those accounts had since been disavowed by every auditor in town.

Here’s another fallacious line that Akbar also regurgitated. From ‘Donny’:

Since 2014, 1MDB has had to service interest on its $42 billion borrowings at an average of say, about 5% per year.

By 2014, three chunks of debt (above, the TIS bond and the USD bonds) were already incurring large, periodic payments. Without income Arul Kanda turned to the Mother of Frauds, an inverted pyramid scheme invented in Chow Kit that relies on multiple short term loans to pay an earlier, fat, long term one which fell due. It is what people also do with their Visa cards today. 1MDB piled up as much as a quarter of its total debt in this way; short (such as the syndicated USD1 bn taken from Deutsche), usually revolving debt, under 1 year, paying long. Arul was clearly stalling until such time the power and land assets could be sold or leased and bring in some money. By the end of 2015, Arul found the Chinese.

Persons like Donny and Akbar who typically accuse Arul of massaging the figures are guilty of the same offense. No wonder the folks in Ulu Kelantan can’t make head and tail of the 1MDB scam, what more with those kampung Hermes bag carriers in Putrajaya. One result: the more it is written about, the more convoluted and obfuscating it gets.

Because 1MDB numbers are used singularly as anti-Najib tools, and not as evidence to show crime, the rudimentary issues at stake are cast to the imagination.

  • (a) Where had the money come from?
  • (b) Where did it go?

Without firm answers, the government, along with the Attorney General and even parliament’s PAC, are left to get away with this often-cited question: Where is Najib’s crime? What, really, did he steal?

The closest suggestion to a crime committed has come from the US but even there that’s just extrapolation: money came from 1MDB to New York, taken out by so-and-so then went to buy such-and-such. All of which makes for what C4 calls a wonderful ‘tale‘.

But a tale is not empirical evidence so that Tony Pua has all to go on is ‘malfeasance’ or misconduct. That’s not even the money laundering done at the periphery of 1MDB and not especially misappropriation and theft. Pua, Donny, Akbar and others are merely casting aspersions, not offering evidence.

The answers to those two questions are, surprisingly, are self-evident once 1MDB is seen not as a government agency misdirected or misused in its purpose but as a vehicle of theft. Because, the only way to steal this kind of money and on such a scale is to do it from the outside not inside; the loot once lodged in Malaysia will be seen by all.

In 2009 and 2010 1MDB tried to take away MYR5 bn, the money it had raised at home (through TIA’s Islamic bond issuance), by passing its bond proceeds through the bogus venture 1MDB-PSI with Tarek Obaid et al.  It almost got caught and 1MDB was punished (with a fine) for it by Bank Negara.

Wiser for the experience, 1MDB turned outwards, specifically to Goldman Sachs, raising USD6.5 bn, using the power plant acquisitions as cover. That USD currency money known as the offshore portion never returned to Malaysia because it isn’t suppose too. Today, it is the object of the American investigations and seizures as well as IPIC’s suit.

To keep such vast sums of money outside Malaysia, 1MDB operators have to keep them in circulation (Figure 12) and this is where BSI, Falcon, Blackstone, Standard Chartered and the Singapore banks enter the picture. Yet, in the end, the Singapore trials have to do, not with theft, but money laundering and violation of disclosure rules, all of which still has nothing to do with Najib. The man might be guilty by association but where is the theft?

To actually see the theft, return to the two questions just posed.

C4’s latest stab at unraveling 1MDB provides clues which are contained in two important charts it has provided (though they are full of holes). Here there are, below:


Figure 1: C4 Chart. The Misappropriation Phases

Those figures above understates the magnitude of the theft, USD3.7 bn, according to C4.

Figure 1 above (C4 Chart) was re-tabulated from the 1MDB major bonds issued between 2009 and 2013. But, C4, by relying primarily on American DOJ data, greatly understated the scale of the theft because where 1MDB money was not passed through the US, the money doesn’t appear in the American forfeiture suits.

Also, those tables (above and immediately below) are highly unreliable and as dodgy as Arul Kanda’s statements. Eg: Good Star might have pocketed USD1.3 bn (Fig. 1) of 1MDB’s money but, backed by Saudi connivance and under the 1MDB-PSI jv, 1MDB transferred out in total about USD3 bn (see Fig. 9 & 10). If only 1.3 bn went to Good Star, where is remaining 1.7 bn?

Later, under another joint-venture but with IPIC (also Aabar), USD6.5 bn was raised and never returned to Malaysia. Now, if USD2.6 bn was ‘stolen’ (that political correct word again) where’s the balance of 3.9 bn?

Figure 2 below: This C4 table is even more sloppy and incredulous than the first. Simply ask this: How could ‘Others’ have taken more than Najib Razak, the Man himself? Who are these Others?

Figure 2: C4 Chart. Where 1MDB’s USD3.6 billion went?



Figure 3. Q1: Where had the money come from?

Figure 3 above reworks the C4 chart in Figure 1 by adding a fourth source of funds, the KWAP term loan to SRC.

With 1MDB, there are only two possible sources of funds from which to ‘steal’: (a) monies raised abroad, and (b) monies raised at home. The distinction is important (for reasons given earlier). Offshore, the two USD bond issuance raised the equal of MYR 21 bn compared with MYR 5 bn raised from the domestic Islamic bonds issuance in 2009. SRC debt to KWAP added 4bn in local issued MYR debt. But, like the earlier TIA, it was also taken to Singapore.

Because the two local debts, MYR 9 bn in total, didn’t pass through the American banking system, neither appears in its investigations, upon which C4 relied heavily on to produce its 1MDB Chronicles.

Figure 4 below collapses the charts in Figures 1, 2 and 3 into one. In it is also added other publicly available information, particularly during 1MDB’s time when Jho Low, Tarek Obaid and Petroleum Saudi Int’l (PSI) were merrily scamming everybody else. Exchange rate then was USD1=MYR3.3. Within the chart, some numbers have not yet surfaced, such as those involving Sharol and Faisal, the two key 1MDB/SRC directors. But the monies, though still unaccounted for, are traceable through 1MDB’s debts using the rule, money in must equal money out. Add those with Sharol and Faisal, the total theft through 1MDB could well exceed MYR20 bn; in the chart below, it’s already 20.5 bn.

Figure 4: Q2. Where had the money gone?

One way to make sense of the chart above is to compare the columns ‘Fund sources’ sub-title headings and the bottom yellow line: money into 1MDB, money out and then onwards to several individual accounts, aggregated. Under Islamic bonds, for example, 5 bn went in, 5 bn out. Tarek, Low, Patrick Mahoney and PSI got about USD 3 bn (MYR  9.9 bn) out of 1MDB. If the local bond issuance (MYR 5 bn) wasn’t enough to cover that sum, then the USD offshore portion would have done it.

The USD 4.3 bn filched from the offshore part of 1MDB’s debt is about USD 600 million more than the USD 3.7 bn used in C4’s figures (also DOJ’s). The reason is Goldman Sachs and its USD 593 million in fees. They were not entitled to so much. But that they helped themselves to almost 10 percent of the bond proceeds was further evidence that what Goldman did for 1MDB was highly improper, almost certainly criminal if not complicit. It is called Fraud.



Figure 5 above: That is Donny’s double counting at work, a piece of work as dodgy as Arul Kanda’s. Some of the later loans taken, say, in 2014 were used to repay earlier ones. An example is the 2013 MYR 2bn line of credit from Maybank (not in Donny’s chart) which was used to part-pay the KWAP loan. Arul was good with this sort of feet shuffling and with right-hand-give-left hand debt circularity. (Also see table at top of post; that was an early Arul handiwork.)


Past illustrations into the 1MDB theft appearing in these pages. In chronological order.

Figure 6



Figure 7



Figure 8



Figure 9


Figure 10



Figure 11



Figure 12


Figure 13



Read Full Post »