From The Star Online

PETALING JAYA: The 1Malaysia Development Bhd board of directors was repeatedly given inaccurate information by the management of the government investment arm, said the Public Accounts Committee.

Among the instances highlighted by the PAC in its report on 1MDB was that the board had been told by the management that a joint-venture agreement signed on Sept 28, 2009, and a press statement of Sept 30, 2009 announcing the signing of the agreement referred to PetroSaudi Holdings (Cayman) Ltd as “PSI”, while the written resolution of the sole director of the company which was signed by Tarek Obaid referred to the same company as “PSH”.

“Four different companies were registered using the name ‘Petrosaudi’, namely PetroSaudi International Ltd, which was set up in Saudi Arabia; PetroSaudi International and PetroSaudi Holdings (Cayman) Ltd, which were set up in the Cayman Islands; and Petrosaudi International Ltd, which was set up in the Seychelles,” said PAC.

It added that the Sept 28, 2009, joint-venture agreement was signed with PetroSaudi Holdings (Cayman) Ltd, and 1MDB’s board of directors was unaware that the “PSI” in the agreement referred to PetroSaudi Holdings (Cayman) Ltd.

“This shows that the acronym ‘PSI’ was used in the joint-venture agreement as if to give the impression that PetroSaudi Holdings (Cayman) Ltd was the same entity as PetroSaudi International Ltd,” said PAC.

It added that 1MDB executive director for business development Casey Tang had said that the joint-venture project between 1MDB and PetroSaudi was a government-to-government matter at a board meeting on Sept 18, 2009.

“A check of the PetroSaudi International Ltd website found that the company was only set up in 2005 and is a privately owned company with no links to the government of Saudi Arabia,” said PAC.

Additionally, PAC said that in a meeting on June 21 2012, the 1MDB board was told of the receipt from the first US$1.75bil note that was used for the Tanjong acquisition, to pay interest and an OCBC consent fee as a condition for funding a Tranche 2 syndicated bridging loan and that US$300mil remained from that amount.

However, PAC added that US$194.80mil remained from the first note.

“The 1MDB board of directors was not told of the real use of the first US$1.75bil note, which was used to pay the arranger fee, a commission to Goldman Sachs, a security deposit and the Tanjong acquisition.

“Some US$785.67mil was paid for the Tanjong acquisition compared to the US$900mil that was announced and US$ 576.94mil was paid as a security deposit to Aabar Ltd,” the PAC pointed out.

For more on this story go to: http://www.thestar.com.my/news/nation/2016/04/07/pac-1mdb-directors-repeatedly-given-inaccurate-info/

See iNews Cayman related story with links published March 16 2016 “No investment bank handling 1MDB’s funds in Cayman Islands” at: http://www.ieyenews.com/wordpress/no-investment-bank-handling-1mdbs-funds-in-cayman-islands/

Related story:

Revealed: 1MDB board outraged at US$ 700Mil pay-out to JHO LOW firm but NAJIB did nothing

From Malaysia Chronicle

Slightly over half a year since its conception as Terengganu Investment Authority, the now Finance Ministry-owned 1MDB made its first deal – and blunder.

On Sep 30, 2009, it parted with a massive US$1 billion after less than two weeks of due diligence – a whopping US$700 million of which went to an unrelated firm, Jho Low-linked Good Star Limited.

On social media that day, Li Lin Seet, an associate of Low whom Sarawak Report linked to the deal, mentioned feeling “the earth moving”. Eleven days later Li was in Las Vegas, guzzling world’s expensive champagne, Cristal.

Over in Kuala Lumpur, however, the 1MDB board was in a less celebratory mood.

“Visibly upset” was how then Felda Holdings managing director and 1MDB board member Bakke Mohd Salleh described the 1MDB board when it found out US$700 million went to Good Star.

It also had other reasons to be “shocked and angry” – it had okayed a deal with PetroSaudi only if terms like independent valuation of assets were complied to. They were not.

“Flabbergasted”, Bakke decided he wanted nothing to do with 1MDB anymore. He resigned.

But the US$700 million – which then 1MDB CEO Shahrol Azral Halmi said actually went to PetroSaudi through its subsidiary Good Star – was not the end of 1MDB’s generosity to the little known Saudi firm.

Oct 3, 2009 – 1MDB board is “shocked and angry” over the Good Star transfer and issues a stern warning to management for flouting their advice.

Among others, it wants the US$700 million returned and banked into the proper accounts, a written confirmation of the value of the asset, a presentation by Edward L Morse and for another independent valuation.

“Flabbergasted” and “annoyed” with management’s non-compliance, Bakke informs the board he does not want to be associated with 1MDB anymore.

Oct 10, 2009 – 1MDB board instructs the management to produce a shortlist of 10 independent valuers to be approved by the board of advisors, so PetroSaudi Caymans can agree upon a second valuation.

Oct 19, 2009 – Bakke resigns from the board

Nov 7, 2009 – Shahrol tells the board that the board of advisers chairperson, Prime Minister Najib Abdul Razak, says there is no need for a second valuation.

Najib, however, instructs the board to appoint a consultant to do a valuation of joint assets.

(The auditor-general’s department found no evidence to back Shahrol’s claim)

December 2009 – The agreement between PetroSaudi and owner of the oil fields is terminated.

March 31, 2010 – 1MDB sells its 40 percent stake in the joint venture for US$1.2 billion in murabahah (loan) notes, essentially lending the cash to the PetroSaudi.

Sept 14, 2010 – 1MDB takes up a US$500 million loan so it can buy murabahah notes from PetroSaudi for the same amount. But 1MDB’s loan is due in 2013, while its murabahah notes will only mature in 2015.

The murabahah fundraising is said to be to buy a stake in oil and gas firm GDF Suez, but auditors KPMG did not check if the funds were used to buy this firm. US$330 million of this was paid to Good Star.

Shahrol says it was done with board approval, but the Auditor-General’s Department says the approval was for transfer to PetroSaudi International.

(PAC asks if the audit firm was aware of US$160 million of that, as well as a subsequent murabahah subscription of US$330 million which went to Good Star. The audit firm says it was not.)

Sept 15, 2010 – KPMG takes over from Ernst & Young as auditors.

KPMG obtains a letter from the Saudi ambassador in Kuala Lumpur, international consulting firm Helvetica and Banque Saudi Fransi vouching that PetroSaudi’s shareholders Tarek and Prince Tukri have good financial standing.

It is forced to do so as Saudi firms are not compelled to publish their financial statements.

September 2012 – 1MDB redeems all its murabahah notes totalling US$2.318 billion which becomes investment “units” in the Cayman Islands, through an investment with BSI Bank Singapore.

The Auditor-General’s Department notes the initial US$1 billion investment changed forms four times from 2009 to 2012, finally held as a portfolio in the Cayman Islands.

Shahrol tells PAC this shows the PetroSaudi venture succeeded – total outlay US$1.83 billion in cash, total recovered US$2.318 billion in investment units.

For more on this story go to: http://www.malaysia-chronicle.com/index.php?option=com_k2&view=item&id=613572:revealed-1mdb-board-outraged-at-us$-700mil-pay-out-to-jho-low-firm-but-najib-did-nothing&Itemid=2#ixzz45QSVhumV