Friday, October 30, 2020

How China & Kuwait used 1MDB kickbacks to pay financier Jho Low’s lawyers in money laundering case

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As part of his legal settlement over the Department Of Justice civil case late last year (criminal charges remain pending) Jho Low was allowed to set aside some $15 million from the assets seized in the United States to pay the law firms who had defended that action, including Kobre & Kim and UK based Schillings.

That may have annoyed Malaysians from whom those funds were stolen. However, even greater outrage has been expressed following the revelations thanks to so-called FARA (Foreign Agents Registration Act) filings in the United States, which showed that both firms had earlier hired a swathe of PR agencies to fight Jho Low’s cause for millions of dollars during the course of the case.

Neither law firm was prepared to declare from whom or where they received that puff money over the course of 2017-2020, saying only that it was paid by an anonymous third party. However, filings by the client PR agents claimed the anonymous funding was unconnected to foreign governments or foreign political parties.

To the contrary, documentation viewed by Sarawak Report provides compelling evidence that these fees, along with tens of millions of dollars worth of earlier invoices (paid in euros in 2016) were financed through 1MDB-related kickbacks paid by a Chinese state company in return for Malaysia’s East Coast Rail contract which was inflated 100% shortly before it was signed in 2016 by Jho Low’s ‘Big Boss’, the former prime minister Najib Razak.

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In a secret deal, which was exposed by Sarawak Report at the time, the Chinese state company CCCC agreed in return to finance over US$7.5 billion which was by then owed in debt and principal by 1MDB.

Further evidence now shows that on the orders of Najib’s 1MDB ‘fixer’ Jho Low much of this dirty money was then funnelled through companies controlled by a member of the powerful al Sabah family in Kuwait, before being disguised as payments from a respectable middle eastern concern in which the politically connected individual held some shares.

The payments were made in September 2016 and related to invoices run-up in the preceding months by Jho Low, who had been exposed globally as a financial fraudster and the architect of the world’s largest theft by the DOJ (some $5 billion were stolen from 1MDB) that July.

Hundreds of Millions of Dollars ‘Commission’ From China

In July 2016, shortly after Jho Low was named as a fraudster in a US Department of Justice asset seizure case, Sarawak Report released details of the covert deal between then Malaysian prime minister, Najib Razak, and the Chinese state construction company China Communications Construction Company (CCCC) that inflated the East Coast Railway Link project by 100%, in return for a secret schedule whereby the company agreed to repay a total of US$7.5 billion owed in debt and principal by the defrauded Malaysian development fund 1MDB.

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Although the Malaysian government denied the details of the contract published by Sarawak Report, Najib later travelled to Beijing in November to ratify a deal based on an almost identical inflation of the costs and under the same borrowing terms.

Meanwhile, Sarawak Report has ascertained that CCCC started to make a series of payments totalling hundreds of millions of dollars from a Hong Kong company named True Dragon Properties Limited, which is owned by Zhen Hua Engineering Company Limited, itself a wholly owned subsidiary of CCCC, into an account in Kuwait linked to Najib’s 1MDB fixer Jho Low.

The first payment of CNY450 million arrived on September 20th 2016 in the Chinese Yuan account of a Comoros lslands-linked company, Comoro Gulf General Trading & Contracting Company, at the newly established Kuwait branch of China’s ICBC bank. The company was owned by Kuwaiti businessmen connected to the Kuwait prime minister, including his son Sheikh Sabah Jaber Mubarak Al-Sabah. Jho Low had earlier cemented a business partnership with these men.

The sum was the equivalent of $60 million (RM250m) and was intended to be the first of several similar payments, which were ultimately expected, according to sources familiar with the transactions, to total US$3 billion.

The reason given to ICBC bank for these payments was that Comoros Gulf General Trading & Contracting Company had supplied Bitumen to the CCCC subsidiary for projects in South America and Africa, something that people with knowledge of the arrangement say was completely untrue.

Jho Low had meanwhile authored a letter that was sent in June on behalf of Sheikh Sabah Jaber Mubarak Al-Sabah and signed by him to various international law firms based in the US and UK to whom he owed certain pressing debts. These included the UK firm Schillings (which specialises in ‘reputation management’) and the US firm Kobre & Kim.

The letter testified to these firms that the Sheikh was “a personal friend of Low Taek Jho” and understood that Jho Low had engaged the firms “in connection with various items”.

[su_quote] “Solely out of a desire to maintain JL’s well-being and ensure that he has access to competent legal counsel of his choosing, I have agreed to pay legal and other expenses incurred by JL in connection with the aforementioned items and/or any related legal items that have been, or that may be, instituted” [/su_quote]

the Sheikh wrote in the letter dated June 22nd 2016 and emailed to Chris Scott at Schillings and Michael Kim at Kobre & Kim.

Jho Low was already by that time highly exposed as a suspicious financial operator who had been blacklisted by global banks, making it extremely difficult for him to process payments in his own name or that of his companies in either the UK or US or through mainstream banks in dollars.

Sarawak Report has seen evidence that the Malaysian businessman, therefore, requested Sheikh Sabah, who had a minority share in Comoro Gulf General Trading & Contracting Company, and his associates to use the money that had arrived from CCCC to pay towards bills owed to Kobre & Kim the sum of €15 million euros on 26th September (paid into an HSBC account in the UK) and another sum of €2.895 million euros to another US law firm Gibson Dunn & Crutcher on 3rd October.

Given that just a few weeks before those payments, on 20th July, Jho Low had been identified as the world’s most wanted money launderer, owing to a major public statement by the US Attorney General and the filing of the world’s largest asset seizure by the Department of Justice, the matter raises considerable questions about the due diligence done by these law firms to ensure that the payments made by this politically connected friend of Jho Low came from respectable sources and were not in fact the product of Malaysian corruption, which turns out to have been the case.

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It also raises questions as to what work the legal firms had been doing for Jho Low to raise such enormous fees (the total bill owed to Kobre & Kim was €18 million and to Gibson Dunn & Crutcher US$5 million) and whether the law firms had in anyway assisted, unwittingly or otherwise, with the money laundering of 1MDB money and if so whether they had sufficiently guarded against such untoward involvement?

Sarawak Report has ascertained that Kobre & Kim initially refused to be paid from the account of this little known company linked to the off-shore Comoros Islands, given that the letter framed by Jho Low had originally indicated that Sheikh Sabah would using the account of a large and well-established company based in Kuwait to cover his fess, namely Al Waseet, in which the prime minister’s son also held shares but not the controlling interest.

Eventually, although the invoices produced by both law firms were made out to Al Waseet International, remittance and transfer notices provided by ICBC bank make clear that the payments were nevertheless sent from the recently opened euro account of Comoro Gulf General Trading & Contracting Company, directly linked to the recently opened yuan account that had just received the money from CCCC.

Moreover, Sarawak Report has viewed the instructions send by Jho Low indicating how the money coming in from CCCC should be used by ICBC Bank to pay the law firms.

There is therefore little doubt that the two top law firms were paid out of the laundered backhanders processed by Jho Low from the Chinese state owned company from money that was ultimately stolen from the Malaysian public through a deliberately inflated contract.

According to legal observers, closer due diligence regarding the newly opened accounts of the Comoro Gulf General Trading & Contracting Company in Kuwait’s newly opened Chinese ICBC Bank ought normally to have been expected to have raised red flags in the accounts department of a major law firm. However, in this case they apparently did not, despite the notorious reputation of the client and the political connections of the individual who had offered to pay his legal fees.

Time To Answer Questions

Sarawak Report has asked CCCC to comment on the evidence that it was therefore complicit in sending money through its subsidiary in the form of bribes to Najib Razak.

We have also requested comment from Sheikh Sabah, whose father was removed as prime minister last November under the cloud of corruption allegations in Kuwait. Given Sheikh Sabah cannot have failed to have known by this time that Jho Low was wanted for stealing billions, why did he accept hundreds of millions into an account of a company controlled by himself and his associates from a Chinese state company known to have secured a major contract from Jho Low’s bosses in Malaysia and then agree to utilise some of that money to pay Jho Low’s legal bills?

Above all, why did the Sheikh (who first met Jho Low in early 2016) agree to cover Jho Low’s legal fees “out of personal friendship” and then to pretend to the international law firms that the money used was his own money rather than a payment organised by Jho Low?

Given the arrangement between Jho Low and Sheikh Sabah and that several billions of yuan were scheduled to flow from CCCC into the Sheikh’s accounts from 2016, Sarawak Report believes that the evidence is overwhelming that the money that was subsequently declared by Schillings and Kobre & Kim between 2018-2020 in their Fara filings relating to the payment of PR agents managing Jho Low’s publicity came from this same source.

The FARA filings for 2018 cite $340,680.00 having being spent by Schillings on PR agents on behalf of Jho Low and $818,434.30 for the same purpose by Kobre & Kim. Both law firms state they did not receive the payment of these fees from Jho Low directly but rather an anonymous third party. It seems evident the third party was in fact Sheikh Sabah Jaber Mubarak Al-Sabah.

The third party payer was Sheikh Sabah, however the money was sourced from Chinese backhanders to Najib
The third ‘foreign principal’ who paid the fees was Sheikh Sabah, however the money was sourced from Chinese backhanders to Najib

Politically Exposed

In January 2020 a new PR agent was hired by Kobre & Kim to continue to promote Jho Low, namely Levick Strategic Communications LP, according to further FARA filings. Levick makes clear that Jho Low, whom it terms a ‘global philanthropist’ is not controlled or funded by foreign political parties

no
no control or funding by foreign political parties?

However, Sarawak Report suggests that this description is heavily misleading, wittingly or otherwise, in that Jho Low primarily represents the former prime minister of Malaysia – a sitting MP in the present Malaysian government – and was funded by kickbacks from a Chinese state company in return for inflated Malaysian public contracts.

Those funds then passed through accounts controlled by the family of the former Kuwait prime minister, a fact known to the law firms who hired the PR agency.

The ‘principal’ (Jho Low) was therefore in fact indebted to, funded and controlled by a mass of foreign political interests which have not been clearly stated on this form, possibly out of ignorance or wilful failures of due diligence.

Sarawak Report has approached the three law firms cited in this article for their comment and will seek a response also from Sheikh Sabah Jaber Mubarak Al-Sabah and CCCC.

Original article on sarawakreport

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