Alleged 1MDB conspirator says he is a scapegoat

This article first appeared in The Edge Financial Daily, on January 24, 2019.
-A +A

KUALA LUMPUR: Khadem Al Qubaisi, who has been detained in Abu Dhabi since 2016, claims that he is being made a “scapegoat” for the United Arab Emirates’ (UAE) role in the 1Malaysia Development Bhd (1MDB) scandal, according to The Wall Street Journal.

Emirati authorities, he claimed, are also trying to force him to turn over his assets, WSJ reported yesterday, citing contents from two five-minute phone calls with Khadem, a former top aide to the powerful Sheikh Mansour Zayed Al Nahyan, the United Arab Emirates’ deputy prime minister and a member of the royal family.

Khadem was reportedly speaking to the newspaper from the Al Wathba prison in Abu Dhabi, where he has been held after Abu Dhabi authorities arrested him following accusations from the US Justice Department that he, together with several others, had stolen billions of dollars from 1MDB. He hasn’t been charged for any crime in either the US or UAE.

“I did this deal but I did it on behalf of the government of Abu Dhabi,” he was quoted as saying, though he did not address any specific allegations against him. “Now they are putting everything on my back,” he said.

He pointed to Sheikh Mansour and Abu Dhabi authorities as the ones who wanted to pin the blame on him.

Khadem said he had acted with the knowledge of more-senior UAE officials when he led International Petroleum Investment Co (IPIC) to become a key business partner of 1MDB, including guaranteeing US$3.5 billion in 1MDB bonds.

Sheikh Mansour was chairman of IPIC when Khadem agreed to support 1MDB.

According to civil complaints filed by the US Department of Justice (DoJ), Khadem allegedly received US$471 million of stolen funds into his private account in Luxembourg and used some of it to buy US real estate. He helped funnel 1MDB money to conspirators through companies set up to look like IPIC’s subsidiaries, US authorities said.

After Khadem’s arrest, IPIC was folded into another UAE fund, where Sheikh Mansour is a board member. Incidentally, Sheikh Mansour is also chairman of the Abu Dhabi Judicial Department, a position that, according to WSJ, oversees all criminal cases in the emirate.

Once one of the Middle East’s high-flying businessman who helped negotiate the bailout of Barclays Bank in 2008 and a multi-billion-dollar investment into Daimler AG on behalf of Sheikh Mansour, Khadem now said the Abu Dhabi authorities are pressing him to turn over his assets to a private company called Das Holding, which is owned by Sheikh Mansour.

“If I did something wrong for this Malaysia deal, ok, they can go and take my assets, no problem. Why is a private company trying to take control of my assets,” he questioned.

Since his arrest, Khadem said he had not been interrogated by any law enforcement body about 1MDB deals. WSJ also noted that although Khadem is wanted for questioning in several other countries for allegedly pilfering money from 1MDB and committing other financial crimes, Abu Dhabi authorities have not agreed to let him testify elsewhere.

Instead, Khadem said UAE officers have been pressuring him to transfer his assets, including land and villas in the UAE, to Das Holding. Khadem claimed two of his nephews who had power of attorney over some of his assets had also been detained until they signed over US$40 million in luxury cars and land to Das Holding.

The two nephews did not respond to WSJ’s requests for comments, and neither did representatives for Sheikh Mansour and Das Holding. The Abu Dhabi government declined to comment.

WSJ also reported, citing sources, that soon after the phone calls, an intermediary in Abu Dhabi who set up the calls was detained and questioned by Abu Dhabi security services.

Meanwhile, an Abu Dhabi-based lawyer involved in Khadem’s case said the latter “abused and exceeded his authority” at Abu Dhabi sovereign funds “to achieve personal and illegal gains.”

“Now he is more concerned about keeping his illegal wealth than doing the right thing by admitting his guilt and returning the proceeds he obtained from his criminal activities,” the lawyer told the newspaper.

Khadem, who recounted in the article that he was handcuffed to a window in a corridor and left for 24 hours earlier this month, said his plan is to “die here in this place or to get out.” The lawyer dismissed Khadem’s description of his prison conditions and treatment as inaccurate.

The article also highlighted that a half-billion dollar yacht called the Topaz that was largely bought with 1MDB funds has not been targeted by authorities so far.

The newspaper said, citing financial documents it reviewed, that Khadem directed companies he controlled to spend about US$132 million originating from 1MDB for debt payments on the yacht between 2012 and 2015. Sheikh Mansour reportedly used and had control of the Topaz — a 482-foot yacht with eight floors, a swimming pool, cinema and two helicopter pads — until at least 2015.

Fugitive businessman Low Taek Jho, or Jho Low, was said to have leased it on several occasions, including to attend the 2014 FIFA World Cup with celebrities like Leonardo DiCaprio.

While WSJ wrote that the yacht’s current ownership could not be determined, it found that the remaining €271 million of an original €464.3 million loan to buy the boat was fully paid off last April, based on registry filings. But the documents has no mention of who paid for it.