PETALING JAYA: A US$330 million (RM1.18 billion) loan 1Malaysia Development Bhd (1MDB) had issued to PetroSaudi International in 2011 was deposited into the account of Good Star Ltd, a firm controlled by businessman Low Taek Jho, whistleblower site Sarawak Report claims.

The money was transferred in four separate tranches into Good Star’s RBS Coutts, Zurich account, said Sarawak Report, citing documents from official investigators.

However, approval had only been granted by the regulators for 1MDB to lend the money to its former joint venture partner, PetroSaudi, on the basis that it was to “finance ongoing overseas investment in the oil and gas sector”, said Sarawak Report.

It said the rationale for the loan approval was “to pursue a strategic and global partnership in the energy sector and promoting foreign direct investment into Malaysia”.

There was no mention made of the company Good Star Ltd in the loan application and neither was approval granted for the money to be sent to it, said Sarawak Report.

The investigation also revealed that the US$330 million, which was sent to Good Star, was officially reported to Bank Negara Malaysia as having been paid to the PetroSaudi company 1MDB PetroSaudi, it said.

“The question now is who was responsible for providing this misleading information that Good Star was a subsidiary company of PetroSaudi International,” Sarawak Report said.

“Also, why did none of the banks involved in any of these transactions ever see fit to file a suspicious transaction report?”

According to the website’s calculations, US$1.19 billion of the US$1.93 billion that 1MDB lent to PetroSaudi ultimately went to Good Star. This included the US$700 million Good Star allegedly siphoned from 1MDB’s now-ended joint venture with PetroSaudi, which was orchestrated by Low, better known as Jho Low.

Good Star had also received an additional US$160 million from a murabaha loan agreement signed between PetroSaudi and 1MDB, which was also masterminded by Low.

Last Thursday, Sarawak Report said Good Star, was found to have transferred over US$500 million to one of the businessman’s bank accounts at BSI Bank Limited in Singapore in 2011 and 2012.

1MDB has come under fire for its financial mismanagement, debts, questionable investments and borrowings. Since its inception in 2009, the strategic development fund, which is owned by the Finance Ministry, has amassed a whopping RM42 billion in debts.

Prime Minister Datuk Seri Najib Razak, who chairs 1MDB’s advisory board, has come under attack from various quarters over the firm’s massive losses and dubious dealings, especially by Tun Dr Mahathir Mohamad.

The former prime minister has repeatedly asked Najib to step down, and had said in a blog posting that unaccounted funds from 1MDB spending showed money has “disappeared”, while noting Najib’s inability to explain the matter disqualifies him from leading the country.

Dr Mahathir also hinted at corruption and theft of 1MDB’s funds, saying that money disappearing was “different from just losing”.

“Governments can lose money through bad investments. We would know where the money is lost. But when huge sums of money disappear, then those entrusted with its management must answer for the disappearance.

“Disappearance is about money lost which cannot be traced. This can be because of corruption or theft.” — The Malaysian Insider

This article first appeared in The Edge Financial Daily, on April 27, 2015.