Conflict of interest in 1MDB deals with PetroSaudi, UBG Bank, says Sarawak Report

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KUALA LUMPUR (Mar 4): One of UBG Bank's top executives was also employed as the chief investment officer of debt-ridden 1Malaysia Development Berhad (1MDB) at the same time the government-owned fund was negotiating a deal with PetroSaudi International, the UK-based Sarawak Report has said.

The website said the employment of Nik Faisal Ariff Kamil, who is also a close associate of businessman Low Taek Jho, or Jho Low, by both companies during the course of 2010 raised the question of conflict of interest.

At that time, Nik Faisal was both UBG's executive director of investments and chief investment officer (CIO), while Jho Low was a board member of the bank, having headed a substantial share acquisition a few months earlier.

"Correspondence shows that Nik Faisal was looped into extensive discussions with PetroSaudi over what was described as 'Project Uganda'," Sarawak Report said.

"This project appeared to be focused around the loans to PetroSaudi and also the buy-out of UBG – given that the correspondence on 'Project Uganda' email network referred to both these topics only.

"It raises questions over whether Nik Faisal was essentially UBG’s ‘man inside’ 1MDB at this crucial negotiating time – acting as an effective cat’s paw for Jho Low?"

Low's company Majestic Masterpiece was issued a stake in UBG, which is owned by Sarawak governor Tun Abdul Taib Mahmud, following a share swap deal, Sarawak Report said. Following that, Low joined the UBG board.

"Nik Faisal was UBG’s executive director of development at the time and is known to be close to Jho Low. He is now a director of another highway construction company called Prolintas, which has received the contract to build the Damansara-Shah Alam Elevated Expressway," the website said, adding that Nik Faisal was still a director at UBG.

Sarawak Report said its evidence, documents and emails, raised a clear conflict of interest in the fact that Nik Faisal was working inside 1MDB as its CIO throughout 2010, at the very time PetroSaudi was negotiating two further loans from the fund and was also engaged in buying out UBG Bank.

"Documents make clear that two further PetroSaudi loans totalling US$1 billion (on top of the original US$1 billion already invested through the joint venture in 2009) were drawn from 1MDB on July 26 and September 8, 2010.

"Meanwhile PetroSaudi’s buy-out of UBG, which was announced in January, was completed in late September 2010.

"Nik Faisal Ariff Kamil was continually consulted by PetroSaudi executives throughout this period, as the documents make clear, and he was the leading figure at the bank in the day to day negotiations over the raising of the loans," it said.

It said this meant that 1MDB executives were negotiating to lend public funds to PetroSaudi at the same time that PetroSaudi was dealing to buy out UBG.

"The inevitable concern is why did this government-run fund, chaired by the prime minister, allow such a clear conflict of interest among its most senior members of staff who were negotiating these vast loans to a company with an extremely limited asset base?

"1MDB and PetroSaudi have consistently and continually denied that any money from 1MDB went into the UBG bank buy-out, from which it has been speculated that Jho Low himself made a very handsome profit of several million ringgit," Sarawak Report said.

Sarawak Report said yesterday that it had obtained "thousands of documents" on 1MDB's operations, as well as of Jho Low's role in the government-owned strategic investment fund.

Citing email correspondence between Low and his cohorts, it also said that Low had orchestrated the entire deal with PetroSaudi so that he could use PetroSaudi as a front to siphon US$700 million from 1MDB.

The exposés have prompted opposition politicians, former Umno leaders and anti-graft bodies to demand a thorough investigation into 1MDB, and piled pressure on Prime Minister Datuk Seri Najib Razak, who is the finance minister and chairs the 1MDB advisory board.