KUALA LUMPUR (Feb 5): Were the two top executives of the Abu Dhabi wealth fund implicated in the 1Malaysia Development Bhd (1MDB) scandal convicted and jailed two days ago in the United Arab Emirates?
According to a Feb 3 news report by the Khaleej Times, the Abu Dhabi Criminal Court had sentenced a former senior management executive of a government-owned company and its chief executive officer (CEO) to 15 years' jail for money laundering. The pair — a former chairman of the board of directors and a CEO of an Abu Dhabi company — was ordered to return about Dh8 billion (US$2.2 billion) to the two companies they misappropriated public funds from.
Khaleej Times, however, did not name the two individuals nor the companies.
Khademi Quabaasy was the managing director of the state-owned International Petroleum Investment Co (IPIC) and chairman of its unit Aabar Investments where Mohamed Badawy Al Husseiny was the CEO. The two men were named by the US Department of Justice (DOJ) as collaborators with fugitive Low Taek Jho (Jho Low) to scam 1MDB of billions of dollars.
The two men were removed from their posts in 2016 after the DOJ instituted action over the theft of billions from 1MDB, with the money laundered through US banks to buy real estate, paintings, yachts and planes. They have not been seen in public since.
Khaleej Time said the court ordered the seizure of the proceeds resulting from the duo's criminal activities as well as property of equivalent. The court also sentenced the CEO to be deported after serving his prison sentence. Mohamed Badawy is a US citizen.
“Court documents revealed that the pair laundered the money by using forged documents, deliberately concealing the real nature of funds obtained, and injecting the funds into false investment transactions with several companies,” Khaleej Times reported. “Investigations conducted by the Public Prosecution in Abu Dhabi further revealed that the accused exploited the names of the two victim companies to enter into agreements with companies outside the country — and did so by abusing their respective positions at the employing company.”
It added: "They also created several companies outside the country to cover up the illegal activities, then used accounts and other companies to divide and distribute the funds to those involved in the crimes, and finally transferred the funds to other accounts in order to conceal their illegal sources.”
The two men had created a fake Aabar Investments company to give the impression it was state-owned. The Abu Dhabi government has denied any knowledge of the affairs done by the two men using the fake Aabar.
The DOJ had stated that the practice of utilising a bank account held by an entity with a name that is identical to that of a well-known commercial enterprise is a technique commonly employed to lend legitimacy to transactions that might otherwise be subject to close scrutiny by the financial institutions involved because of, for example, the size of the transactions or the role of politically exposed persons or entities.
It says a total of about US$1.1 billion was transferred, either directly or indirectly, via overseas investment funds into the Blackstone account in Singapore, which was used as a transit account to improperly distribute funds to individuals affiliated with 1MDB, IPIC and Aabar Investments PJS Ltd (Aabar BVI).
Between May 25, 2012, and Dec 14, 2012, five wire transfers totalling US$636 million were sent from the (fake) Aabar BVI Swiss account to the Blackstone Asia Real Estate Partners account in Singapore. These wire transfers were processed through correspondent bank accounts at Standard Chartered Bank and Citibank in the US.
Another US$455 million was transferred from the Aabar BVI account to Blackstone Asia Real Estate Partners through a layering process in which the money was first invested in two so-called funds — Enterprise Emerging Market Fund and Cistensque Investment Fund.
Aabar BVI is the fake Aabar that is alleged to have received US$1.367 billion from the two US$1.75 billion bonds that Goldman Sachs raised for 1MDB to buy power assets from Tanjong PLC and the Genting group in May and October 2012.
Acting on the instruction of Jho Low, hundreds of millions of dollars from the Blackstone account were also transferred to the following:
1. US$473 million to Khademi Quabaasy — the managing director of IPIC and chairman of the real and fake Aabar — via an account at Bank Rothschild in Luxembourg in the name of Vasco Investment Services;
2. US$66.6 million to Mohamed Badawy Al Husseiny — the CEO of both the fake and real Aabar — via bank accounts in Frankfurt (BHF Bank) and Texas (Bank of America) in the names of Rayan Inc and MB Consulting respectively;
3. US$30 million to the bank account of Malaysian Official 1 at AmPrivate Bank in Malaysia.
Malaysia has sued Abu Dhabi for the return of US$1.2 billion that was paid to IPIC under a complicated debt settlement agreed to by then Prime Minister Datuk Seri Najib Razak in 2017. The case is currently in the UK Court of Arbitration. Malaysia has argued that the settlement was invalid and illegal because it was the result of a massive fraud.