Sunday 01 Oct 2023
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This article first appeared in The Edge Malaysia Weekly on March 28, 2022 - April 3, 2022

FLUSH with millions of dollars from funds siphoned out of 1Malaysia Development Bhd (1MDB), former Goldman Sachs banker Roger Ng Chong Hwa, his wife Lim Hwee Bin and Ng’s associates considered purchasing a number of properties in London in 2012 and 2013 for investment purposes.

They had shopped around for a handful of choice properties and went to the extent of considering the use of a company registered in Guernsey — an island off the coast of the UK that is a known tax haven — to ensure that transactions would be “tax efficient”.

FBI agent Sean Fern confirmed this in his testimony on March 22 in the ongoing trial of Ng in the US, according to transcripts obtained by The Edge.

Fern confirmed correspondence dated May 1, 2013, between a Coutts banker and Ng in which the former suggested that the commercial property purchases in the UK be financed through a Channel Island-registered company, in line with advice from consultants KPMG.

“My thoughts at this stage would be to fund the commercial property purchases through the Channel Islands company in conjunction with advice from KPMG. If your investments in the Guernsey company are to be by way of Mezz funding, this will manage the corporation tax issues, if I have understood correctly, but utilise the surplus cash flow. Thus, I am not sure that repayment will be in line with your comments,” said Fern, reading aloud the contents of the email.

Correspondence between Ng and KPMG Channel Islands Ltd in July 2013 regarding a tax advice report on buying UK properties through a Guernsey company was also presented in court.

“The report will cover the specific Guernsey and UK tax principles that the structure will rely upon and provide details of other taxes that require consideration,” said Fern, reading aloud the correspondence.

Ng had reached out to the KPMG representative earlier regarding a property in Ossington Street in Notting Hill, London.

Shopping for prime real estate in Notting Hill and Mayfair

Ng and his associates had sought to buy residential or commercial properties, or a mix of both.

The acquisitions were to be made by an entity called Hwasun Estate Ltd, registered in Guernsey in February 2013, to ensure the transactions were “tax efficient”. Three companies — Ideal Force Sdn Bhd , 771 Portland Place London Ltd and River Blue Investing Corp — would each own a third of Hwasun Estate Ltd.

Another company, Queens Gate Capital Ltd, was listed as an initial beneficial owner of Hwasun, but it was replaced by River Blue. Ng and Lim were the beneficial owners of Queens Gate. River Blue is also linked to the Ngs.

Prosecutor Brent Wible: And what does the [organisation] chart show about the ownership of River Blue Investing Corp?

Fern: It was going to be controlled or owned by Tanamar Holdings Ltd, a nominee’s shareholder by declaration of trust, which in turn was going to be 50% owned by Lim and 50% owned by his mother-in-law Tan Kim Chin.

1MDB funds were also funnelled to River Blue. On June 28, 2013, it received US$2.5 million from Lim and Tan’s OCBC Singapore account. However, there were some glitches when it came to Blue River replacing Queens Gate.

According to the court documents read aloud by Fern, there were several additional requests for due diligence documentation from the corporate service provider in May 2013 on the change of the beneficial owner.

In July 2013, even the representative of KPMG, who eventually prepared the tax advice report, asked Lim “to provide advice” on Hwasun. To this, she wrote back to say it was “appalling” that further documentation was needed when they had already been clients for a while.

Moreover, they had been awaiting his assessment for quite some time. She then forwarded to him the names of all the parties involved in the transaction. In the end, the Ossington Street purchase did not take place.

Other potential properties considered and mentioned in court included those in Grosvenor Street and Bourdon Street in Mayfair.

In April 2013, Ng emailed Leissner about a property in Grosvenor Street that was worth £31 million to £32 million.

“...getting leverage of 60%-ish. Gross yield on rent is about 4.5%. After leverage, 5% to 6%, depending on [the] cost of [borrowing] … Historically upwards revision, never down. Price per sq ft is £1,000, about 26,000 sq ft and about 114 years lease remain,” said Fern, reading the email.

Ng had indicated in the email to include another associate and suggested that he, Leissner and the associate split the equities cheque three ways, which would amount to £4 million each. He added that Deutsche Bank would require some assets under management for the potential loan.

As early as December 2012, Ng’s mother-in-law emailed UBS inquiring about a mortgage for a property in Bourdon Street. “We would definitely want a mortgage to offset against rental income. If UBS can consider this mortgage, [we] would appreciate some indicative rates,” read the email.

Ng’s trial is ongoing at the US District Court in the Eastern District of New York.


Funds from Project Magnolia flowed into Silken Waters

Federal Bureau of Investigation (FBI) agent Sean Fern testified on March 21 that Lim Hwee Bin, the wife of former Goldman Sachs banker Roger Ng Chong Hwa, used a shell company, Silken Waters/Victoria Square, to funnel millions of dollars in kickbacks from 1Malaysia Development Bhd’s (1MDB) first bond issuance.

Goldman Sachs was given the mandate for the bond issuance — code-named Project Magnolia — which raised US$1.75 billion to fund the purchase of power assets from tycoon Ananda Krishnan’s Tanjung group.

The beneficial owner of Silken Waters/Victoria Square was Ng’s mother-in-law Tan Kim Chin.

Using emails, bank records and phone logs, Fern corroborated much of the money-trail evidence previously testified to by FBI agent Eric Van Dorn.

On the right is an infographic of events that transpired in relation to Silken Waters/Victoria Square, specifically in relation to Project Magnolia, according to court transcripts obtained by The Edge.

Ng, the only Goldman banker to stand trial over the 1MDB debacle, is charged with conspiring to launder money and bribe government officials in Malaysia and Abu Dhabi through bond offerings that Goldman Sachs handled. Three charges have been levelled against him for alleged violations of the Foreign Corrupt Practices Act. If found guilty, he faces up to 30 years in prison.


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