This article first appeared in The Edge Malaysia Weekly on May 15, 2023 - May 21, 2023

FORMER prime minister Datuk Seri Najib Razak signed mega infrastructure contracts, including the East Coast Rail Link (ECRL), with China in 2016 at inflated prices, in return for which Chinese state-owned companies undertook to pay the massive debts of 1Malaysia Development Bhd (1MDB) — the payments for which were routed through several bank accounts owned by Kuwaiti individuals in a bid to hide the true intent.

And when state-owned agencies such as the Land Public Transport Commission (SPAD, since decommissioned and replaced by the Land Public Transport Agency [APAD]) objected to a project award for lack of an open tender, Najib sought to skirt the issue by establishing a new special purpose vehicle that was compliant to oversee the proposed projects.

The grand stratagem and China’s complicity were revealed in March in a Kuwait court that sentenced fugitive businessman Low Taek Jho aka Jho Low in absentia to 10 years’ jail for his role of money laundering in the emirates. A number of Kuwaiti individuals, including the son of the emirate’s former prime minister Sheikh Sabah Jaber Al-Mubarak al-Hamid Al-Sabah, were also handed jail sentences.

Kuwait court documents obtained by The Edge from the March proceedings highlighted the role of Jho Low — whom the court described as Najib’s “accomplice” — as one of the masterminds behind the proposed deals.

Najib’s then aide Datuk Amhari Efendi Nazaruddin had previously testified in a Malaysian high court that he had travelled to China in June 2016, with Jho Low’s help, to conduct several real estate infrastructure deals there. Amhari had testified that when he arrived in China, the fugitive financier was already there to help in the negotiations.

Jho Low, who is the fifth defendant in the Kuwaiti proceedings, was said to have used his influence to appoint his two accomplices as secretaries of the Malaysian-Chinese High Influence Strategic Economic Commission (MCHISEC) to ensure the signing of the agreements between Malaysia and China relating to the ECRL and oil pipeline construction projects consisting of a petroleum pipeline from Port Klang to Kuala Kedah as well as the Trans-Sabah Gas Pipeline.

Other projects mooted were a proposed Bangkok-Kuala Lumpur high-speed rail, a multi-product pipeline and the development of federal territory Labuan into an offshore banking and tourism hub.

The two individuals, identified as Jerome Lee Tak Loong and Terrence Geh Choh Heng, were appointed to the MCHISEC for the ECRL and the gas pipeline projects to ensure agreements would be signed. This was done before Amhari’s June 2016 trip and Najib’s visit five months later to formalise the deals.

Lee was previously 1MDB’s investment director who was once remanded by the Malaysian Anti-Corruption Commission in 2015 before being released, while Geh was 1MDB’s director of finance. Lee and Geh are said to have left the country after Barisan Nasional led by Najib lost in the May 2018 election.

The insertion of Lee and Geh into the MCHISEC was to ensure they could prepare the document stating that the ECRL would be awarded to China Communications Construction Company (CCCC) and the oil gas pipeline project to China Petroleum Pipeline Bureau (CPPB).

Najib was said to have instructed SPAD to submit the proposal to Malaysia’s Economic Action Council to implement the ECRL at a cost of RM45 billion to RM55 billion, but SPAD objected to the terms initially as the process was not made through public tender.

To get around the objection, the Ministry of Finance (MoF) — then also headed by Najib as finance minister — established Malaysia Rail Link Sdn Bhd (MRL) to manage and implement the ECRL project with CCCC appointed as the contractor. A memo was prepared for the Malaysian Cabinet chaired by Najib to approve the agreement for the ECRL as well as an oil pipeline project at a cost of RM55 billion.

The Export-Import Bank of China (China Eximbank) had already agreed to finance the project and according to the agreement signed by Najib in a November visit to China, where he signed off on the proposed projects mooted by Jho Low, the MoF agreed to allocate funds in stages through a government grant to purchase land for the ECRL project.

MRL entered into an agreement with China Eximbank, which agreed to provide a loan of up to 85% of the project cost, while the Malaysian government was to provide the remaining 15% via the issue of Islamic Sukuk and bonds.

For the two oil-and-gas pipeline projects, Suria Synergy Energy Resources Sdn Bhd (SSER) was formed under 1MDB’s wholly-owned subsidiary SRC International Sdn Bhd as a company involved in energy resources, natural resources and minerals for the development of infrastructure development.

The two gas pipeline projects were to be implemented by CPP and the China Eximbank again agreed to finance up to 85% of the value of the projects.

As the guarantor for the projects, the Malaysian government agreed for SSER to pay the balance 15% in advance payment to CPP as consideration since the remaining SRC debt was also to be acquired by CPP. In addition, Putrajaya was also to bear the cost of purchasing the land for the project.

According to the Kuwaiti court, CCCC had transferred funds from the loans related to the above projects via its two subsidiaries in Hong Kong — Multi Strategic Investment Limited (MSIL) and True Dragon Properties Limited (TDPL) — to two companies in Kuwait.

The court document stated that Malaysia’s Penal Code and the Attorney General’s Chambers considered these funds to be theft-related and fraud crimes that harm Malaysia’s interests as the funds were obtained illegally by the offer and acceptance of bribes.

The court said that the victims were MRL and SSER, which are owned by MoF and the Malaysian government.

Jho Low is said to have hatched the money-laundering plan to cover 1MDB’s ballooning debts in 2016 with Hamad Ali Hassan, said to be a close associate of Jho Low as they studied together in Wharton. He is also said to be the person linking the other Kuwaitis involved in the scheme.

Jho Low, according to court documents, was said to have gone to Kuwait with an entry visa issued by Sheikh Sabah Jaber (the son of the former prime minister) and had met the other two defendants Bachar Kiwan and Saud Abdullah Ahmed Abdel Mohsen there.

According to the court documents, the meeting had taken place on Sheikh Sabah Jaber’s farm in Abdali, where the defendants had planned to commit money laundering operations inside Kuwait involving the sums related to 1MDB investments in the railway and oil-and-gas pipeline projects.

Jho Low was said to have provided them with a scheme of the names and accounts of the abovementioned companies, institutions and individuals, and in implementation of their criminal scheme, the funds related to the aforementioned projects were passed on using the account of Comoro Gulf Trading and Contracting Company belonging to Sheikh Sabah Jaber, Hamad Ali, Bachar and Saud Abdullah.

The Kuwaitis used Comoro’s account in the Industrial and Commercial Bank of China Ltd at the Kuwait branch — to receive RMB450 million that was equivalent to KWD21.5 million, from Hong Kong-based TDPL owned by CCCC.

Two companies were formed on the directive of Sheikh Sabah Jaber, namely Al-Asbah International Company and Al-Mouniratain International Company, managed by Hamad Ali. Al-Asbah had an account with the Industrial and Commercial Bank of China Limited at the Kuwait Branch.

Al Asbah’s account was used to receive 7.279 billion yuan or 343.7 million Kuwaiti dinars from CCCC’s Hong Kong-based MSIL. To lend an air of legitimacy to the deal, a fraudulent contract for the supply of bitumen and steel materials was made between Comoro, owned by Sheikh Sabah Jaber and Bachar Kiwan, with TDPL.

In addition, the funds received were also alleged to be consulting fees for the two projects. The transfers of funds occurred in 2017.

Previously, Najib’s aide Amhari — the prosecution’s eighth witness in the 1MDB-Tanore trial — testified that he was dispatched on June 28, 2016, to China as Malaysia’s “diplomatic representative” by Najib on a “secret mission” to convince China to help pay 1MDB’s debts, in return for which Beijing’s state-owned enterprises would be awarded several infrastructure projects.

At the time, 1MDB’s growing debts had become public including a huge one with Qatar’s International Petroleum Investment Company (IPIC) as it had stood as guarantor for a US$3.5 billion bond issued by 1MDB and undertaken by Goldman Sachs.

“Although I respected Najib’s directive, this was the most difficult moment in my job. I was worried about being directly involved in Najib and Jho Low’s plan to cover up the loss of 1MDB funds and the repayment of IPIC debts or the preparation of political funds,” Amhari told the High Court, adding he had mixed emotions over the trip.

Amhari said his June trip was to facilitate Najib’s planned visit in November 2016, when the deals would be finalised. By November, Najib had visited Beijing to sign an agreement between CCCC and ECRL Sdn Bhd, and another between China Petroleum Pipeline Engineering Ltd and SSER.

He also said that Najib’s visit was to secure two funding agreements: the first between China Exim-bank and ECRL, and the second between China Eximbank and SSER.

Najib, who is facing 25 charges of abuse of power and money laundering charges in the ongoing 1MDB-Tanore trial, was in China to also witness renminbi-bond underwriting agreements between China and ECRL, as well as between China and SSER.

Sheikh Sabah, Hamad Ali and Saud Abdullah were charged and found guilty by the Kuwait court of money laundering of RMB7.279 billion and forgery of documents for this purpose.

Sheikh Sabah, along with Bachar Kiwan, were also charged with money laundering of RMB450 million while Bachar and Jho Low were charged with assisting or abetting in the money laundering.

The funds had made their way through an elaborate scheme of transactions, and testimonies of the witnesses in the Kuwaiti trial revealed the men had all received portions of the funds as bribes that were supposed to be utilised for ECRL, pipeline construction and to repay 1MDB debts.

Jho Low, Sheikh Sabah, Hamad Ali and Bachar were sentenced to 10 years’ jail with hard labour, while Saud Abdullah — who was a lawyer in the deal — was sentenced to seven years’ jail.

Jho Low and Bachar were sentenced in absentia.

Najib himself is currently serving a 12-year jail sentence and was fined RM210 million after he was convicted of seven criminal charges relating to SRC funds. He is currently on trial for offences relating to 1MDB.

Although the ECRL was scrapped when the Pakatan Harapan coalition came to power in May 2018, following recommendation and negotiations by then economic adviser Tun Daim Zainuddin a year later, the project was resumed at a reduced cost of RM44 billion. Not much progress appears to have taken place for the two gas pipeline projects.

Following the Kuwait proceedings, there have been calls for Kuwait to repatriate 1MDB’s stolen monies back to Malaysia.

In the Kuwait proceedings, a former director of Kuwait’s Anti-Money Laundering and Terrorist Financing Crimes Department with the rank of colonel, Hamid Turki Hammoud Buyabis, also filed a civil suit against Sheikh Sabah for compensation for the moral damage caused to him.

Hamid Turki told the emirate court that Sheikh Sabah had purportedly used the name of his father, who was then prime minister, to intimidate him from further investigating the money laundering case.

He said that despite the fear and intimidation that Sheikh Sabah had directed at him, he had exercised his functional role and had continued to investigate the case. Adding more presssure, Sheikh Sabah then accused him of leaking state security matters. 

Hamid Turki was eventually freed of the accusations, but he claimed to have suffered moral damage as a result of the plot and misleading action by Sheikh Sabah. 

However, the court told Hamid Turki that he had brought his suit to the wrong court. 

“It was evident from the papers that the public prosecution had charged all defendants of the crimes of money laundering, forgery of customary documents and harming the country’s national interests without ascribing a crime to any of them that may be the subject of a civil lawsuit.

“Hence, Hamid Turki’s civil claimant for compensation does not arise from the crimes subject of the accusation from Sheikh Sabah Jaber that was made,” the court said. 

The court directed Hamid Turki to bring his case against Sheikh Sabah before a competent civil court pursuant to Kuwaiti law.

Save by subscribing to us for your print and/or digital copy.

P/S: The Edge is also available on Apple's App Store and Android's Google Play.