So Much For 'Royal Goodwill' - Malaysia & Abu Dhabi Are Still At Loggerheads!

So Much For 'Royal Goodwill' – Malaysia & Abu Dhabi Are Still At Loggerheads!

Anyone tempted to conclude from the present strutting denials of the former prime minister Najib Razak that he might somehow, after all, be innocent of the thefts from 1MDB can look beyond the daily damning evidence from his latest trial in KL – to what Malaysia’s legal representatives have been saying in Britain.

A recent judgement from the British High Court relating to what is clearly revealed to have been a bitter and ongoing battle between Malaysia’s 1MDB and Abu Dhabi’s IPIC (who are both claiming some six billion dollars compensation from the other) includes a damning summary of the case brought by Malaysia’s own lawyers alleging Najib’s criminal and dishonest behaviour as he first orchestrated and benefited from the thefts, and then sought to cover them up by buying off the Emirati fund with a “grossly one-sided settlement” at a huge further cost to his own country.

The summary given by the British High Court judge, Justice Andrew Baker, (below) is of Malaysian government’s own case before the court:

The Cover-Up Claim

[Malaysia’s] claim … is that the Deeds and therefore also the Consent Award begat by them were concluded … to the knowledge of the defendants [Abu Dhabi], not as a means to compromise in good faith the legal disputes referred to Arbitration 1, but in bad faith as a means to conceal, or further the concealment of, Mr Najib’s prior fraud and dishonesty

The argument here is that a collusive settlement by which, in effect, one party connives to conceal or further the concealment of the other party’s fraud and dishonesty, to keep it hidden from its victims (here, it is said, the Malaysian state and/or the Malaysian people whose interests Mr Najib is said to have subjugated to his own), is obtained by fraud

[Malaysia’s] claim has the following essential ingredients:

  1. (a)  a full defence to the claims made in Arbitration 1 should have included an averment of Mr Najib’s dishonest involvement in the siphoning off of 1MDB funds, and the defendants “were aware of this during [Arbitration 1] and exploited it”. I infer that the ‘exploitation’ alleged is the securing of settlement on the terms of the Deeds;
  2. (b)  Mr Najib wanted Arbitration 1 not to proceed any further than it did for a dishonest reason, namely to avoid allegations of his dishonest involvement in the siphoning off of 1MDB’s funds being made, evidenced and considered in Arbitration 1;
  3. (c)  the defendants knew that Mr Najib had been involved in the underlying fraud upon 1MDB “and that he would exercise his control over MOFI and 1MDB in order to protect himself and those close to him rather than the best interests of either entity”, and exploited that knowledge to obtain “grossly one-sided” settlement terms, colluding with Mr Najib by way of those settlement terms so as to cover up his fraud;
  4. (d)  there is substantial injustice [to 1MDB/Malaysia] as a result,… [Judgement issued November 4th, Justice Andrew Baker]

In short, whilst Ismail Sabri and UMNO have been hard at work back home seeking to rehabilitate Najib by painting him as a maligned victim of a politically motivated prosecution; appointing him as the key strategist of the Malacca state election; handing him back hundred of millions in confiscated cash and goods and even, apparently, planning to honour him with a RM100 million home as a gift from a thankful nation, (whilst at the same time even treating him as an experienced mentor for the present government in the field of finance)….. abroad the same government’s lawyers have agreed that Najib is a global criminal as they fight to win their case against Abu Dhabi.

The judge labels Malaysia’s case, as it seeks to overturn the 2017 ‘Consent Award’ that Najib’s government signed off with Abu Dhabi over 1MDB, as an allegation of a “collusive cover-up” between the two countries, which Abu Dhabi exploited in full knowledge of Najib’s desperation to conceal his fraud in order to obtain a grossly one-sided pay-off agreement.

This Consent Award signed by Najib amounts to a liability on the part of Malaysia of no less than $6 billion to Abu Dhabi plus a write off debts that ought to have been owed by Abu Dhabi to Malaysia (given IPIC’s knowing participation in the thefts using bogus off-shore Aabar subsidiaries set up by the CEO Khadem Al Qubaisi and his number two, Mohamed al Husseiny).

Moreover, as the judge points out, even if Najib seriously didn’t know about the thefts (despite being in charge of all decisions) before 2017, as he seeks to claim, these negotiations with IPIC resulting in the so-called Consent Order of that year could not have been concluded without his knowing that billions had disappeared and where (the fake offshore namesake companies were listed in the settlement as being the recipients of the missing cash but as having nothing to do with IPIC/Aabar).

Despite this Najib continued right up until the election to publicly claim that no money had gone missing from 1MDB. He is confirmed a liar by Justice Baker, who points out that neither side in the argument before him are denying Najib’s guilt or the facts of the thefts from 1MDB:

Read more from the judgement:

Justice Baker states that as pleaded in Malaysia’s own claim, the Consent Award “formed part of an attempt by Mr Najib and others to conceal earlier fraudulent activity, contrary to the interests of [MOFI] (and contrary to the interests of the Malaysian people). Moreover, the Defendants [IPIC/Abu Dhabi] knew that Mr Najib was acting in this way.” Mr Najib is Dato’ Sri Haji Mohammad Najib bin Tun Haji Abdul Razak, the former Prime Minister and Minister of Finance of Malaysia, whose alleged involvement in what is said to have been kleptocracy on a massive scale is the background to this claim; and

(b) that irregularity caused serious injustice “to the Claimants (and, as a consequence, to the Malaysian people) because it led to an award comprising grossly disadvantageous terms on behalf of the Claimants and provisions requiring payment of substantial sums to the Defendants, which are not justified by the merits of the claim [i.e. the claim that was before the Arbitration 1 arbitrators] and would not have been awarded had the matter fairly been determined on its merits.”

The judge goes on to lay out the case of Malaysia’s lawyers by again pointing the finger at Najib’s knowing direction of the looting from 1MDB: “the gist of the claimants’ claim is that the settlement given effect by the Consent Award was concluded, on the claimants’ side, by or at the behest of Mr Najib, to the knowledge of the defendants acting contrary to the claimants’ interests by agreeing grossly disadvantageous settlement terms outside any range of terms that an honest individualacting in the claimants’ interests might have considered agreeing, in an attempt to conceal earlier fraudulent activity…..

My reading of the essence of the claim is ….

    1. (a)  that the Consent Award “formed part of an attempt by Mr Najib to cover up his and his fellow conspirators’ fraud (including senior officers of IPIC and Aabar …), contrary to the interests of MOFI, 1MDB and the Malaysian people, in whose interests he was constitutionally bound to act”,
    2. (b)  that IPIC and Aabar “knew that [Mr Najib] was acting in this way and were complicit in his fraud: their agents colluded with him in the original fraud, and then both IPIC and Aabar … colluded with him again in seeking to cover up the fraud by means of the Award and other agreements”, and
    3. (c)  that “this was a continuation of the fraud and … the way in which the Award was procured was clearly contrary to public policy. In addition, the settlement agreements upon which the Consent Award is based are void and would, if they were not void, be unenforceable on grounds of illegality.”  …….

It was common ground that no challenge to the Consent Award on the grounds now put forward would ever have been contemplated while Mr Najib was in power, and that the claimants should not be shut out from pursuing those grounds because no challenge was brought until after the May 2018 general election, notwithstanding that the claimants were by then already 11 months out of time.

The 1MDB affair, involving (as alleged) the dishonest siphoning off of over US$6 billion from 1MDB for the personal benefit of various individuals including Mr Najib and his stepson, Riza Shahriz bin Abdul Aziz (‘Mr Aziz’), has been a huge scandal in Malaysia……

The judge later points out “the claimants opened with the comment that “The circumstances of this case are extraordinary and widely reported worldwide”; and the latter part of that (worldwide notoriety) was true some considerable time before the Deeds were concluded in April 2017.”  

This emphasises how ridiculous Malaysia’s own lawyers contend it has been for Najib to pretend at this late date that there was no problem over 1MDB just as he was negotiating a disadvantageous cover-up settlement with IPIC.

So, what kind of financial advice is Ismail Sabri seeking from the former prime minister, citizens may well ask, when Malaysia’s own lawyers have so described him?

Why is he offering his ‘mentor’ a one hundred million ringgit trophy property as a present from the people?

Failed Royal Deal?

Clearly, as Ismail presses ahead with his vast, opaque budget gambit for 2021, the public coffers remain in extreme peril under such circumstances.

However, the very same King who has urged and chastised parliament to support the highly questionable budgets of two minority prime ministers, appointed by himself in defiance of the outcome of the 2018 election, has staked his credibility on a successful personal negotiation of the Abu Dhabi issue.

One of the early actions of the Mahiaddin administration after seizing office in 2020 was to suspend the successful legal proceedings started by their predecessors under PH in the United Kingdom, pending this supposed negotiation. What the this latest UK court wrangling reveals is that eighteen months later nothing has been resolved.

As PN took office the UK Appeal Court had just upheld a ruling that the secretive arbitration process that had produced the unfavourable Consent Order in 2017 should be transferred to open court on grounds of the probable fraud.

Rather than have the Supreme Court hear and most likely uphold that judgement, resulting in a detailed and open trial (which, as we know from published recordings, Najib had warned Abu Dhabi’s Crown Prince (MBZ) would embarrass both himself and his brother, Sheikh Mansour) the new government agreed to suspend proceedings pending efforts to make a settlement.

The newly appointed King made much of his close personal ties with the strongman of Abu Dhabi. MBZ had attended his coronation and the two royals’ time together at Sandhurst was recalled. Two high level trips were conducted by the King to Abu Dhabi over 2020/21 and the government’s newly appointed top negotiator on the case (then PM Mahiaddin’s personal lawyer Rosli Dahlan) was soon boasting that a settlement was imminent which would see big bucks returned.

However, the posting of this latest judgement following arguments made as late last as June in the UK courts provides clear evidence that the present Malaysian government remains at loggerheads with the Emiratis, who are plainly refusing to cough up concessions to a restored UMNO regime that is so obviously once more desperate to protect Najib.

This particular court action had been brought by Abu Dhabi in an apparent bid to derail Malaysia’s successful bid to get matters adjudicated in open court. Abu Dhabi had submitted that the entire process was time expired according to contract law. Success for the Emiratis would have destroyed Malaysia’s leverage in the ongoing settlement negotiations and KL’s lawyers were arguing that an extension was appropriate given the circumstances that Najib had been in charge until 2018.

The November judgement has however found in favour of Malaysia in a huge boost for 1MDB’s case against IPIC as Justice Baker showed his clear scepticism in the face of Abu Dhabi’s argument that Emiratis had acted in innocent ignorance during the negotiations with Najib:

“it was submitted for the defendants that there is “no credible basis” for the allegation that they (the defendants) appreciated Mr Najib was acting wrongfully in supporting settlement on the terms of the Deeds. I disagree…….” [Judge Andrew Baker]

Ironically, this case and Baker’s judgement have now laid bare all the detail behind the secretive arbitration that both sides had clearly wanted to keep out of open court.

Stage by stage the judgement explains how both 1MDB and IPIC top management worked closely to frame a series of bogus option deals and guarantees that enabled them jointly to siphon out no less than $3.5 billion from the £6.5 billion raised in loans by 1MDB, through arrangements with Aabar, into a series of bogus off-shore Aabar subsidiaries in the BVI and Seychelles. Those managers were named as Najib, Jho Low and IPIC’s Khadem Al Qubaisi and his deputy Mohamed al Husseiny, who were the main beneficiaries, plus others.

Further substantiating the likely conclusion that IPIC’s Abu Dhabi negotiators were well aware of this fraud and exploited it to get grossly favourable terms from the now disputed arbitration settlement in 2017, the judge also drew attention to a clear threat made by the IPIC legal team in an email to 1MDB.

The email indicated that unless IPIC got the terms they wanted in the resulting Consent Order, which was designed to compensate Abu Dhabi as it fulfilled the obligation it had entered in to to bail out 1MDB’s debts, they would be forced to publish their open response to the arbitration case “in the form we believe necessary to defend and win our claim”.

Justice Baker observed that this strongly implied there would be an argument that IPIC were knowingly leveraging their position with a threat to expose Najib. Thanks to Judge Baker’s presentation of the case both sides now lie exposed with little left to hide from an open court.

Time Extension Granted But On Condition Malaysia Acts

In finding for Malaysia against this attempt by Abu Dhabi to scotch their case, Judge Baker accepted that granting a time extension was justified given that the 1MDB plaintiffs were justified in arguing that the bulk of their delay in bringing their case for fraud was caused by the continuation in office of Najib himself, who would never have allowed his own fraud to be challenged.

There was also a delay after the 2018 election the judge accepts. However, in the light of the submission by the former AG Tommy Thomas, whom Justice Baker fulsomely praised for his statement to the court (see below) he ruled that he believed the facts and the law allowed for the extension he has now given to Malaysia to pursue its case against IPIC:

 

  1. Mr Thomas’ account is clear, straightforward and credible, and no reason was advanced why I should not accept it as honest and accurate, notwithstanding that it should have been provided much sooner in the proceedings.
  2. Mr Thomas is a very experienced independent lawyer. He was called to the English Bar in 1974 and to the Malayan Bar in 1976. He was in continuous and active practice as a legal adviser and advocate for 40 years or so prior to appointment as Attorney General. Malaysia has a unified legal profession, but Mr Thomas says that his was alwaysprimarily a litigation practice equivalent to what would be a barrister’s practice in England. He developed through his practice a particular expertise and substantial experience of matters involving financial fraud or financial organisations in difficulty.
  3. Mr Thomas confirms the huge importance of this Claim in Malaysia. He says the claim to set aside the Consent Award is “of … fundamental importance to Malaysia and to our people … . Not only are the financial sums involved extremely substantial, but obtaining a proper resolution of this dispute is critical to public trust. Determining whether the Consent Award was affected by the 1MDB fraud is a matter of the utmost public interest in Malaysia. In that regard, I note it has been a matter of substantial media attention.” The question of what to do about the Consent Award, he says therefore, was treated by his office and by Mr Thomas personally “as a priority and as urgent, as best could be done in the extraordinary circumstances in which we found ourselves”. To similar effect, but as regards 1MDB more generally, Mr Thomas declared to press reporters at the Attorney General’s Chambers as he took up office on 6 June 2018 that “The government’s first and immediate priority is all matters pertaining to 1MDB. I have to study the papers in that scandal, and we shall institute criminal and civil proceedings in our courts against the alleged wrongdoers.”
  4. Indeed, Mr Thomas explains that the level of distrust of the previous regime, and fear that elements within it had acted against the interests of the Malaysian people or so as to protect their own or Mr Najib’s interests, was such that the principal reason for his appointment as Attorney General by Dr Mahathir “was to ensure that legal matters concerning 1MDB would be pursued independently and completely”.

 

Justice Baker further accepted the exceptional nature of the situation facing the PH government and its new AG as it struggled to bring a plethora of legal actions including this one on assuming office to repair the damage caused by Najib Razak.

Included in those circumstances was what he described as the appalling mess left by what he calls Tommy Thomas’s “discredited predecessor” namely AG Apandi who had so culpably exonerated Najib:

“Mr Thomas inherited no meaningful prior work product, the only previous and supposedly independent investigation in Malaysia (by Mr Thomas’ now discredited predecessor) had cleared Mr Najib of wrongdoing, and 1MDB was an empty shell.”

This vital ruling allowing extra time on the exceptional grounds facing Malaysia in this case (and the clear view of the judge that IPIC have potentially been dishonest) means that on the one hand that Malaysia is back in a position of strong advantage in its attempts to pressure a more favourable settlement, clawing back the $6 billion conceded to Abu Dhabi by Najib.

On the other hand, the fact that this attempt by Abu Dhabi to throw out the case was still being fought by both sides in court as late as last June plainly shows that, despite the talk of Royal Diplomacy, there has been no settlement after 18 wasted months of negotiation following the suspension of the main case by PN.

The prospects get worse, because although the UK court has ruled in Malaysia’s favour  and now extended the time to pursue its complaint against IPIC’s ‘collusive fraud’ together with Najib, the judge also made plain that Malaysia must now act swiftly. He has demanded immediate action to produce a timetable for the case, otherwise foot dragging may allow for the ruling to be contested.

What chance is there that Najib’s allies now back in government will spring into action thanks to this latest favourable judgement by the British courts to press their case and retrieve $6 billion for 1MDB?

Expect for continued behind the scenes negotiations instead, as those with positions of influence and benefits to gain seek outcomes for themselves.

Expect for Abu Dhabi to continue to play hardball as it gambles on the reluctance of the returning UMNO players to expose their criminality in a foreign court.

Expect, after 18 fruitless months ‘Royal-backed’ negotiations, for the time to run out on this victory and for Malaysia to once more lose the chance to get a proper judgement or settlement in its favour thanks to the return to power of Najib and his UMNO cheerleaders.