Eyeing issues on 1MDB Malaysia episode 10

The Third Force

There is a little known meeting that took place between former British premier Tony Blair and the Crown Prince of Abu Dhabi, Sheikh Mohammed bin Zayed al-Nahyan. Some time in July 2007, Mohammed hosted a dinner befitting a King in Blair’s honour and spoke of his interest in China’s nuclear ambitions.

To Blair, things couldn’t have gotten any better. The former British premier was in Abu Dhabi specifically to entice Mohammed into partnership agreements with the Chinese. He had planned to negotiate those agreements through an umbrella organisation he ran, Tony Blair Associates (TBA). It is almost as if Mohammed had read his mind.

Without a second thought, Blair told Mohammed of his links with Chinese officials and offered the Crown Prince a passage through the Chinese energy gateway. The former premier proposed to use a fund belonging to The Carlyle Group (Carlyle) as the vehicle through which the Crown Prince could foster ties with a group of well-placed Chinese businessmen. To consolidate a working relationship, Blair motioned that the Abu Dhabi government be involved with Carlyle in an official capacity.

Not only did Mohammed agree, he went on to dump money into Carlyle through a state-owned fund he was the chair of, Mubadala Development Company PJSC. On the 19th of September 2007, Mubadala took a 7.5 percent stake in Carlyle’s general partnership by paying the Washington based corporation USD1.35 billion. The wealth fund was granted an additional two percent stakes when it committed a further USD500 million to an investment fund that was wholly managed by Carlyle.

To keep his end of the bargain, Blair got Daniel A. D’Aniello, the chairman of Carlyle, to purchase shares from a Chinese recycling company through Carlyle Asia Growth Partners III, LP (CAGP), a closed private equity fund wholly owned by Carlyle. Two months later, CAGP made purchases that turned it into the second largest shareholder of China Recycling Energy Corporation (CREC), a waste management company based in the Shaanxi Province of China. Blair assured Mohammed that CREC had plans to venture into the recycling of nuclear waste material.

The ‘bailout scheme’ wasn’t specific to Carlyle. Blair told Mohammed that Marcus and Soros were in the midst of some high powered talks with officials from the China Development Bank (CDB). According to Blair, Marcus was involved in negotiations with these officials to trigger Barclays’ venture into nuclear projects through China Guangdong Nuclear Power Holding Co. Ltd. (CGNPC), a major energy corporation under the purview of the Chinese government.

Seeing that Mohammed was enticed by the prospect of a partnership with CGNPC, Blair got Marcus to fast track negotiations with the CDB by offering the Chinese bank a chunk of its equity. Days later, on the 23rd of July 2007, Barclays announced a decision to sell a 3.1 percent stake of its holdings to CDB for £2.2 billion on the pretext of raising capital needed for a planned merger with AMD AMRO, the largest bank in the Netherlands.

Mohammed was impressed. So impressed, he got his brother, Sheikh Mansour bin Zayed bin Sultan al-Nahyan, to pledge some billions through an Abu Dhabi investment firm in return for a sizeable chunk of Barclays’ holdings. That deal came into public view in October 2008 when Barclays announced a £7.3 billion injection by governments and investors from the Mideast and attributed £3.5 billion of that sum to Mansour.

The media credited Bob Diamond for the deal. Then the bank’s president, Diamond never once denied reports of his association with Mansour or made public Blair’s involvement in the scheme of things. However, he confided in an aide that the Abu Dhabi deal was not entirely his doing, that the situation was very much under Marcus’ and Blair’s control. You’re reading it for the first time ever here, because George Soros made absolutely sure that the media never got hold of an email through which Diamond communicated his displeasure at being credited for the deal.

Notwithstanding the email, shareholders found it difficult to believe that Mansour had alone pumped £3.5 billion into Barclays. To allay skepticism, Marcus instructed his subordinates to fabricate reports in ways that credited 11 percent of the banks stock to Mansour. But the fine print found on some regulatory disclosures told a very different story. It showed clearly that the cash injection was in the name of the International Petroleum Company (IPIC), a state-owned fund Mansour was and still is the chair of.

Despite this, the bank continued to name Mansour as shareholder in its 2008 annual report that was published the year after. Marcus did not want anyone to learn of Khadem al-Quibasi’s involvement in the scheme of things. He did not want shareholders to discover a secret agreement he had entered with Qubaisi through an associate of theirs, Amanda Staveley.

The biggest con-job in the history of Abu Dhabi

Ms. Staveley is a British businesswoman noted for her connections with Mideast businessmen and members of royalty. It was through her that both Marcus and Blair forged an acquaintance with Qubaisi early in 2006, at the height of the United States (US) housing bubble.

Then the Managing Director of IPIC, Qubaisi served as Mansour’s key investment strategist and had a free hand in deciding how the company was run. Ms. Staveley, who acted as Marcus’ go between, negotiated a secret deal with Qubaisi that required him to hold beneficial interests in her company. She unveiled a scheme to generate wealth using money that belonged to the government of Abu Dhabi.

Qubaisi agreed. He needed to make up for losses a group of shell companies in the British Virgin Islands (BVI) suffered when Barclays and HSBC were hit by the subprime mortgage crisis. The former IPIC Managing Director was the beneficial owner of those companies. Like Soros, he channeled ill-gotten wealth through them and had that wealth converted into fixed assets.

Many of Qubaisi’s assets were based in the US and comprised apartments, penthouses and condominium units registered under the names of some Americans. When the housing bubble collapsed, so did his BVI network. Qubaisi suffered losses worth an estimated £300 million and was forced to shut the BVI companies down.

Ms. Staveley’s proposal seemed like a good idea. The plan was for her to establish a secondary group of shell companies which Qubaisi would latter assume control of. That plan came into fruition some time in October 2008 when PCP Gulf Invest 1, 2 and 3 (PGI 1 to 3) were registered in Jersey and the BVI. The establishment of these companies, however, was strangely coincidental with Mansour’s £3.5 billion pledge to Barclays which Ms. Staveley herself helped finalize.

On the 24th of March 2009, Ms. Staveley secured a further 758,437,618 shares from Barclays. These shares were made issuable to PGI3 upon the exercise of certain warrants by the company. Several top executives from Barclays were puzzled that the bank had issued those warrants to PGI3 despite the company being in Ms. Staveley’s name and that of her partner, Craig Eadie.

To quash the perception of irregularity, Marcus is said to have convinced Barclays’ executives that an official from IPIC was ‘holding’ PGI3 in trust for Ms. Staveley. That, in essence, was the truth, though the media now claims that PGI3 was in no way related to the Abu Dhabi investment company.

If that were to have been the case, the US Securities and Exchange Commission would never have allowed Qubaisi to file Schedule 13G on the 1st of September 2009 pursuant to an Option Deed dated the 1st of June 2009.

Under the terms of the deed, KAQ Holdings Limited, a BVI concern wholly owned by Qubaisi, had the option to acquire from IPIC the entire issued share capital of PGI3, an option Qubaisi first exercised on the 7th of June 2009 and thereafter on the 1st of September 2009 and the 16th of February 2010.

Still, that in no way validates Barclays’ dealings with Ms. Staveley, considering that the issue of warrants to her company stood to benefit government officials and were therefore in breach of anti-corruption laws. The fact that Mansour personally benefitted from the deal has since been established by my team. Document ’leaks’ reveal that the IPIC chair accumulated wealth worth £350 million but has yet to channel a penny to the Abu Dhabi fund.

Mansour channeled ten percent of that wealth to Ms. Staveley and apportioned Blair an equal amount. Qubaisi, however, was the only one who seemed left out. In 2014, he confided in an aide through email that Mansour had cheated him and was someone he could “never trust.”

The coming of 1MDB

On the 2nd of June 2009, IPIC announced the sale of £3.5 billion worth of Barclays shares and £1.5 billion worth of convertible loan notes. The media was all over the story, claiming that the Abu Dhabi owned investment company generated profits worth £1.45 billion. However, documents my team sighted told a very different story.

Every bit of information pointed to profits worth almost £3 billion (USD4.83 billion) that included an estimated £1 billion (USD1.61 billion) Mansour and Qubaisi siphoned through a network of BVI companies. It appears that Qubaisi had forged company documents just to conceal from investors transactions worth a little over £2 billion that rightfully belonged to the government of Abu Dhabi.

Qubaisi had planned to use that wealth to lure Southeast Asian economies into some investment schemes through the BVI. He set his sights on China and discussed with Mansour ways in which IPIC could get involved in China’s offshore interests. Mansour approached his brother, Mohammed, for advice. That is when things began to take a very interesting turn.

As the story goes, Mohammed approached Blair and discussed ways in which the Abu Dhabi government could lure the Chinese into partnerships. Having previously bailed Carlyle out, Mohammed expected something in return. He expected Blair to work out a partnership between China Guangdong Nuclear Power Holding Co. Ltd. (CGNPC) and Mubadala through the China Development Bank, or CDB.

Blair assured Mohammed that he could pull it off and even threw in the possibility of Mubadala establishing a joint fund with CDB. A very pleased and excited Mohammed immediately appointed Blair as Mubadala’s principal advisor to oversee the sovereign wealth fund’s energy investments.

The appointment came with a price tag of £1 million per annum which Blair got Mubadala to declare as his annual salary. Documents my team sighted revealed that Blair has thus far earned £30 million simply by sealing a bunch of meaningless agreements with the Chinese on behalf of Mubadala.

Qubaisi was not at all pleased with what had gone on. He complained to Mansour that the plan was for Mohammed and Blair to assist IPIC establish some form of a working relationship with the Chinese. I am told that Mansour responded by telling Qubaisi, “my brother knows what he is doing.”

While all of this was going on, some new developments were taking place in Malaysia. On the 22nd of July 2009, the Prime Minister of Malaysia, Dato’ Seri Najib Tun Razak, announced a decision by his government to assume ownership of an existing Malaysian fund, the Terengganu Investment Authority (TIA). The fund was renamed 1Malaysia Development Berhad (1MDB) and established primarily to forge global partnerships and to promote foreign direct investment.

Qubaisi took serious notice of the development. By then, he had whipped up quite a bad reputation for the manner in which he conducted business with Barclays. Qubaisi realised that he didn’t have much of a future with investors in the UK. He told Mansour that IPIC needed to gradually shift its focus to 1MDB, Malaysia’s sovereign wealth fund.

Qubaisi reasoned that 1MDB was in its infancy and lacked experience in ways to deal with the Arabs. For some reason, he seemed sure that the then Managing Director and Chief Operating Officer (CEO) of the fund, Dato’ Shahrol Azral Ibrahim Halmi, was “someone who could be bent.”

When Blair sounded the alarm

On the 11th of January 2010, 1MDB made public a multibillion dollar joint-venture initiative with the State Grid Corporation of China (SGCC). The announcement triggered a shockwave that led to a meeting between Blair and Soros to discuss “the Malaysian threat.” It was during this meeting, held in Manchester City later that month, that Soros plotted to turn the Chinese against 1MDB and the Najib administration.

Soros made it clear that he did not want a Southeast Asian oil producing country to expand on its energy ambitions with China. With the Republic fast becoming the world’s largest importer of crude oil and teeming with ambition to plunder the South China Sea, he knew that the government of China would be receptive to Southeast Asian partnerships just to ward off a western influence within the region.

Soros knew that Malaysia, being a Muslim majority populous, stood at the epicentre of disputes over security in the Malacca Straits and the South China Sea, waterways pivotal to the Chinese oil trade. He knew the Chinese needed 1MDB to be dependent on China’s trade proliferation. The more the fund was dependent on the Chinese, the more likely Najib would agree to military cooperation with China to secure the trade gateways.

And that bothered Soros immensely. Not only did the billionaire magnate want to exert some form of control over economy within the Southeast Asian region, he needed the Chinese to channel their wealth through his funds and not 1MDB. For that to happen, he needed the Republic to work with IPIC and the Saudi based PetroSaudi International, two companies that often indulged in backdoor deals through BVI and Panama based companies.

It was no different for Blair. The former British premier needed the Chinese to venture into energy exploration and production with Mubadala and PetroSaudi. He needed a portion of the wealth generated from those ventures to be made payable to him as commission through Tony Blair Associates (TBA), an umbrella organisation based in the UK that was wholly owned by him.

But Mohammed saw differently.

All he cared about was getting the Chinese to accommodate a Mideast presence in the Republic’s energy agenda. It didn’t matter to him if it was accomplished through Blair or through Najib. As long as Najib was able to trench Mubadala a clear pathway through Chinese bureaucracy, to Mohammed, Najib was a friend worth the price.

It was this line of thinking that worried Blair immensely.

So worried was he, he got in touch with Qubaisi through an associate and began discussing ways in which IPIC could explore the South China Sea together with the Chinese. Qubaisi responded harshly by telling the associate that “it is what I wanted from the beginning, but Blair spoilt everything.”

Nevertheless, it was agreed that Qubaisi would spend some time establishing a network of companies in the BVI specially dedicated to 1MDB with the help of a notorious Panamanian lawyer, Jürgen Mossack.