By Malaysiakini
Controversial businessman Taek Jho Low used money infused by 1Malaysia Development Bhd (1MDB) to PetroSaudi to effectively buy out Utama Banking Group (UBG Bank), allegedly allowing former Sarawak chief minister Taib Mahmud and his family to make RM465 million, a report has revealed.
Business weekly The Edge in its exclusive report said Low had orchestrated the buy-out of UBG Bank by PetroSaudi International in order to “appease” Taib, who had become infuriated with Low “flipping stakes” for profits in various companies when the duo had “teamed up” previously.
The money used by PetroSaudi International to buy out UBG Bank in 2010 came mostly from 1MDB and a RM700 million loan from Aminvestment Bank Bhd.
The Edge reports that it had sighted documents that showed that while negotiations were underway for the buy-out of UBG Bank, PetroSaudi pursuaded 1MDB to subscribe to a new issue of US$500 million in murabaha notes, of which US$260 million made its way to PetroSaudi’s Malaysian arm, Javace Sdn Bhd, which in turn made a general offer for the buy-out.
The buy-out happened following strained relations between the Taib family and Low, owing to the fact that Low’s promised investment from the Middle East for Sarawak Corridor of Renewal Energy (Score), and the Iskandar Development, did not materialise, following the 2008 financial crisis.
Huge cash pile
The business weekly explained that Low first approached Taib after UBG Bank sold off RHB Bank to Employees Provident Fund (EPF) in late 2006, and was sitting on a huge cash pile of about RM2.23 billion.
The then 26-year-old tycoon then put up an “action plan” in which he orchestrated UBG spending virtually all of the money it had from the RHB sale by buying various stakes in the Iskandar development region, mainly buying off Low’s own stakes in several firms.
Jho low
This resulted in Low making RM400 million as he made a “quick flip” in the Iskandar land deal, which saw a consortium that he helped set up buy 133 million sq feet of land.
He however sold off his stake to companies linked to UBG within three months of the land purchase, which meant he made profit without having to fork out the initial 10% of the price paid for the land.
“He made over US$100 million without putting in a single cent by flipping it before the first 10% had to be paid,” The Edge quoted a source familiar to the transaction.
This in turn reportedly riled up Taib, and Low then had to initiate the privatisation of UBG through PetroSaudi.
The buy-out was completed in December 2010 at RM 2.50 a share, allowing Taib to walk away with RM465 million.
In June and August 2014, Javace and UBG were wound up voluntarily after UBG sold off most of the stakes it had bought in its RM1.35 billion spending spree until July 2008, a spending spree that was orchestrated by Low as part of his deal with Taib.
“In June and August 2014, Javace and UBG were wound up voluntarily, closing one chapter in an intriguing story about a 30-something-year-old who combined his political connections in the Middle East and Malaysia with his sharp eye for opportunities to do complex multi-billion ringgit deals which had started to unravel, including at 1MDB,” The Edge said.
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