How involved is Jho Low with 1MDB?

By Stephanie Jacob

The billionaire tycoon has denied many times that he is involved in 1Malaysia Development Bhd (1MDB) beyond offering occasional advice when asked. However a trove of documents and email correspondence recently published by Sarawak Report is now putting Jho Low’s assertions to the test.

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Taek Jho Low, or Jho Low as he is best known, has said time and again that he is not involved in the 1Malaysia Development Bhd (1MDB). He made his latest attempt to distance himself from the fund and its troubles last week, suggesting he was getting caught up in the political crossfire which is surrounding the controversial fund.

Speaking to Hong Kong’s South China Morning Post, the young tycoon said “I feel like I am a victim of the crossfire in Malaysian politics which is getting more polarised. I am a target.” He explained that aside from sometimes being asked for his views informally, he is neither hired by 1MDB or paid a salary by them or any other government entity.

But while his repeated denials are starting to make him sound a bit like a broken record on the issue, the allegations that Jho Low is more involved than he is willing to admit simply refuses to fade away.

The link to 1MDB comes from before the fund looked like it does now. Jho Low has said he was among the advisors whose views were sought when the Terengganu Investment Authority (TIA) was set up in 2008. According to Jho Low’s representatives he was one of many consulted by TIA’s stakeholders.

His representative from Edelman New York said, “Low was one of many advisors invited by the stakeholders of TIA to provide advice from Jan 2009 during the initial stages of TIA due to his market-based knowledge with respect to the running of sovereign funds.”

Then in mid-2009, the Malaysian government decided TIA would become 1MDB and according to Jho Low, this is the point where he stopped actively participating.

The problem is the links keep coming up, most lately in a trove of documents and emails published by the online news site Sarawak Report. Over the past few weeks, the site has been releasing articles based on what it says are documents and email correspondence between Jho Low and his associates, and representatives of Petrosaudi (PSI) and 1MDB.

Petrosaudi was one of the first groups with which 1MDB did business with. What is interesting is the pages of email conversations and text message records which appear to chronicle the build up to 1MDB entering into a partnership with Petrosaudi, and what appears to be Jho Low’s active role in the negotiations .

It should be noted that the documents and records have not been independently verified by KiniBiz. For its part, 1MDB has so far not commented on either the Sarawak Report articles nor disputed the veracity documents. Petrosaudi however, has lodged a report with the Scotland Yard alleging the Sarawak Report hacked their website for the materials.

In response Sarawak Report’s editor Clare Rewcastle Brown told Malaysiakini “I had neither forged nor hacked to get this material, but I thank Petrosaudi for at least acknowledging the authenticity of the documents I have published.”

Did Jho Low and Petrosaudi discuss 1MDB-JV before the companies met?

TIA became 1MDB when it was brought under the purview of the Finance Ministry in July 2009.

But as 1MDB would have been taking shape in Malaysia, email records published by Sarawak Report detail meetings and email conversations which allegedly took place between Jho Low, several of his associates, and Petrosaudi representatives discussing a potential deal between Petrosaudi and 1MDB.

According to the news site, the discussions over a potential 1MDB and Petrosaudi joint venture (JV) began on Sept 8, 2009 when Jho Low met with a UK businessman named Patrick Mahony. The two had been introduced several days earlier by Petrosaudi (PSI) chief executive officer (CEO) Tarek Obaid.

At the time of meeting Jho Low, Mahony had been working for Ashmore which was an investment group funding Petrosaudi’s main operations in Argentina. Mahony joined Petrosaudi after the JV with 1MDB was signed.

The players devising a 1MDB-Petrosaudi deal

Tarek Obaid is the CEO of Petrosaudi and is believed to have close ties with certain Saudi Arabia’s royals. Among them is Prince Turki bin Abdullah who is the son of the late King Abdullah who passed away recently.

Also at the meeting were two individuals believed to be close associates of Jho Low. The first is Seet Li Lin, a contemporary of Jho Low’s at the Wharton Business School in the US. According to screenshots taken by Sarawak Report of his LinkedIn page, Seet is the vice president of Jynwel Capital Ltd which is Jho Low’s investment company.

The second colleague present was Tiffany Heah, who is said to be a lawyer at UBG or Utama Banking Group, which owned a commercial bank in Malaysia. UBG is associated with former Sarawak chief minister Abdul Taib Mahmud’s family holdings Jho Low set on its board. In January 2010, Petrosaudi bought a stake in UBG and later took it private.

The day after the meeting on Sept 9, 2009, Mahony wrote an email to the trio in which he detailed potential ways in which Petrosaudi and 1MDB could work together. Also discussed was the possibility of working together with Petronas and MISC.

Among the issues raised by Mahony, was how a potential JV between Petrosaudi and 1MDB would look. He said “I think what would make sense is that we set up a joint venture where we contribute our assets and you can contribute cash to match our asset base. We can then decide where that cash goes. Some of it may go to paying us back for some cost and some should stay in the JV for new acquisitions.”

Possibility of Petronas as partner

A little further on in the same email, Mahony said “I am assuming here that 1MDB will be our partner first and that Petronas will come in later. If this is the case we can have Petronas either come into the JV or partner with us directly…I somewhat favour the latter as this would guarantee funding for the assets for development….Over time, Petronas could buy the JV and both PSI and 1MDB would have made a big return.”

Mahony then said this was just one idea, and told the trio that further discussions could be had in order to discuss their ideas and what they think would be the most appropriate way to proceed.

Also on Sept 9, Seet wrote to Mahony to inform him that Jho Low had spoken to the ‘top boss’. Seet explained that Jho Low had been given guidance on how the negotiations should move forward by this ‘top boss’ who remained unnamed.

Firstly they were to target to close the deal by Sept 20, with all agreements signed and monies paid to Petrosaudi before the end of September. And secondly, there was to be an official meeting of dignitaries and signing of documents by the end of September. Seet also asked Mahony for a list of assets currently owned by Petrosaudi.

Although the name of the person referred to as ‘top boss’ is not mentioned, Mahony appears to understand who the person is. He assures Seet that he is gathering presentations for them and would send them material by the next day. Mahony concludes his email by saying “this is good news.”

However it appears Mahony was not moving ahead quickly enough for Jho Low’s liking. On Sept 10 he emailed Mahony and Obaid to emphasised the importance of getting things done quickly.

He said “we need to move fast and we need as much detailed info u have as fast as possible. We want to sign and pay by sept 09. Will be emailing out a timeline [sic].” Mahony replied by assuring Jho Low that he would send something to him overnight.

Several things which stand out in these email exchanges, the most obvious being that despite 1MDB being heavily discussed, nobody from the fund was copied in the discussions. And while the identity of the ‘top boss’ remains hidden, it becomes clear in the subsequent correspondence, that the person is not  from 1MDB.

According to the email correspondence published by Sarawak Report, it was not until Sept 15 2009, that the former 1MDB CEO Shahrol Helmi was brought into picture. From the email correspondence it appears that Shahrol and Mahony had a conference call.

Creating a ‘storyline’ for 1MDB’s representatives

Before the call, Mahony, Seet and Tiffany Heah worked together on creating a storyline for the eventual conference call with Shahrol. Seet emailed Mahony (in which Jho Low and Heah were copied) to outline suggestions on what the latter could say in his call with Shahrol later.

This included emphasising Petrosaudi’s CEO Tarek’s ties and position in Saudi Arabia and the fact Petrosaudi is owned by Prince Turki bin Abdullah. Mahony was encouraged to play up the links between Petrosaudi and the Saudi royal family, even implying the group was in fact owned by the late King Abdullah.

He was also encouraged to say King Abdullah had learnt about 1MDB from Prime Minsiter Najib Abdul Razak when they had spoken. And that the leaders had discussed about possible JVs between 1MDB and Saudi companies, and the Saudi king had tasked Prince Turki to follow up on the same.

Seet followed up with another email specifically asking Mahony to not mention any assets in his discussions with Shahrol. He said “Jho would like to emphasise that we do not need to mention about the assets or any oil and gas matter in this call since information will be sent to 1MDB this Friday.”

Jho Low connects 1MDB’s and Petrosaudi’s CEOs

On Sept 15, the CEOs of Petrosaudi and 1MDB were finally put in touch by Jho Low himself via email. In an email titled ‘Introductions for Petrosaudi and 1MDB’, Jho Low said he was putting the two in contact “as per the mutual interests of Petrosaudi and 1MDB.”

In the email Jho Low comes off sounding like a representative of the Malaysian government rather than a private businessman who sometimes offers advice to the fund.

He wrote “I am pleased to confirm as per YAB Prime Minister’s discussions with HM King Abdullah Al-Saud on furthering Saudi-Malaysia bi-lateral ties, together with YAB PM’s discussions with HRH Prince Turki Al-Saud, PetroSaudi and 1MDB is on track with respect to your USD2.5b JVC partnership. YAB PM has confirmed that he looks forward to the signing ceremony on 28 September 2009 to be attended by HRH Prince Turki Al-Saud [sic].”

Jho Low cautions the parties to be discrete and suggests that he be left out of the email loop in line with proper governance standards. However he appears to remain copied on all subsequent conversations stemming from his introductory email.

What stands out here is there is already a price tag being put on the JV although it appears that Petrosaudi and 1MDB have only been in contact for less than five days and their CEOs are just being introduced.

Further emails show that just two weeks to the eventual signing ceremony, Shahrol was still very much playing catch up in the discussions. On Sept 20, Shahrol wrote to Obaid (with Jho Low, Mahony and two 1MDB staff were copied) to say he had not received a copy of Petrosaudi’s company profile yet.

Shahrol said “I understand that you’ve couriered over a copy of PSI’s company profile late last week…we haven’t received anything yet. In the spirit of moving as expeditiously as possible, would it be possible for Robert, our corporate communications person to liaise directly with his PSI equivalent to get going on joint statements, and to agree on levels of detail we are comfortable with releasing to the media?”

Mahony replied on Obaid’s behalf and said “I attach a brief presentation. This is a bit dated and only includes the upstream oil and gas ambition of PSI (it also does not have any asset specific data) but should give you a sense of what we are about.”

It is interesting that Shahrol seemingly settled for a presentation without any asset specific data, given the deal being discussed involved Petrosaudi pumping in assets to the JV. Especially since Shahrol and a team from 1MDB would fly into London on Sept 23 for further discussions armed only with this basic information.

Meanwhile Jho Low and his close associates continue to be not only privy to negotiations but also involved as active participants. In an email conversation between Mahony and Seet on Sept 21, the latter asked that himself and Jho Low be blind copied (bcc) in any correspondence between Petrosaudi and 1MDB.

He also requested that two meeting rooms be booked during the negotiations, the first to be used by Petrosaudi and 1MDB and the second for use by Jho Low and Petrosaudi.

Seet ended the email saying “Jho has softened the ground so the 1MDB ppl are expected to come and meet, chat to know each other and sign. Their legal counsel will be here as well. [sic]” Clearly from Seet’s perspective, the deal was all but done.

Interestingly as the email conversation progressed, it appeared that Petrosaudi too was at times playing catch up to Jho Low and his associates. Later on in the exchange, Mahony asks when he can expect the draft JV agreement from Seet, who replies it will be ready in a few hours.

It is important to note that at this time Petrosaudi’s and 1MDB’s CEOs had not met face to face and that neither Petrosaudi’s nor 1MDB’s lawyers were involved in preparing the draft JV agreement. For his part, Mahony requested that his lawyers be put in touch with Jho Low’s lawyers, when Seet sent him the JV agreement. At this point, the 1MDB delegation had not even arrived in London.

On Sept 29, 2009, 1MDB and Petrosaudi formally entered into a JV agreement

This level of involvement is again in stark contrast to Jho Low’s insistence that he is not actively involved in 1MDB beyond occasionally offering advice. Assuming the email correspondence is authentic then Jho Low’s participation in negotiations between 1MDB and potential business partners in undeniable. This then raises questions of conflicts of interest and how much he has benefitted from his involvement.

The young billionaire has always maintained that he has never received compensation directly from TIA, 1MDB or the Malaysian government. This claim is also being put to the test by documentation and email correspondence published by Sarawak Report. In the third part of this series, KiniBiz examines the subsequent movement of 1MDB’s money after the JV was signed.

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