by Tom Wright
In August, Switzerland’s attorney general announced he had launched a criminal investigation of 1MDB and frozen multiple accounts containing tens of millions of dollars. With many of his accounts in Singapore and Switzerland now shut, Low was being shunted to the furthest reaches of the global financial system, forced to rely more on Thai baht or Chinese yuan transactions.
The bonds between Low and Najib remained in place. But they were frayed, with all sides now watching their own backs, distrustful of those with whom they had conspired for years. When one contact asked Low about all the money that appeared to be missing, he was quick to assign the guilt to Rosmah.
“She is an avid purchaser of jewelry in the millions. Where is the money from?” he asked.
Around one hundred thousand Malaysians, many of them young, urban professionals, swarmed around the center of Kuala Lumpur on August 29, 2015. Wearing yellow T-shirts bearing the slogan “Bersih”—the Malay word for “clean”—they marched through the streets, protesting the growing evidence of mass corruption at the heart of their government. The Home Ministry had banned yellow T-shirts after earlier Bersih protests, declaring them a national security threat, but the demonstrators took no heed.
One demonstrator carried an effigy of Najib in a cage; others held up pictures asking how much an average family could purchase of different everyday products—KFC chicken, rice, hot chocolate—with $681 million, the biggest transfers into Najib’s accounts; a popular caricature of Rosmah, with cartoonishly big hair, replaced her eyeballs with dollar signs.
There were Bersih protests in other cities, and by Malaysians living abroad, too. In Kuala Lumpur, many of the protesters stayed out all weekend, sleeping on the streets. Former Prime Minister Mahathir Mohamad, wearing a safari suit, attended the rally, repeating his call for Najib to step down. Some of the protesters, regular school teachers or office workers, were simply tired of the kleptocracy that Malaysia had become. Others were worried the state was taking an authoritarian turn, closing newspapers and detaining anyone who threatened the ruling party’s hold on power. And there were fears the massive debt that 1MDB had incurred would weigh on Malaysia for years to come, leeching funds away from spending on education and social welfare.
“When you act against the media it seems like you have something to hide,” said Sheila Krishna, a Kuala Lumpur taxi driver.
Now a strongman, Najib would endure no opposition. A federal court recently had sent Anwar Ibrahim, the popular opposition leader, back to jail for five years for sodomy, prompting criticism from the United States and human-rights groups. A couple of weeks after the Bersih protests, progovernment “red-shirt” protesters took to the streets. Some participants admitted to receiving small sums of money to attend. Over the coming months, the red shirts—many of them aggressive-looking ethnic Malays wearing bandanas—disrupted antigovernment protests and assaulted activists.
“Malays too can show we can still rise up,” Najib said in a fiery speech, praising the red-shirt protesters.
Glimmers of hope remained: A High Court judge ruled the suspension of the Edge’s publication license was unlawful, and its journalists once again began holding Najib to account. Some protesters came back into the streets over the ensuing months.
But Najib’s newfound authoritarianism scared many.
A deadly turn would cow even the bravest Malaysians into silence.
PART V
THE CAPTAIN’S RESOLVE
Chapter 45
Prosecutor in an Oil Drum
Kuala Lumpur, Malaysia, September 2015
Just after dawn on September 4, a workaholic Indian Malaysian named Kevin Morais got into a Proton Perdana sedan for his daily commute to the Malaysian Anti-Corruption Commission’s office in Putrajaya, about an hour’s drive from his northern Kuala Lumpur apartment complex. He would never arrive.
Since Najib’s crackdown several weeks earlier, Morais had become steadily more enraged. The fifty-five-year-old, with a mop of black hair and a haggard tiredness about him, had studied law in London in the 1980s before returning to Malaysia, where he rose to the position of deputy public prosecutor in the attorney general’s office. In Malaysia, corruption cases were plentiful, and Morais often worked weekends, darkening the bags under his heavily lidded eyes.
A few months earlier, Morais had—to those who knew him—begun to act strangely. The prosecutor was nervous about a case involving Prime Minister Najib and Rosmah, he informed a brother living in the United States. Fearful his phone line was tapped, Morais often talked to his brother in Malayalam, a language of southern India. He sounded frightened, and complained about the stress of his job. Morais didn’t go into the details of his work, but he was temporarily assigned to the Malaysian Anti-Corruption Commission. He was working on the money flows from 1MDB to Najib’s accounts, and he had helped draw up the draft criminal charges against the prime minister.
After Najib removed Attorney General Abdul Gani Patail, Morais felt anxious about his own position. He had even begun worrying about his safety. Only days later, an anonymous leaker emailed a copy of the draft charges the attorney general’s office had been preparing to Clare Rewcastle-Brown at Sarawak Report. When she published her story, making it clear why Najib had moved so aggressively to fire Abdul Gani, there was a witch hunt in the attorney general’s office and the Malaysian Anti-Corruption Commission to find the source of the leak. Police arrested two officials from the commission and a prosecutor from the attorney general’s office. Police filed an arrest warrant for Rewcastle-Brown, but she was safe in the UK.
The detention of the prosecutors caused panic at the attorney general’s office, which was now controlled by a Najib loyalist. Scared into compliance, the Malaysian Anti-Corruption Commission put out a statement saying the money Najib received was a “donation” from the Middle East, a fabrication to protect the prime minister. Fretful of his central role, Morais took off to England for several days, where he had an apartment in a town near London. He talked to his brother of retiring from government service and even visited a solicitor to arrange his will.
The police soon released the detained lawyers. Morais returned to Malaysia and moved on to other work. As he drove to the office that early September day, the prosecutor tried to focus on his latest case, one involving a Malaysian Army pathologist charged with running a medical-procurement scam. A few minutes from his complex, the driver of a Mitsubishi Triton truck began to tail the public prosecutor. The truck followed Morais for a while, and then accelerated, ramming his car off the road. Its passengers jumped out, dragged Morais from the car, bundled him into their truck, and sped off.
Sometime over the next hour, the assailants murdered Morais, most likely by strangulation, before tying his corpse in a gunny sack, the kind used for storing agricultural products. They put the sack in an oil drum and filled it with liquid concrete, before dumping it in a swampy wasteland near a school. Then, the perpetrators torched Morais’s car and removed its serial numbers before dumping it in an oil-palm plantation.
When Morais didn’t arrive at work, anxious colleagues and family members alerted police. Just under two weeks later, using security camera footage to locate the Mitsubishi Triton, officers made several arrests and were led to the swamp, where they discovered Morais’s body. It was a macabre sight, the corpse curled up in a fetal position, encased in concrete like a fossil, still wearing his tie. Police arrested seven people, including the Malaysian Army pathologist, who was charged with abetting the murder.
To Morais’s family, the official story of his death just didn’t add up. The brother was convinced Morais had leaked the draft criminal charges against Prime Minister Najib and someone had found out about it. He contacted Rewcastle-Brown, who told him the source, unknown to her, had sent the documents from a “[email protected]” email address. Jibby was the name of a close family friend of Morais. But Najib’s critics also used “Jibby” as a derisory nickname for the prime minister. The sender remained a my
stery.
The killing had an immediate chilling effect at the Malaysian Anti-Corruption Commission. Staffers were scared for their lives. But a few brave prosecutors, at enormous personal risk, continued to look for a way to ensure Najib was held to account. The prime minister may have seemed secure, but his power only reached so far, and, unknown to him and an ocean away, the case had reached the desks of several special agents in the U.S. Federal Bureau of Investigation.
Chapter 46
Special Agent Bill McMurry
New York, February 2015
For Special Agent William “Bill” McMurry, the story about Najib’s wealth landed at an opportune time. A veteran FBI agent, McMurry had just been tapped to head a new international corruption squad in New York, and his team was hunting for a high-profile case. With sandy, straight hair and blue eyes, McMurry gave off the air of a middle-aged California surfer, although in reality he was a New Jersey native who had spent years fighting international crime based out of the FBI’s offices in a downtown Manhattan federal building.
His biggest triumph to date was unraveling the case of Sister Ping, a Chinatown underworld figure who in 2006 was sent to jail for thirty-five years for her role in a human-trafficking enterprise. After the New York Times story on Jho Low’s property acquisitions, McMurry’s team was tasked with checking out the details. The Wall Street Journal’s coverage of Najib’s accounts put the case at the front of the queue.
The FBI squads—there were also units in Washington and Los Angeles—were an intensification of an effort by the U.S. Justice Department and the FBI to combat kleptocracies, foreign governments from Russia to Nigeria and Venezuela, dominated by corrupt officials who steal from their treasuries for personal enrichment. It was not pure altruism. The United States for decades had been concerned that corruption would undermine free-market capitalism, making it harder for American firms to compete internationally. And then there were fears that kleptocracy—the word is from the Greek and means “rule by thieves”—would lead to a less stable world order, in which failed states like Afghanistan and Syria harbor terrorists.
“Corruption leads to lack of confidence in government. Lack of confidence in government leads to failed states. And failed states lead to terror and national security issues,” was how Special Agent Jeffrey Sallet, chief of the FBI’s Public Corruption Section, put it when announcing the international corruption squads.
Corrupt foreign leaders and officials had an Achilles’ heel—they relied on the U.S. financial system to transfer cash and had a penchant for acquiring real estate in New York, Los Angeles, and Miami. The Justice Department set up the Kleptocracy Asset Recovery Initiative in 2010 to coordinate the work of FBI investigators and prosecutors to seize the U.S. and global assets of corrupt foreign officials. If those kleptocrats were no longer in power, Washington would transfer the proceeds back to the countries. In 2014, the Justice Department oversaw the seizure of more than $480 million in corruption proceeds hidden in bank accounts around the world by former Nigerian dictator Sani Abacha.
The 1MDB scheme, McMurry’s team must have soon realized, was of a whole different magnitude. For one thing, Low just seemed so brash: His money-laundering techniques, although sophisticated, had been carried out through major banks, and there was a solid money trail. This was easier to deal with than Pakistani money launderers, who often would go into hiding for years and make their funds disappear through the informal hawala money-transfer network. Then there was the scale: The 1MDB affair was shaping up as the single largest financial scam of all time.
On the ground, Robert Heuchling, a thirty-four-year-old FBI special agent who worked for McMurry, was attempting to get his head around this mind-numbingly complex case. Slender with blue eyes and an athletic build, Heuchling studied journalism at Northwestern University before joining the U.S. Marines, and he had worked at the FBI for five years. McMurry made him lead on the case, by far the most weighty of his short career. Justin McNair, an agent who had forensic accounting experience, was another senior member of the group. Alongside a team of federal prosecutors, and with access to data from the U.S. financial system, as well as cooperation with law enforcement agencies in Switzerland and Singapore, the agents were making progress.
But there was a problem. Money-laundering cases are by nature multijurisdictional, making them time-consuming to investigate. On sprawling international cases, prosecutors rely on what are known as Mutual Legal Assistance Treaties, which allow for the sharing of information—documents, sworn statements, and the like—between law enforcement agencies. The United States had signed such a pact with Malaysia in 2006, and Switzerland had a similar agreement. Najib’s administration, however, was declining to cooperate.
At first, Najib privately expressed confidence that Western nations would not pursue investigations into 1MDB, wagering Malaysia’s status as a U.S. ally would buffer it from intrusions into what he considered a domestic matter. It soon became clear the foreign investigations were not going to melt away. At a meeting of public prosecutors in Zurich, Attorney General Mohamed Apandi Ali—the loyalist Najib had installed in the job—urged his Swiss counterpart, Michael Lauber, to abandon his investigation. Lauber refused.
The Najib administration also tried diplomatic channels to get the FBI to drop its probe, without luck. But the prime minister instructed his attorney general not to cooperate with overseas probes, and that left foreign investigators without access to crucial Malaysian banking documents.
Investigators in Abu Dhabi, where the scandal threatened to highlight the shabby business practices of Sheikh Mansour, were similarly keen not to air their dirty laundry in public. It was one thing to quietly remove Al Qubaisi from his position, but quite another to launch a full-blown probe that could embarrass a senior royal figure.
The broad contours of the scheme had appeared in the pages of Sarawak Report and the Wall Street Journal, but only the first heist, involving the $1.5 billion taken from 1MDB starting in 2009, was clearly drawn. The Journal began to focus on exactly how Prime Minister Najib had gotten paid in 2013, and the money trail led to Abu Dhabi.
Jho Low was perturbed by questions the prime minister had received from the Journal. Focusing on the money flows, we had figured out discrepancies between 1MDB’s financial reports and those of IPIC. The Abu Dhabi fund had guaranteed $3.5 billion in 1MDB bonds sold by Goldman Sachs in 2012, and, in return, the Malaysian fund’s financial statements showed it had transferred $1.4 billion in “collateral” to IPIC. The collateral was accounted for in 1MDB’s accounts as a “non-current deposit,” meaning it would be repaid by IPIC in the future, but was not at that moment available in cash. This struck us as strange. Why issue bonds and then pay almost half of the proceeds in “collateral” to the guarantor of the bonds? But what we discovered next deepened the mystery: IPIC’s financial reports made no mention of receiving the money.
Around this time, we developed a crucial deep-throat informant. Referred to internally at the Journal as “Malaysian Source,” or MS, the person had intimate knowledge of the workings of every aspect of what had transpired, yet because of personal involvement was also motivated to mislead us. The person passed wire-transfer documents to the Journal that appeared to show the $1.4 billion indeed flowed from 1MDB to Aabar, the IPIC subsidiary. MS was hoping we would accept this at face value and move on.
But the documents in fact showed the money had been sent to Aabar Investments Ltd.—the look-alike British Virgin Islands–based shell company controlled by Al Qubaisi and Al Husseiny. We searched offshore company databases and took the information to government sources in Abu Dhabi, who confirmed that IPIC and Aabar did not formally control this company. Although Abu Dhabi authorities didn’t want to embarrass Sheikh Mansour, it was evident to IPIC’s new management that Al Qubaisi could not bear the blame alone. The Persian Gulf suspected Jho Low and began investigating the matter.
Malaysian Source’s efforts to mislead us had backfired, handing the Journa
l a scoop about the existence of this look-alike shell company—one of Jho Low’s trademark methods for siphoning cash. We then wrote to Najib asking why IPIC had not received money that 1MDB claimed to have sent, citing Abu Dhabi investigators. The PetroSaudi fraud already had been laid bare, and now Low feared the uncovering of another major part of his scheme, the removal of cash from the 2012 power-plant bonds. He moved fast to keep a lid on the truth. Turning to Ambassador Otaiba and Al Mubarak of Mubadala, Low worked to stop the Journal’s story in its tracks.
He was particularly worried by our discovery that Abu Dhabi “investigators” had found no trace of the money. He was losing control of events, worried by our ability to communicate with Abu Dhabi officials. In an email, Low, using a pseudonym, sent across to Otaiba and Al Mubarak the questions we had asked Prime Minister Najib, attached to which he made his own request.
“Malaysian side is extremely concerned and wants to ensure strategy to [be] consistent and coordinated,” Low wrote.
Najib was keen, he went on, to make sure Abu Dhabi did not formally investigate the missing cash. Instead the emirate should stick to the agreed story. Al Qubaisi was to blame, and a deal was in place for Abu Dhabi to cover the $3.5 billion in bonds, with Malaysia later repaying the Persian Gulf state with cash or other assets.
“Note: There are enough reviews on 1MDB being done by various regulators. There is a concern that an additional review done by an Abu Dhabi investigative team will open another unnecessary attack avenue for detractors,” Low wrote.
