by Sarawak Report
Marked “For Internal Use Only” an Appendix to a Term Sheet due to be approved by the Malaysian Cabinet tomorrow (27th July) lays out in detailed figures how Najib plans for over US$7 billion in accumulated 1MDB/Jho Low company debts to be wiped out by taxpayers in a secret deal between his Ministry of Finance and the Chinese state company CCCC (China Communications Construction Company).
The PM’s ‘cunning plan’ is to get the Malaysian Government to agree to inflate the actual cost of the East Coast Rail Project from only RM30 billion to RM60 billion, all to be borrowed from the Chinese Government, in order to disguise the payment of 1MDB’s (and Jho Low’s company) debts.
A whistleblower, who has supplied full details of the project, described the plan to Sarawak Report:
“The Malaysian Government is planning to award an overvalued project to launder money in order to fill the loophole of 1MDB. The plan is to award the East Coast Rail Project to a Chinese Company, China Communication Construction Company Limited (CCCC). The initial budget for the project is MYR 30b, but they have overvalued the project by another MYR 30b, making it MYR 60b. The extra MYR 30b will be used to launder out cash to 1MDB related companies.
The project has been proposed to the cabinet on 25/7/2016 and will be approved by the cabinet on 27/7/2016 with total value of MYR 60b.
The Chinese company, which is backed by the China Government, will help pay off the 1MDB dept in advance and progressively. In return, this Chinese company will be rewarded with high profits and land, and of course extra influence with the Malaysian government”.
Doubling the cost of mega-project
The outrageous plan is blatantly laid out in the term sheet and internal report, which have been leaked to Sarawak Report.
The report says baldly that the actual cost of building the railway, has only been estimated by CCCC at RM27 billion. However, there is to be a so-called “Additional Differential” cost of RM29.85 billion, which will more than double the cost to make a total bill of RM60 billion, including a fat percentage of profit for the company (handily based on the total and not just the construction costs):
The company makes no bones about the incentives provided by the Malaysian Government in this “Direct Contract”, meaning that there was no open tender to get the best deal for the project.
CCCC says it has been given land on generous terms, including a chunk of land which was given cheap by Najib to 1MDB, then inflated in value at Ayer Item – the land which is valued at US$1.3 billion will be offered to CCCC for US$850 million.
CCCC will also gets tax breaks including from GST for the next ten years. And then, as a Chinese State-owned company CCCC notes the benefit of the extended influence over Malaysia the project and the massive loan of the cash (at a generous 2% interest rate) will provide.
So much for Najib Razak’s much vaunted ‘inward investment’ plans from fellow Islamic countries and his stirring of hatred against the so-called ‘Chinese Tsunami’!
Sneaking 1MDB’s debts into the project
The quid pro quo for the Chinese partners in this lucrative deal is to assist in Najib’s corrupted exit strategy for getting shot of his multi-billion dollar debts at 1MDB at a total cost of US$5.63 billion!
The first priority being to get 1MDB off the hook over its outstanding payments to Abu Dhabi’s IPIC. In the first instance this will be achieved through the payment of the $850 million to 1MDB for the Ayer Item land, but after that the company will assume the repayment of the remaining debts for the disastrous ‘power purchase’ and ‘strategic partnership loans’ which lost billions (mainly stolen).
The Malaysian taxpayer will of course have to pay the whole lot back with interest over the next 7 years in payments, all planned to be disguised by the inflated Rail Project!
Laughably, this outlay is set to be disguised by a repayment in ‘assets’ valued to the same amount of US$5.63 billion. The assets concerned are largely duds – vaunted ‘liquid and cash assets’ tucked away by 1MDB in dodgy bank accounts, including the 1MDB Brazen Sky account at BSI (alleged worth $940 milllion) and also the supposed assets of 1MDB Global at BSI, (alleged worth US$1.56 billion).
Significantly, we note that the 1MDB Global money, which was raised through a Goldman Sachs loan, is now also described as ‘Units’, raising the probability that these are in fact worthless pieces of paper representing bogus investments, similar to the ‘Units’ in Brazen Sky, which would imply, that like the PetroSaudi funds, the billions raised by 1MDB Global have all been stolen:
List of Payments totals US$7.5 billion/ RM29.8 billion
Just last week the United States DOJ explained in searing detail how all that missing 1MDB money, which is now being sneaked onto the East Coast Rail tab, was stolen by Najib and his family and associates, including Jho Low and IPIC’s Khadem Al Qubaisi, to be spent on gambling, drinking, jets, yachts, record-breaking fine art purchases (in many cases depicting under-dressed female forms).
The report sheet in our possession lays out in precise detail what CCCC/The Chinese Government has agreed to funnel through the project, in order to get Najib off the hook on all his problems.
The astonishing list contained in an Appendix to the agreement is clearly costed and totals over US$7,5 billion. It includes writing off 1MDB’s debts to the Abu Dhabi sovereign wealth fund IPIC, which is currently suing 1MDB to the tune of US$6.5 billion over unpaid guarantees.
Bailing out Jho Low’s companies also
Significantly, the list also includes an agreement to buy out two Jho Low related companies, which have long been suspiciously associated with Najib’s record of personal plunder from 1MDB. These are Loh & Loh Corporation Berhad and Putrajaya Perdana Berhad, for which Jho Low and his partners will receive a healthy US$315 million:
Sarawak Report has long since exposed how Jho Low used 1MDB money, which was secretly channeled through a so-called Islamic loan agreement with the company PetroSaudi to ‘buy out’ the Sarawak UBG group in which he and Taib Mahmud held the major stakes.
The purported buyer was Javace Sdn Bhd, a supposed subsidiary of PetroSaudi International, Seychelles (a bogus subsidiary of PetroSaudi, whose Director was Tarek Obaid, also a director of PetroSaudi). However, secret transactions obtained by Sarawak Report showed that all the money in Javace was controlled by a company Panama Investment Manager, which was owned by Jho Low.
The two subsidiaries of UBG Putrajaya Perdana and Loh & Loh are still identified as crony companies controlled by Low and Putrajaya Perdana was identified by investigators as having played a key role in funnelling cash from 1MDB’s subsidiary SRC into Najib’s own personal accounts:
Plainly therefore, Najib hopes to use his over-reaching powers at the MOF/PM’s office to launder all his dirty linen through the same simple mega-project, courtesy of secret and politically motivated Chinese cooperation.
Public estimate leaves out the 1MDB costs and commitments?
A huge sum of RM85 million is also put aside in the contract for a ‘nominated company’ to be awarded a “publicity” and “communications” and “strategic consultation” role on the project – no guesses that this will go to a crony outfit.
Finally, also attached to the papers is a totally conflicting set of calculations, which are not listed as being “only for internal consumption” and which appear to represent the public face of the planned deal. These consist of a broad-brush, ‘back of the envelope’ set of figures, which provide a broad estimate for the project at the fuller figure of RM60 billion.
In this list there is no mention of any of the costs due to be carried for 1MDB!
The agreement is due to be passed by Najib’s compliant cabinet….. about now!