Najib Razak: probe shows millions spent on luxury goods

The probe into 1MDB shows Malaysian Prime Minister Najib Razak and his wife spent up big on luxury goods.

Najib Razak

On Christmas Eve 2014, Malaysian Prime Minister Najib Razak stepped on to Hawaii’s 18-hole Kan­e­ohe Klipper course for a round of golf with US President Barack Obama. Off the fairways, another side of Mr Najib’s time in office was on display.

Two days earlier, the Prime Minister’s credit card was used to charge $US130,625 to Chanel in Honolulu, according to Malaysian investigation documents.

The credit card charge was more than Mr Najib’s entire official annual salary of $130,000.

A person at a ­Chanel store in the upscale Ala Moana Centre recalled Mr Najib’s wife shopping there just before Christmas.

The credit card was paid from one of several private bank ­accounts owned by Mr Najib that global investigators believe received­ hundreds of millions of ­dollars diverted from a government investment fund set up by the Prime Minister in 2009.

Today that fund, 1Malaysia Devel­opment Bhd, or 1MDB, is at the centre of corruption probes by authorities in Malaysia and at least five other nations.

The Malaysian investigation documents, viewed by The Wall Street Journal, contain bank-­transfer information that provides the most complete picture to date of the money that flowed through the Prime Minister’s ­accounts over a five-year period.

The majority of it, investigators say, originated from 1MDB. They show for the first time how some of the money in Mr Najib’s accounts allegedly was used for personal ­expenses.

That included $US15 million in spending on clothes, jewellery and a car, according to the bank-­transfer information, involving stores in the US, Malaysia, Italy and elsewhere.

The disclosures appear to undermine key claims Mr Najib and his allies have made, including that none of the money went towards personal ­expenses. They also detail how Mr Najib used the funds to operate a large political machine, with money flowing from his accounts to politic­ians, think tanks and lawyers during a close election in 2013.

Mr Najib, who was seen by Washington as a liberal, Western-friendly leader when he came to power in 2009, did not respond to requests for comment. He has strenuously denied wrongdoing.

A lawyer for Mr Najib’s wife, Rosmah Mansor, declined to comment. The 1MDB fund also didn’t respond to questions.

It has denied sending money to Mr Najib’s accounts or any other wrongdoing and said it was co-­operating with probes.

In all, the documents show more than $US1 billion entered five accounts belonging to Mr Najib at AmBank Bhd, a Malaysian bank, between 2011 and last year. As previously reported, $US681m was transferred via a web of entities in March 2013, money that investigators in two countries believe originated with 1MDB, the government fund.

Investigators believ­e another set of transfers in 2014 and last year, totalling $US25m, came from an entity known as SRC International Bhd, a company that originally was controlled by 1MDB but was transferred to the Finance Ministry in 2012. Mr Najib is also the Fin­ance Minister.

After The Wall Street Journal first reported those transfers last July, Mr Najib wrote a post on Facebook saying: “Let me be very clear: I have never taken funds for personal gain as ­alleged by my political ­opponents — whether from 1MDB, SRC International or other entities, as these companies have confirmed.”

GRAPHIC: Web of money

In January, Malaysia’s Attor­ney-General cleared Mr Najib of wrongdoing, saying $US681m that entered his accounts in 2013 was a legal donation from Saudi Arabia’s royal family, and that most of it was ­returned. Mr Najib’s defenders have said any money spent in Malaysia went for polit­ical purposes, which they say is permissible. Malaysian authorit­ies haven’t commented on the other money alleged to have entere­d Mr Najib’s accounts.

The latest Malaysian investi­g­ation documents contradict the Attorney-General’s account. They show transfers from a person in Saudi Arabia and from the country’s Finance Ministry, but they ­occurred earlier, in 2011 and 2012, and are of smaller amounts, totalling $US200m.

The Finance Ministry didn’t respond to requests for comment.

The documents show Mr Najib made more than 500 payments from his accounts, the bulk of them to political players. Tens of millions of dollars of such payments occurred ahead of the May 2013 elections, which Mr Najib’s party risked losing for the first time since Malaysia’s independence from Britain in 1957.

The payments from his ­accounts at this time included nearly $US7m to the priv­ate account of one of his four brothers, who is chairman of CIMB Group Holdings Bhd, a government-controlled bank. Nazir Razak, the brother, confirmed to TheWall Street Journal in a written statement that he had received the money, which he said was disbursed by bank staff to ruling-party pol­iticians according to the instructions of party leaders.

He said he believed the money originated with donations he had helped raise from Malaysian corporations and individuals for the elections. “I had no knowledge what­soever that these funds may have originated from any other source(s),” he said. “The entire amount was paid out in cash to various recipients ­according to the instructions of the party president and the ­account was closed with a zero balance.”

A spokeswoman for CIMB decline­d ­to comment.

Another transfer, of almost $US70,000, on July 4, 2014, went to the Prime Minister’s son, Norashman Najib, according to the documents. Attempts to reach him were unsuccessful.

The money flowing to Mr Najib’s account is only part of a much larger amount that investig­ators believe was misappro­priated from 1MDB, which raised more than $US11bn in debt, much of it from global investors.

Swiss authorities, who along with the US, Hong Kong, Abu Dhabi and Singapore are probing the fund, say 1MDB-related losses from misappropriation could reach $US4bn.

Several investigations by Mal­aysia’s central bank, a parliament­ary committee, the country’s auditor-general, Malaysia’s anti-graft agency and police continue.

The Malaysian investigation documents show that about $US170m entered the Prime Minister­’s accounts from other offshore companies set up to look like bona-fide financial giants such as Blackstone Group LP.

Investigators in two countries are probing the origin of the money from Blackstone Asia Real Estate Partners, a British Virgin Islands company, and whether any of it origin­ated from 1MDB. A spokeswoman for Blackstone Group said the US company had no knowledge of this entity.

A report on ABC’s Four ­Corners said some of the money transfers into Mr Najib’s accounts triggered internal money-­laundering alarms inside AmBank. The bank didn’t respond­ ­to requests for comment.

Altogether, $US44m from Mr Najib’s accounts was recorded as going to a company called Solar Shine Bhd.

The firm was used by the ruling party to distribute small handouts such as food and station­ery to voters around election times, according to newspaper reports and a person familiar with the matter.

Ruling party organisations and think tanks got large amounts, ­according to the documents. Attempts to locate Solar Shine were not successful.

Of the apparent personal spending, one of the most regular recipients of funds from Mr Najib’s accounts was Jakel Trading Bhd, a Malaysian luxury clothing retailer.

Between 2011 and 2014, Mr Najib transferred more than $US14m to Jakel, according to the documents. The company specialises in traditional Malay formal wear, suits, wedding attire and home furnishings. Attempts to reach Jakel were not successful.

There was an expenditure on June 28, 2011, at Signature Exotic Cars, a car dealership in Kuala Lumpur, for $US56,000.

Signature’s managing director, Daniel Lim, did not respond to a request for comment.

Mr Najib’s credit card also incurred charges of €750,000 in Aug­ust 2014 at an Italian branch of De Grisogono, a Swiss-owned jewellery store, again being ­financed from the same account as the expenses in Hawaii, according to bank-transfer information that forms part of the Malaysian government probe.

A person who works for De Grisogono confirmed the Prime Minister’s wife was a client of a branch of the jewellers in Porto Cervo, a Sardinian resort.

Mr Najib’s wife joined him for his 2014 trip to Hawaii, where Mr Obama was holidaying, which was supposed to help cement ­Malaysia’s role on a global stage.

The transaction in the Chanel store was paid for with a Visa card in Mr Najib’s name, according to the Malaysian investigation ­documents.

At first the transaction didn’t go through and Mr Najib had to call his bank to approve the charge, said one of the people aware of the shopping trip.

A spokeswoman for Chanel declined to comment.

The credit card was paid for by an account in Mr Najib’s name, documents show. That ­account had been credited with $US9m a few months earlier.

The money came from SRC International. On the day Mr Najib played golf with Mr Obama, SRC International transferred $US9m to the account via 1MDB’s corporate social responsibility arm.

The Wall Street Journal