At Heart of 1MDB Case is Saudi Royal Oil Group

The PetroSaudi International has been left grappling with questions by the US authorities over its dealings with the scandal-racked 1MDB, the Malaysian state wealth fund.

This Saudi company that was co-founded by a Saudi prince and claims to a “partner of choice” for multinationals is little-known but a well-connected oil company.

Claims that money that a Malaysian businessman who splurged millions on art, partying and a Hollywood film were to the tune of $1bn which was Malaysian public money and was meant for 1MDB’s joint venture with PetroSaudi and were siphoned off, were strongly backed by US investigators last week.

$20m of the total reached an unnamed top Malaysian official, whose description corresponds to that of Najib Razak, the country’s prime minister after it had been routed through the unnamed PetroSaudi prince, officials from the US Department of Justice allege.

While rejecting any claims of involvement in misappropriation of funds from 1MDB, PetroSaudi has denied any wrongdoing. It said that it will co-operate with any official requests for assistance and added that it is not aware of any investigation into its own conduct. Mr Najib, who chaired the advisory board of 1MDB has also denied any wrongdoing in connection with the fund.

The most extensive detail so far on the alleged transactions, including those involving the 1MDB-PetroSaudi joint venture was provided by the US court case, launched last week to recover money allegedly looted from 1MDB.

Claims of multibillion dollar corruption in 1MDB’s international dealings are being probed in many continents and the US action is just one of such several probes. PetroSaudi is neither a defendant in the US case nor accused of any crimes.

With his his business partner Tarek Obaid, a former banker, Prince Turki bin Abdullah bin Abdel Aziz — a son of the late King Abdullah had founded PetroSaudi in 2005 as a private oil company. Opening offices in London’s Mayfair district that have pictures of Saudi royalty and are decked with national flags, the company that grew from drilling and oilfield management diversified into trading.

High profile names that included Rick Haythornthwaite, chairman of Centrica and MasterCard, who provided advice on oil exploration, were attracted by the company as advisers. It did a few months of advisory work for PetroSaudi almost six years ago, on business in Asia unconnected with Malaysia, said the Tony Blair Associates, the consultancy set up by the former UK prime minister. Projects in Ghana, Indonesia, Venezuela and Tunisia are currently listed in the website of PetroSaudi’.

A trove of corporate email correspondence that was covered extensively on the Sarawak Report investigative blog were leaked by last year Xavier Justo, a former PetroSaudi executive following which the 1MDB-PetroSaudi joint venture first attracted scrutiny. After pleading guilty in August 2015 to blackmail in relation to the documents, Mr Justo is now serving a three-year sentence in a Thai jail.

The US complaint claims that in exchange for the Saudi company bringing in mineral extraction concessions in Turkmenistan and Argentina allegedly valued at $2.7bn, an agreement to the tune of a $2.7 billion investment in the joint venture was signed in 2009 and this is at the heart of the 1MDB-PetroSaudi relationship.

PetroSaudi said that Prince Turki has ceased to be a shareholder in 2013 but declined to confirm that the royal co-founder referred to in the US legal complaint was Prince Turki. All the funds and transfers related to the joint venture with 1MDB have been properly accounted for, claimed PetroSaudi. The joint venture with 1MDB ended in 2012.

(Adapted from CNBC)

Categories: Economy & Finance, Regulations & Legal, Uncategorized

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