Speaking from a live studio uplink, investigative journalist Clare Rewcastle Brown apologized for not being able to speak to attendees of the 2016 ACFE Fraud Conference Asia-Pacific in person. “Our trip became apparent to Malaysian authorities and they issued yet another extradition request for my arrest,” Rewcastle Brown said. “Given the close extradition agreements that are in place in Singapore, it seemed to be a bad idea to come.”
Clare Rewcastle Brown founded The Sarawak Report and Radio Free Sarawak in 2010 to disseminate news that concerned the Sarawak region of Malaysia and eventually, news surrounding the emerging 1MDB (1Malaysia Development Bhd) scandal. In August 2015, a warrant for her arrest was issued by a Malaysian court for "activities detrimental to parliamentary democracy" and the "dissemination of false reports."
Despite not being physically in the room, Rewcastle Brown laid out the intricate timeline of the 1MDB scandal that allegedly began in 2009 and runs through present day. In July 2015 outlets began reporting that almost $700 million linked to 1MDB was believed to have been deposited into Najib's personal bank accounts. It is widely believed that the funds in 1MDB, once laundered, had been used by Najib as slush fund for his reelection, and more currently as a personal bank for him and his family.
She told attendees that she initially came upon the scandal through her work investigating deforestation in the Sarawak region of Malaysia. As she followed trails of corruption tied to development and deforestation there, they all led upward. What she found was the beginning of a colorful and tangled web of international shell companies, a high-profile Malaysian financier and agent, a wife with a penchant for designer handbags and a Hollywood blockbuster.
After Najib Razak was elected Prime Minister in 2009, he was named chair of the advisory board overseeing 1MDB, a national investment fund. 1MDB was slated to help pay for infrastructure projects for the country, however, after Najib’s reelection in 2013, the fund started reporting growing debt. “Financial observers began to notice in late 2014 that 1MDB was failing to service its debts and that it was fantastically exposed and that it didn’t have the cash flowing in,” she said. “But the fund was government owned, so never mind the question marks.”
As the debt began to garner interest from international regulatory bodies, they discovered that billions of dollars had been transferred from 1MDB to shell companies in the Cayman Islands and the Seychelles. These transfers were done primarily through a bank in Singapore that was headquartered in Switzerland and seemed to be orchestrated for the most part by a financier Jho Low. Once the money was laundered through these accounts, it was murky as to where it went, although Rewcastle Brown had some ideas.
She told attendees of Jho Low receiving red carpet treatment at banks, when his connections and questionable money movement should have alerted red flags for money laundering. “The 1MDB affair and its actors therefore represent a classic case where players are protected by a political sphere of influence believe they can still act with impunity within the world of global finance,” she said.
She highlighted some of the unusual ways the money in the 1MDB fund was spent. Most notably, Najib’s step-son Riza Aziz financed and helped produce the film “The Wolf of Wall Street.” Star of the film Leonardo DiCaprio thanked Riza and Low in his acceptance speech at the Golden Globes. Low even received a special mention in the movie’s credits. Riza’s mother, and Najib’s wife, Rosmah Mansor, allegedly advocated for all Malaysian school children to see the movie (which carries an R-rating for sequences of strong sexual content, graphic nudity, drug use, language throughout and for some violence). Questions were raised about how Riza was able to come into such money as Najib’s family was not known as being wealthy. “A journalist’s role is to ask questions, so I asked ‘how come?’” said Rewcastle Brown. She came to the conclusion that Riza received the seed money for the movie from 1MDB.
Najib’s wife, Rosmah Mansor, also began garnering attention for her collection of designer handbags, favoring Hermes Birkin bags (which retail for $9,000 to $150,000 each).
1MDB is currently being investigated by Swiss, Singh and U.S. authorities. In a question-and-answer session after her prepared remarks, Rewcastle Brown addressed what controls she thought could help prevent this type of large-scale money laundering. “I think this case is really an opportunity to hold banks and players in these actions seriously to account. And to make the actors who have broken the rules pay the penalty, seriously. [They should be] absolutely exposed, shamed and embarrassed because we need to put off future, potential situations like this arising again,” she said. “I think that’s the best we can hope to come out of this. By showing at last, that the financial regulators have teeth and that they’re catching up to the global criminal element who have been using our offshore system and far-too compliant financial organizations. If we can get ahead of them, maybe that’s the best way to deal with this particular problem.”