Turnbull’s son: I was sidelined for blowing whistle on 1MDB bank scandal
The Australian 12:00am March 8, 2018
Ben Butler
Alex Turnbull, the Prime Minister’s son, claims he was sidelined from his executive position at a global investment bank after blowing the whistle on billions of dollars of allegedly dodgy deals done with scandal-ridden Malaysian sovereign wealth fund 1MDB.
In 2012 and 2013, while Alex Turnbull was working in Singapore at Goldman Sachs — the same bank that employed his father Malcolm in the late 1990s — the organisation raised bonds for 1MDB worth $US6 billion.
The 1MDB deals, organised by senior banker Tim Leissner, were extremely lucrative for Goldman Sachs, reaping it almost $US590 million in fees and commissions.
The US Department of Justice alleges $US2.62bn of the bond proceeds were pillaged by Malaysian elites, including Prime Minister Najib Razak, as part of a plot to loot 1MDB. Mr Najib’s spokesman did not respond to detailed questions yesterday but the Malaysian Prime Minister has previously denied any wrongdoing.
Alex Turnbull, who was not involved in organising the bonds, said he raised concerns with colleagues about their high price and the lack of clarity in offer documents about the use of the funds.
“When the 1MDB deal was done with Goldman I sent an email to some of my colleagues saying, ‘What the f..k is going on with this? The pricing is nuts, what is the use of funds?” he told The Australian. “And I got a talking-to by compliance.”
He said he was “B-tracked” as a result and later resigned from Goldman Sachs.
“Whistleblowing is a nasty business,” he said.
Alex Turnbull’s claims come in an election year in Malaysia and follow more than 2½ years of work by Foreign Minister Julie Bishop to shore up relations with Malaysia, which is regarded by Canberra as a key ally in the battle against terrorism. His statements could make for awkward scenes for Malcolm Turnbull at a special Association of Southeast Asian Nations summit next weekend in Sydney, which Mr Najib is expected to attend.
They also come as international investigators move closer to Jho Low, the alleged mastermind of the plot to loot 1MDB. Indonesian police last week seized the Malaysian businessman’s luxury yacht, Equanimity, off the coast of Bali.
In raising his concerns at Goldman Sachs, Alex Turnbull also made reference to the 2006 murder of Mongolian model and translator Shaariibuugiin Altantuyaa, who was reportedly the lover of Najib supporter Abdul Razak Baginda. Mr Abdul Razak was acquitted of the murder, in which Altantuyaa was taken to the jungle, shot twice and blown up with C4 explosives.
“How many Mongolian models did we have to bury in the jungle for this pricing?” Alex Turnbull told The Australian.
It is believed it is a similar remark to colleagues that earned him a telling-off from Goldman Sachs’ compliance division.
Mr Leissner resigned from Goldman Sachs in 2016. Last year Singaporean and US authorities banned him from the financial services industry for 10 years over an allegedly unauthorised letter he wrote on bank letterhead pledging support for Mr Low. Goldman Sachs declined to comment.
Alex Turnbull worked for Goldman Sachs’ special situations division between 2010 and 2014, when he resigned to start his own Singapore-based hedge fund, Keshik Capital.
Goldman Sachs raised $US3.5bn for 1MDB in 2012 through two tranches of bonds, codenamed Project Magnolia and Project Maximus. Much of the money was earmarked for the purchase of energy assets, but in court documents the US Department of Justice alleges some $US1.367bn was misappropriated by being sent to a Swiss bank account.
Through a series of complex transactions in tax havens around the world, $US30m was allegedly deposited in the bank account of “Malaysian Official 1” — who can be identified as Mr Najib — while $US238m was allegedly sent to Mr Najib’s stepson, Riza Aziz, the US Justice Department alleges.
Mr Riza is accused of using the money to buy luxury real estate and fund movies including the Leonardo DiCaprio vehicle The Wolf of Wall Street.
Mr Low is also accused of withdrawing more than $US1.15m of the money at the Venetian Casino in Las Vegas during a gambling spree with a group including DiCaprio.
In March 2013, under the moniker Project Catalyze, Goldman Sachs issued additional bonds for 1MDB worth $US3bn, of which US Justice Department investigators allege $1.26bn was looted.
Mr Najib signed a letter of support on behalf of the Malaysian government.
An offering circular shows the money was supposed to be invested in a joint venture with a subsidiary of the Abu Dhabi government-owned International Petroleum Investment Company.
Unusually, the circular warned that the joint venture “has not identified a specific use for the proceeds of this offering”.
The US Justice Department alleges that, shortly after the bond sale, $US681m was diverted to Mr Najib’s bank account at Ambank in Malaysia. Some $US620m was allegedly then sent back offshore — but the US Department of Justice claims $US27.3m of this money was then handed over to a jeweller in Monaco to buy a pink diamond pendant and necklace set for Mr Najib’s wife.