1MDB: The inside story of the world’s biggest financial scandal

Source: The Guardian

On 22 June 2015, Xavier Justo, a 48-year-old retired Swiss banker, walked towards the front door of his brand new boutique hotel on Koh Samui, a tropical Thai island. He had spent the past three years building the luxurious white-stone complex of chalets and apartments overlooking the shimmering sea and was almost ready to open for business. All he needed was a licence.

Justo had arrived in Thailand four years earlier, having fled the drab world of finance in London. In 2011, he and his girlfriend Laura toured the country on a motorbike and, two years later, they got married on a secluded beach. The couple eventually settled down in Koh Samui, a tourist hotspot, just an hour’s flight south of Bangkok. After trying out a couple of entrepreneurial ventures, Justo eventually decided that he would go into the hotel business. He bought a plot with an imposing house and began building: adding a gym, villas and a tennis court.

That June afternoon, he was expecting a visit from the tourism authorities to sign off on the paperwork. Instead, a squad of armed Thai police burst through the unlocked door, bundling Justo to the ground. The officers tied their plastic cuffs so tightly around Justo’s wrists that he bled on the dark tiled floor. The police quickly moved into his office, ripping out the computers and emptying the filing cabinets.

After two days in a ramshackle local jail, Justo was flown to Bangkok and paraded before the media, in a press conference befitting a mafia kingpin. Still wearing shorts and flip-flops, he was flanked by four commandos holding machine guns, while a quartet of senior Royal Thai Police officers briefed the assembled reporters on the charges against him.

Justo was charged with an attempt to blackmail his former employer, a little-known London-based oil-services company named PetroSaudi. But behind this seemingly mundane charge lay a much bigger story.

Six months earlier, Justo had handed a British journalist named Clare Rewcastle Brown thousands of documents, including 227,000 emails, from the servers of his former employer, PetroSaudi, which appeared to shed light on the alleged theft of hundreds of millions of dollars from a state-owned Malaysian investment fund known as 1MDB.

The documents that Justo leaked have set off a chain reaction of investigations in at least half a dozen countries, and led to what Loretta Lynch, the US attorney general, described last week as “the largest kleptocracy case” in US history. Read more

The Guardian view on Malaysian politics: a scandal meriting the world’s attention

Source: The Guardian

Malaysia’s prime minister Najib Razak. ‘Even his erstwhile patron, former premier Mahathir Mohamad, has joined forces with the opposition in an attempt to oust him.’ Photograph: Reuters

Malaysia’s new security law, due to come into force on Monday, would be alarming at any time. Its sweeping powers permit authorities to declare national security areas which are off-limits to protests, where individuals and premises can be searched without a warrant, and where killings by security forces need not result in formal inquests. Changes to the country’s criminal code, undermining the rights of suspects, are similarly concerning. Human rights groups warn that existing laws, including the colonial-era Sedition Act – which Prime Minister Najib Razak once vowed to repeal – have been used to detain and muzzle critics. The country’s police chief recently warned that protests by electoral reform group Bersih would be permitted only if participants avoided calling for Mr Najib’s resignation.

The government says the National Security Council Act is needed to protect the public from a mounting global terrorism threat. It is striking, however, that it becomes law as the prime minister faces growing pressure and planned protests over the multi-billion-dollar 1MDB development fund scandal, which has snowballed since emerging a year ago. Even his erstwhile patron, former premier Mahathir Mohamad, has joined forces with the opposition in an attempt to oust him. Read more