NAJIB SUNK, 1MDB FIRE SPREADS OVERSEAS: Now US$ 20mil wired to Petro Saudi founder traced, believed to be part of US$ 85mil 'broker fees'

SINGAPORE-based banks' involvement in the 1Malaysia Development Bhd (1MDB) controversy may not just be limited to Swiss wealth bank BSI Singapore, but could also involve British bank RBS Coutts.

Documents obtained by The Business Times reveal that US$20 million had been wired, in late September 2009, from an account with RBS Coutts' Singapore branch under "Acme Time Limited" to Saudi businessman Tarek Obaid.

Mr Tarek founded PetroSaudi International (PSI), an oil and gas investment firm which had inked a US$2.5 billion joint venture with Malaysia's state-backed 1MDB in September 2009.

The payment took place soon after 1MDB had set up the joint venture with PSI which saw the Malaysian firm forking out US$1 billion cash while PSI injected assets said to to be valued at US$2.7 billion.

The transfer of US$20 million from an account held at the private bank closely follows an agreement between Mr Tarek and a Seychelles-incorporated firm Good Star Ltd - which is reportedly linked to Malaysian tycoon Low Taek Jho - to pay Mr Tarek US$85 million as "broker fees" for Middle East investments into Malaysia.

Mr Low played an adviser role in the setting up of Terengganu Investment Authority (TIA) in 2009, which soon morphed into 1MDB. The businessman who heads Hong Kong-based private equity firm Jynwel Capital has denied allegations that he was behind some of the deals involving 1MDB as he has never held any position with the firm. In recent interviews, Mr Low also said that he was a victim of a political crossfire in Malaysia.

1MDB, which is wholly owned by the Ministry of Finance with Prime Minister Najib Razak as the chair of its advisory board, is under a probe by a special task force comprising the police, the Attorney-General's Office and anti-graft agency following police reports lodged against the firm.

1MDB's books are also under scrutiny by the national auditor.

The Monetary Authority of Singapore told BT last month that it would provide support "within the full ambit of its laws" to the Malaysian authorities in their probe into 1MDB's books and operations.

It said this following the revelation by Malaysia's Ministry of Finance that 1MDB's cash of US$1.103 billion redeemed from its Cayman Islands investment was held in foreign currency at BSI Singapore.

The regulator also said that it was engaging the "relevant financial institutions" in Singapore on the matter but declined to elaborate, citing "confidentiality considerations."

When contacted, a spokesman for RBS Coutts declined comment.

Interestingly, in late 2009, over a third of the staff at the Singapore office of RBS Coutts reportedly quit in a mass resignation to join rival BSI Singapore in what was then deemed one of the largest movements of employees between rivals.

Lugano-based BSI used to be owned by Italian insurance giant Generali and was bought out in July 2014 by Brazilian investment bank BTG Pactual.

1MDB recently did a U-turn on plans for a direct sale of its energy assets, just a week after it appointed CIMB Group to advise on the sale.

It had earlier sought buyers for its energy portfolio after it was deemed that the long-planned-for US$3 billion initial public offering may not pan out well on the back of the controversies that have dogged the firm and delays in submitting the application to the country's securities regulator.

Malaysian daily The Star reported on Wednesday that Prokhas, an in-house restructuring unit of the Finance Ministry, has been tasked with addressing 1MDB's debt woes. 1MDB, which has debt of some RM42 billion, needs RM5 billion this year to meet its loan obligations, said the newspaper. - http://www.singaporelawwatch.sg/