SINGAPORE (Feb 1): A Bloomberg newsbreak on how Low Taek Jho, or Jho Low, made millions from a 2009 bond sale has put the spotlight on the first debt issued by 1Malaysia Development Bhd (1MDB), when it was known as the Terengganu Investment Authority (TIA).
The 30-year Islamic bonds, which pay a coupon rate of 5.75%, were sold at a steep discount by AmInvestment on a bought deal and not through a tender, raising a hue and cry among bankers at the time.
Investigators are now looking into it and have discovered the following:
1. AmInvestment sold RM3.8 billion of the bonds to Thai brokerage Country Group Securities. According to Bloomberg, another RM500 million was sold to a Singapore firm but it did not name the company. The Edge Malaysia understands that the firm is Aktis Capital Singapore.
2. The bonds were sold to Country Group and Aktis Capital at a 13% discount — they paid RM87 against the face value of RM100.
3. AmInvestment then immediately resold the bonds on behalf of the two companies to local investors (mainly pension funds and insurers) for between RM100 and RM105, enabling the two entities and their clients to make a big profit — an estimated RM559 million — on a quick flip.
Country Group then instructed AmInvestment to send US$113 million of the windfall profit to Acme Time Pte Ltd in Singapore.
US investigators have determined that Acme Time’s account in RBS Coutts was controlled by Jho Low and his associate, Eric Tan Kim Loong.
It is interesting to note that on Sept 30, 2009, Tan wrote to RBS Coutts, instructing it to transfer US$20 million to PetroSaudi International’s Tarek Obaid through his JP Morgan account in Switzerland. This transfer was carried out a day after 1MDB signed a joint venture with PetroSaudi International, pouring US$1 billion into it.
Malaysian investigators are now looking into why AmInvestment did not sell the bonds directly to the eventual buyers — insurance companies and pension funds — but instead, facilitated Country Group and Aktis Capital to make large profits through a quick flip.
They are also trying to find out who in AmInvestment approved the transfer of the US$113 million to Acme Time in Singapore.
Besides Jho Low, who made millions from the big flip in 2009,? Login to read the full story here or grab a copy of this week’s issue of The Edge Singapore (#867, week of Feb 4), which is available at newsstands now.
