Two individuals accused of playing prominent roles in the sprawling 1Malaysia Development Bhd. scandal have been convicted of financial crimes in Abu Dhabi, The Wall Street Journal reported Sunday.
The Abu Dhabi Criminal Court sentenced Khadem al Qubaisi, a United Arab Emirates citizen who previously headed the International Petroleum Investment Company (IPIC), and Mohammed Badawy al Husseiny, an American citizen who ran a subsidiary of the company, to 15 and 10 years in prison, respectively, according to the newspaper. The pair must also jointly pay €300 million, half of which will go to IPIC, which is referred to in court documents as the “victim company,” the WSJ said.
The court did not publish details of the charges other than to say Qubaisi unlawfully appropriated “149 million euros after selling shares he owns for the company he heads, without disclosing his ownership of the shares,” according to the report. Sources told the WSJ that the convictions were unrelated to the 1MDB scandal.
At the time of his arrest in August 2016 for his alleged involvement in the $4.5 billion theft of 1MDB funds, Qubaisi was considered one of Abu Dhabi’s most-high profile businessmen and was believed to have a close relationship to Sheik Mansour bin Zayed al-Nahyan, the brother of the UAE President Sheik Khalifa, the Financial Times reported that year.
Qubaisi has repeatedly denied any involvement in the scandal and told The Wall Street Journal in January that he was being scapegoated by UAE officials. “I did this deal but I did it on behalf of the government of Abu Dhabi,” he told the newspaper.
In a June 2017 complaint seeking 1MDB-related forfeitures, the US Justice Department accused Qubaisi and Husseiny of incorporating entities in the British Virgin Islands and the Seychelles to mimic IPIC subsidiary Aabar Investments PJS.
The sham companies—identified as Aabar-BVI and Aabar-Seychelles in the complaint—were used to open accounts at BSI Bank in Switzerland and UBS AG in Singapore as part of a broader effort to siphon money out the Malaysia-owned development bank, according to the Justice Department.
That effort purportedly entailed funneling nearly $577 million in proceeds from a 1MDB bond sale held in 2012 to Aabar-BVI within a day of the fund receiving the money.
“Nothing in the offering circular disclosed that 1MDB would transfer any of the bond proceeds to Aabar-BVI, or that the funds transferred to Aabar-BVI would subsequently be used for the benefit of officials at 1MDB, IPIC and Aabar, including Qubaisi, IPIC’s chairman, and Husseiny, Aabar’s CEO,” the department said.
In 2014, Qubaisi used illicit funds diverted through the BVI account to purchase a New York City penthouse apartment for more than $50 million, according to court documents. That same year, he separately used proceeds of the scheme to buy the Laurel Beverly Hills Mansion for $31 million as well as a second Beverly Hills property for $15 million, the department said.
The Aabar-Seychelles account, on which Husseiny was the sole authorized signatory, was used to transfer the majority of proceeds from a $975 million loan obtained from Deutsche Bank in 2014 under false pretenses, the department said.
Low Taek Jho, a Malaysian national believed to have been central to embezzling funds from 1MBD, is accused by US officials of playing an integral role in exploiting the accounts held for Aabar-BVI and Aabar-Seychelles.
Former Malaysian Prime Minister Najib Razak is currently on trial for money laundering and other charges related to 1MDB.
Photo: Khairil Yusof [CC BY-SA 4.0], via Wikimedia Commons
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