The High Court in Kuala Lumpur recently delved into the intricate financial dealings surrounding US$8.99 million (RM42.13 million) received by Blackstone Asia Real Estate Partners Ltd (BVI), a company allegedly tied to fugitive businessman Low Taek Jho, better known as Jho Low. The funds were purportedly kickbacks for an investment made by Aabar-SRC into Mongolia's Gobi Coal & Energy Ltd (GCE), according to offshore asset recovery specialist Angela Barkhouse, who testified in a lawsuit by SRC International Sdn Bhd against former Malaysian Prime Minister Datuk Seri Najib Razak for breach of statutory duties.
Blackstone Asia Real Estate Partners, established by Low, was structured as a shell company with a name reminiscent of the legitimate real estate private equity firm, Blackstone Real Estate. Low intentionally adopted this naming convention for his offshore shell companies to mimic well-established entities, as part of his alleged conspiracy to divert millions of dollars from 1Malaysia Development Bhd (1MDB).
Aabar-SRC, a joint venture between SRC International's subsidiary, SRC BVI, and Aabar UAE of Abu Dhabi, played a pivotal role in this complex scheme. Barkhouse highlighted that the US$8.99 million payment to Blackstone originated from an HSBC Hong Kong account of GCE, with the payment reference labeled as "COMMISSION."
The timing of these transactions, occurring shortly after Aabar-SRC's payment to GCE, led Barkhouse to conclude that these payments were likely kickbacks for the US$91 million investment in GCE. Aabar-SRC had utilized most of the funds to purchase 14 million shares in GCE, a company holding rights to significant coal mines in Mongolia, on December 8, 2011.
Despite the substantial investments from SRC BVI, GCE failed to commence commercial coal production or generate revenue from its mining operations, as revealed in court. Under new management, SRC International initiated legal action in May 2021, accusing Najib of breach of trust, abuse of power, and misappropriation of funds for personal gain.
Initially naming several former directors alongside Najib in the lawsuit, SRC International later removed six names, retaining only Najib and Nik Faisal as defendants. Najib, who served as SRC's Emeritus Advisor from May 1, 2012, until March 4, 2019, has been incarcerated at Kajang Prison since August 23, 2022, after being found guilty of misappropriating RM42 million in SRC International funds.
Following his petition for a royal pardon on September 2, 2022, Najib's sentence was reduced to six years, with the fine reduced to RM50 million from RM210 million. The ongoing hearing before Justice Ahmad Fairuz Zainol Abidin is set to continue on March 25.
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