Malaysia renews efforts against corruption

Saudi and UAE worries about the re-invigorated anti-corruption investigation are rooted in the potential implication in the scandal of a Saudi commercial company, members of the Saudi ruling family and UAE state-owned entities and officials.

The investigation is likely to revisit 1MDB relationshipʹs with Saudi energy company PetroSaudi International Ltd, owned by Saudi businessman Tarek Essam Ahmad Obaid as well as prominent members of the kingdomʹs ruling family who allegedly funded Razak.

It will not have been lost on Saudi Arabia and the UAE that Mahathir met with former PetroSaudi executive and whistle blower Xavier Andre Justo less than two weeks after his election victory.

A three-part BBC documentary, "The House of Saud: A Family at War", suggested that Razak had worked with Prince Turki bin Abdullah, the son of former Saudi King Abdullah, to syphon off funds from 1MDB.

UAE-owned, Swiss-based Falcon Bank has also been linked to the scandal while leaked emails documented a close relationship between Yousef al-Otaiba, the UAEʹs high-profile ambassador to the United States and confidante of Prince Mohammed bin Zayed and controversial Malaysian financier Jho Low, a 27-year-old Wharton graduate who helped Razak run 1MDB.

Probing uncomfortable details

The Wall Street Journal, citing not only emails, but also U.S. court and investigative documents, reported last year that companies connected to Otaiba had received $66 million from entities investigators say acted as conduits for money allegedly stolen from 1MDB.

The UAE embassy in Washington declined to comment at the time but admitted that Otaiba had private business interests unrelated to his diplomatic role. The embassy charged that the leaked emails were part of an effort to tarnish his reputation.

Bank statements and financial documents reviewed by The Wall Street Journal, suggest that Khadem Al Qubaisi, a CEO of an Abu-Dhabi owned investment company, who has also been implicated in the scandal, facilitated the purchase by UAE deputy prime minister Sheikh Mansour Bin Zayed Al Nahyanʹs brother of a $500 million yacht with 1MDB funds.

"The impact of this election will reverberate far beyond Malaysiaʹs borders," said Asia director of the Centre for Humanitarian Dialogue Michael Vatikiotis.

Vatikiotis was looking primarily at the fallout of Mahathirʹs victory in southeast Asia and China. His analysis is however equally valid for Saudi Arabia and the United Arab Emirates, where it could also prove to be embarrassing.

James M. Dorsey

© 2018

Dr. James M. Dorsey is a senior fellow at the S. Rajaratnam School of International Studies, co-director of the University of Würzburg’s Institute for Fan Culture, and co-host of the New Books in Middle Eastern Studies podcast. James is the author of The Turbulent World of Middle East Soccer blog, a book with the same title as well as Comparative Political Transitions between Southeast Asia and the Middle East and North Africa, co-authored with Dr. Teresita Cruz-Del Rosario, Shifting Sands, Essays on Sports and Politics in the Middle East and North Africa, and the forthcoming China and the Middle East: Venturing into the Maelstrom.

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