CHAPTER FIVE: BEYOND MURAD KHALID: THE REAL STORY OF ANWAR, BANK NEGARA AND THE MONEY MACHINE

It is my hope that you will forgive my absence these past few weeks, dear reader. I had planned on expanding on the story of Anwar’s finances and wealth accumulation, and how he used the resources of the very people he’d sworn to serve, but events in Malaysia raced ahead of me.

When I saw the reports about Bank Negara and the RM3 billion, I decided to pause, and see what was being released or alleged before continuing with recording these files.

I would like to imagine that I had some role in the Malaysian Anti-Corruption Commission’s renewed interest in Anwar’s dealings during his time as Finance Minister and Deputy Prime Minister, but my self-regard is not that high. Regardless, with all of the scepticism surrounding the story, I wished to allow the increased interest in Murad Khalid’s statutory declaration and the allegations contained therein to die down a touch before I waded back in.

This is precisely because the allegations are substantively correct, but wrong in almost every detail. And the story of Bank Negara is merely a small piece of a much larger puzzle.

The story of how we all – each of us who contributed over the years to the I-Files – put together Anwar’s money trail is a rather long one, and if told in full, would put too many names and too many dangerous secrets in play. Instead, I will provide you with some of that back story, based on documentation and eyewitness accounts, and focus mainly on the money itself as it moved from place to place, growing as it went.

We will follow the money.

Telling the story of Anwar Ibrahim’s money is rather like telling the story of the Pacific Ocean: Where to begin and how to end is a feat in itself. I pray that you will indulge me, as this story once again moves from place to place and time to time. It was once said that Anwar’s money washed across five continents, and I had been sincerely doubtful of such a claim until the I-Files actually coalesced, with documents; and then I understood how very true this statement was.

One must understand that Anwar’s personal fortune, before he became Finance Minister, was a significant increase over what he had every amassed or dreamed of amassing in his ABIM days, but was not nearly enough to fuel what he needed to move ahead in the world.

That all changed with the birth of Mr Ten Per Cent.

I remember the first time, not long before Anwar became Deputy Prime Minister, that we gathered together, the commercial types, the station chiefs, the Yanks, Aussies and Brits, and we spoke of the man who was increasingly important to commercial and government interests in Malaysia. This meeting was also the first time we informally began aggregating and crosschecking our work. We of course held back the occasional uncertain tidbit here and there; but generally, we began working from the same sheet, because we had no choice.

It was 1993. We were all gathered around a large table, the eight of us. Four Brits, two Yanks, two Aussies. We’d all softened a little around the edges from our hellbusting days, just a decade before, even those of us who kept in fighting shape.

But every last man at that table had seen military, intelligence, or commercial service. Our minds were our best weapons, and we were gathered to put those weapons to a common use. We were there to discuss oil prices, unrest in the Middle East and our ventures there, and most importantly, Anwar Ibrahim.

We had eschewed servants for this meeting, swept the room twice over for bugs, and we were using the best (and most expensive) transmission-blocking equipment known to man in order to keep this meeting secret. We took all of these precautions because we were all convinced that Anwar was both brilliant and dangerous, and we needed every advantage we could get.

Roger, the American I mentioned earlier, opened his folder, one of eight identical packets around the table. Photos of Anwar with Mahathir were moved aside for a series of intelligence reports acquired from Singapore, Washington, London, Canberra, and Ottawa. “The first problem,” he began without preamble, “is ‘Mr Ten Per Cent.’” We flipped to the appropriate tab, though I’d already read this section twice over. “Every single major transaction and public listing now requires a ten per cent fee, as it passes through the Finance Minister’s office. No fee, no listing, no contract, no Government approval.” It was all through witness interviews; inside Finance, never a record of the ten per cent. It was all done via friends, cronies, proxies, and outside, rented hands.

“The question before us is this,” he began, holding up a stapled ledger of the fees we’d managed to identify, dozens of pages thick. “Why is Anwar Ibrahim after this much money? He’s already filthy rich.” The total, circled in black felt marker, was in the high eight figures. The man had done well for himself – multiplying the family fortune many times – since ascending to Finance Minister, through what we believed were the use of his hidden accounts at Hong Leong and Bank Negara, but this seemed to be somehow too simple, too crude. Mere accounts? No, there had to be more to it. And there was, as we would soon discover … much, much more.

I kept my counsel, as Roger and I had agreed I would. Stephen, one of the Australians, spoke up. “The Umno General Assembly is in October,” he said, quietly. “He’s looking to go from Finance Minister to DPM, and Ghafar Baba is in the way.” We all nodded.

Roger had clearly rehearsed this part. “How many votes has he lined up?”

Stephen again. “Enough to crush Ghafar,” he said. Then as now, becoming Deputy President of Umno was the sine qua non of being Deputy Prime Minister. “Mahathir is encouraging his ambition, like he needs it,” he laughed a little. “I don’t think poor Ghafar sees it coming. We know Anwar’s already dropped tens of millions of ringgits into this and is actively pouring in more.”

TO: CENTOPS
FROM: HIBISCUS GS15/7
CC: USECSTATE-SEA
RE: MY/KL/AI

…MFINANCE/AI is part of the “cost of doing business” now. Old stories of UMNO corruption light by contrast. 10% of all listings and contracts are directed to MFINANCE/AI. Receipts YTD estimated at $20M.…

I will turn to the story of the end of Ghafar Baba’s career presently. However, first one must understand where Murad was simply in error – through no fault of his own, as the events at issue were well above his rank. This is because Anwar’s financial holdings were never so simple as ‘straw man’ accounts or “master” accounts or “shadow” accounts and straightforward deposits; that was all that Anwar would have allowed Murad to see or to think.

To completely understand Anwar’s finances, one must understand the network of associates and cronies he developed. For example, Nasaruddin Jalil, Anwar’s former private secretary, worked hand-in-glove with his old patron after Anwar became Finance Minister. As director of Diversified Resources, Bhd, Nasaruddin profited from Anwar’s largesse and connections in everything from minibus servicing in KL to joint ventures with Proton to develop new vehicles.

The latter is especially remarkable, as Diversified took a 51 per cent share in the joint venture, despite no experience with developing automobiles. Anwar, naturally, took his share, invisibly as always, and his network of cronies and their companies enjoyed exclusive supply contracts with the venture.

When the Diversified-Proton joint venture teamed with Citroen to produce a round of Citroens bearing the Proton mark, the joint venture increased Anwar’s funding yet again. Murad’s statutory declaration insists that Anwar simply ordered a disbursement of RM10 million to Nasaruddin. If that had been the case, Malaysia would be a much richer country today.

As another example, Abdul Rahim Ghouse, one of the more pivotal of Anwar’s henchmen, bears particular scrutiny not only for his well-known ties to Anwar, but the manner in which he served as a gateway to so many others.

Rahim was well-known when Anwar was sacked, and later led the Free Anwar campaign from Perth, to which he fled immediately on Anwar’s arrest. That flight helped solidify much of the intelligence we had on the men and their ties, as so few of Anwar’s cronies actually left the country.

Rahim, together with Wan Hasni Wan Sulaiman, founded Abrar, a company at the centre of so much of Anwar’s business dealings; the other founder was Yassin Qadi, a Saudi businessman who would become famous in the early part of the millennium as one of al Qaeda’s funders, a terrorist financier identified as such by both the United States and the United Nations. Abrar was one of Anwar’s funding arms, and was, according to American and other intelligence agencies, used to hide and funnel assets to Hamas, al Qaeda, the Taliban, and other groups reliant on Wahhabi funding and support.

Qadi was but part of the web of Wahhabi financiers, like Sheikh Saleh Abdullah Kamel (whom I mentioned in the previous chapter), who financed and sponsored young radicals such as Anwar and others in Turkey and Indonesia. Saleh Kamel then enjoyed lucrative contracts and the opportunity to build Wahhabi teachings and influence into developing Muslim states.

Qadi’s chalet in Switzerland was raided during the hunt for al Qaeda, and there authorities found phone records for only a handful of people – Anwar, Wan Azizah, Hassan Marican, a handful of Petronas executives, and various up-and-coming Turkish politicians. Qadi would also rely on Turkey and future Turkish Prime Minister Recep Tayyip Erdogan and other founders of the Islamist party, the Justice and Development Party, or AKP, for protection and access – but Anwar’s extensive ties to Turkey are yet another story, and for the next chapter.

Wan Hasni, though a multimillionaire from his support for and ties to Anwar, would fall when Anwar was dismissed in 1998; until then, he provided not merely a veneer of academic legitimacy, but also another source of funds for Anwar’s various off-the-books enterprises.

Rahim took part in and benefited from Anwar’s largesse. From his student days in the US in the 1980s, he integrated himself into Anwar’s Malaysian Islamic Study Group, one of several radical Muslim Brotherhood/money-laundering fronts Anwar had made his own, and eventually rose high in Anwar’s councils. Rahim himself and his children have benefited from the International Institute of Islamic Thought, Anwar’s foremost charity/financing front; Rahim’s children have received more than $200,000 from the IIIT.

Some years later, an Australian sat down in an office in a Singapore office tower so well airconditioned one might have thought it winter in Glasgow outside. On the other side of the conference table were two men, one from Hong Kong, one from Malaysia. The latter was a former Bank Negara officer.

The Australian had been sent by a group of men in Malaysia to peel apart the layers, to dig beyond the legend and the many stories of the fallen Deputy Prime Minister, to understand why and how he had fallen, and what had happened to the wealth they were certain he’d gathered before his sudden fall. Just days before, another BNM officer, Abdul Murad Khalid, had given a sworn statement in which he claimed that the fallen Umno man had controlled billions of ringgits in the bank through proxies and straw men.

That confirmation of their long-held suspicions sent the ex-pats – my close associates who were then formally compiling the I-Files – looking for the real answers.

The Malay turned to the Chinese fellow, who nodded. The bank officer straightened his tie, took a sip of water, and remembering what had been promised on both sides, took a deep breath before speaking.

“Anwar Ibrahim’s money has washed across five continents, and is moving even as we speak,” he began.

Once a deal was done, once the fees were skimmed, once the cash was available, Anwar very rarely kept those funds immediately in Malaysia. He preferred them to flow offshore, via front companies, via obscure and less obscure banks, and always via others, never in his own name.

What he kept in Malaysia tended to be only what he needed on a daily basis. Call it petty cash. Call it operational funds.

That is not to say he did not use Bank Negara for his money; rather, it is to say he used it to move his money, rather than to hold it. Without Bank Negara to turn a blind eye, to allow and clear the massive capital flows he needed, Anwar’s financial operations in Malaysia and beyond would have come to a grinding halt.

This was not a story of “master” accounts or “shadow” accounts as has been written recently in the Malaysian media. This was a story – in part – of shadowy, but very senior Bank Negara officers who helped Anwar to make sure that huge capital flows were not subjected to any scrutiny, so that the money was allowed to move in and out of the country.

Anwar relied on a complex web of Malaysian and foreign accountants, financial advisers, tax lawyers, brokers, and other financial professionals to not only comply with, but to cleverly exploit loopholes in and shelter, a sprawling financial empire. He ran his operations from Malaysia, but his money rarely stayed for long in one place. Some of those lawyers and accountants also moved around, and switched sides, and (in exchange for the appropriate gratuity) they brought to our little team of expats, one at a time, some of the paper trail.

There were five primary holding centres for the money, through which Anwar’s web of confidantes and assistants constantly shifted the mass of his funds, chasing alpha (and beta), and using the proliferation of financial tools that became available in the 1990s to massively expand the resources Anwar would eventually need.

The story begins, as with so much else, with IIIT. Nominally a not-for-profit formed in the United States to broaden Islam’s outreach to the world, and actually operating to advance its Saudi funders’ goals, it was frequently utilised as Anwar’s personal vehicle. IIIT served a number of functions, including as an influence driver and a financial vehicle.

Despite FBI raids and lurking suspicions of terrorist involvement, nothing ever stuck, and IIIT meanwhile procured Anwar access to influential policymakers in the US Government and academia – associates of Paul Wolfowitz and other so-called neoconservatives, men who aspirationally seek democracy across the globe, even where it already exists.

IIIT eventually provided a means of direct access for Anwar, Qadi, Rahim, and others in Anwar’s personal circle to influential Washingtonians both inside and outside of government. Members of then-President Bush’s, then Clinton’s, then the younger Bush’s inner circle were treated to conferences, honoraria, and paid junkets to exotic locales to reinforce IIIT’s nominal message of moderate Islam – and to develop close ties to Anwar and his cronies. The names constitute a veritable who’s who in Washington over the years from both parties – Al Gore, Dick Cheney, Paul Wolfowitz, Grover Norquist, Bill Cohen, Richard Perle, Madeleine Albright, Donna Shalala, William Perry, Colin Powell, Michael Chertoff, Richard Holbrooke – and those same men and women would rally to Anwar’s defense when he was tried and imprisoned for corruption and sodomy. They all received Anwar’s friendship and, in some cases, largesse.

Cohen as Secretary of Defense; Gore as Vice President; Holbrooke as State Department honcho; and Wolfowitz as Mr Pentagon and then World Bank president, and even later, in disgrace, became Anwar’s staunchest defenders.

Little did they know.

Those same men and women would provide reciprocal legitimacy for Anwar. Norquist, for example, became one of Anwar’s foremost enablers, turning his tax-cutting bona fides into a lever to propel Anwar into close confidences with Republican leaders. Norquist, who married a Muslim, would direct charitable giving to and with IIIT, bolstering Anwar’s causes and his own standing.

Those ties, in turn, opened doors for Anwar into American business, consulting, speaking, and advising on interactions with Islamic governments and finance. Anwar is able to play the ‘good Muslim’ to Americans with little practical experience in the Islamic world, guiding them to favourable investment opportunities – companies and firms with ties to Anwar.

But the real story of IIIT is its role as the wellspring of Anwar’s financial network.

From: daemon.fbi.gov Fri. April 18 14:02:34 1997
Received: from waco1 [xxx.xx.xxx.xx]
by choo-choo.fbi.gov [xxx.xx.xxx.xx] ID ticklemedead Fri. April 18 14:02:35 1997
Subject: Welcome to Paradise KL Style
To: xxxxxxxxxxxxx@mail.fbi.gov
Date: Fri. April 18 14:02:34 1997

… Intl Institute Islamic Thought ties to House of Saud secondary to moneylaundering. SecDef believes Saud financing BLOWBACK through international fronts dedicated to Islamic engagement – believes Holy Land Foundation and Center for American Islamic Relations direct launderers. FBI-INT believes IIIT is primary funding conduit, but SECDEF has warned off and FBIDIRECT agrees …

IIIT began taking in Saudi funds for Anwar more or less from its inception, but it was only when Anwar became Finance Minister that its capital operations skyrocketed – with funds from Abrar and from Anwar’s own direct contributions. Some of the ten per cent Anwar siphoned from every public listing and every Government contract flowed indirectly to IIIT and to a handful of private accounts it controlled.

Murad’s assertion that Anwar directed RM2 million to IIIT is low by orders of magnitude; it appears that he confused amounts sent to ABIM (which he gives as RM5 million) with the amounts directed to IIIT. By the time Anwar was sacked, IIIT is said to have controlled or owned, always indirectly, roughly US$350 million in securities, real estate holdings, and liquid assets. Before they flowed into designated banking centres, they passed through an amazing network of companies and banks.

This was the way the Anwar money machine functioned, always indirectly, always via a variety of entities, from the British Virgin Islands to the Seychelles, from Singapore to Liechtenstein, and beyond.

Funds were poured from central holding stations, always offshore, in the form of seed capital, SWIFT transfer, and financial investments, mainly to four other banking centres: Islamabad, Geneva, Tel Aviv, and Hong Kong, which over time became self-sustaining. From there, each banking centre moved multi-denominated currency into opaque management funds, usually but not always run by Al Baraka, Hong Leong, Bank Al-Taqwa (a specialised Wahhabi institution that funds terrorism in the Middle East), and other more obscure institutions such as the Panama affiliate of PKB Bank of Pakistan, which was run by the veterans of Pakistan’s notorious BCCI before it shut down.

That money, when it was allowed to flow back into Malaysia as dividend income for nominees or as investment capital for front companies, or occasionally, as cash, would be vital for Anwar’s political projects – unseating Ghafar, attempting to topple Mahathir, even, in 2008, attempting to purchase Dewan Rakyat MPs from Sabah and Sarawak before the bungled September 16 promise came crashing down.

When it came time for Anwar to draw on enormous sums – such as when he was crushing Ghafar, and making his move on Mahathir – there was “a great big sucking sound,” in the words of one of the compilers of the I-Files, a Yank who had served two tours of duty in KL, as money was drawn from across the globe, through a very particular bank – one we all thought was dead and buried.

“Israel Discount Bank,” the Malay said after a long pause. It was the third day of this lengthy debrief meeting, and by now everyone was on a less tense and more friendly basis. Drinks had been had, meals shared, and the first part of the Aussie’s consideration delivered as promised.

“Anwar’s hatred of Jews never precluded making money off of them, and he’s long supported finance in Israel as a means to an end. IDB was the perfect location for funds – Mahathir would never look there, and with his radical leanings, no one would imagine Anwar would keep a penny there. They had the expertise, the discretion, and the international connections Anwar needed. And no one could ever trace any of the funds back to Anwar, because some of the companies used in transfers were regular, even respectable, and none owned by Anwar. So, no — no fingerprints at all. IDB could honestly say it knew nothing. As always, there was plausible deniability for both Israel Discount Bank and for Anwar.”

The Malay paused to catch his breath before speaking again. “The masterstroke,” he said, “Was keeping that wire line open from IDB to Pakistan.”

The trail of money from Tel Aviv led to a run-down back alley in a Lahore slum. The fellow who went to investigate this part was an American with combat experience in three theatres, a former Navy Seal who spoke Arabic and Urdu as smoothly as he spoke English, and whose numerous knife scars around his liver were a testament to his longevity. His hand-selected team were men of similar disposition, including a Gurkha. Their stories alone would make an engrossing read, but for their sakes, I leave their story to their own telling.

In that back alley was a permanently-ajar door with a single man, armed with a 9mm pistol and a brutal combat knife, permanently stationed before it. By providing dearly-obtained pass-phrases and a bulging briefcase filled with American dollars, the men were able to pass through the door and the balmy corridor beyond.

Inside was one of the most sophisticated banking centres in the world. Clocks set to every time zone on Earth, computers sporting the latest high-end processors, T1 lines, and posh offices that all pointed in toward a single, teak table at which some of the most important financial decisions in the world were made on a daily basis.

This was the hidden bunker for a group of veteran Pakistani, British, and Egyptian bankers who had for a long time danced in the dark, enjoying macabre relations with Langley in Peshawar. They were men who had financed extremists, kept narco-money for the druglords of Colombia, and whose scandal, known as the BCCI affair, ultimately brought the City of London near to to its knees in 1991.

And now they were reborn, at the service of the highest bidder, including a certain up-and-coming politician from Malaysia …

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