1MDB had links to company which paid Blair, says report

1Malaysia Development Berhad (1MDB) could have inadvertently funded a secret contract that Petro Saudi International (PetroSaudi) had with Tony Blair, the former British prime minister, to lobby for contracts, investigative news portal Sarawak Report said.

Citing London’s The Sunday Times newspaper, Sarawak Report said Blair had secured the secret contract with PetroSaudi in November 2010, and was hired to help promote the oil firm to Chinese leaders for a retainer fee of $65,000 a month and a 2% commission for every successful deal.

“The controversial company (PetroSaudi) was itself funded by a billion plus dollar loan from the 1Malaysia Development Fund (1MDB) and has provided no other evidence of substantial income for that period.

“It works out at an annual ‘retainer’ of over RM2.6 million for the ex-British PM, all apparently funded by the money,” wrote Sarawak Report.

The Sunday Times reported on November 9 that the contract between PetroSaudi International and Tony Blair Associates (TBA) lasted only a few months.

“It (the contract) states TBA would help find potential sources of new investment and says Blair would personally make ‘introductions to the senior political leadership, industrial policymakers, corporate entities and other persons in China identified and deemed by us and you to be relevant to PetroSaudi’s international strategy’,” wrote The Sunday Times.

It noted that the contract was brokered just a year after it agreed to a “controversial” multibillion dollar venture with “a state Malaysia Investment fund”.

“It (PetroSaudi) is a relative upstart in an industry dominated by big long-term players, but its global ambitions were bolstered in 2009 with a deal with 1MDB, a company owned by the Malaysian government,” said The Sunday Times.

In September 30, 2009, 1MDB and PetroSaudi entered into a US$2.5 billion joint venture to “spearhead the flow of direct investments from the Middle East as well as make strategic investments in high-impact projects here”, according to a statement on 1MDB’s website.

Sarawak Report claimed that PetroSaudi had no track record or apparent funds before it began the joint venture with 1MDB.

It said that records for PetroSaudi in Switzerland for 2009 indicated the firm had only SFr100,000 in the coffers of its international business, which was not enough to pay for even a month of Blair’s retainer fees.

“Meanwhile, the UK arm for PetroSaudi International turns out only to have been registered as a company in February 2009,” said Sarawak Report.

“Company records for that year indicate an unexciting balance sheet for what was supposedly a multi-national, billion-dollar operation due to invest in Malaysian development just a few weeks later.”

Sarawak Report said that even when 1MDB had responded to criticism in 2010 by exiting the joint venture and “selling out its share” to PetroSaudi, it soon turned out that 1MDB had lent the money to Petro Saudi to buy it out.

“So the clear conclusion is that PetroSaudi had little operating income before the injection of funds by 1MDB and therefore Tony Blair’s fancy salary was thanks to Malaysian money, which was being secretly spent on foreign speculative ventures, rather than local development,” it said.

It added that PetroSaudi “has no official status whatsoever to carry out investments for Saudi Arabia”, and was merely a private company owned by a Saudi prince.

“While Malaysia seems to have gained nothing from the deal, PetroSaudi International appears to have burgeoned into a cash rich enterprise with various investments in Venezuela and Africa.

“It was able also to hire the likes of Tony Blair to boost its credibility and business opportunities – all for a mere RM218,000 a month!”

A spokesman for 1MDB said all money invested in PetroSaudi was returned to 1MDB with interest and there was no ongoing financial relationship.

Meanwhile, in response to the allegations over Tony Blair's indirect link to 1MDB, a spokesperson for his office today said: "Tony Blair Associates worked for PetroSaudi for a period of months over four years ago. The contract in question was in connection with an issue in the Far East. TBA has had no involvement in Malaysia and never had a contract with 1MDB.” – November 11, 2014.