KUALA LUMPUR, Nov 3 — Australian regulators are liquidating a company, which purportedly managed US$2.32 billion for 1Malaysia Development Berhad (1MDB), that they said risked its clients’ money in questionable investments, the Wall Street Journal (WSJ) reported.
The US-based daily reported today that the company called Avestra Asset Management had a key role in managing the US$2.32 billion, which the paper said came from 1MDB’s now-aborted joint venture with Saudi oil company PetroSaudi International in 2009.
The WSJ cited an anonymous source familiar with the matter and testimony last June by 1MDB’s auditor before the Public Accounts Committee (PAC) on Avestra’s purported role in managing the money for 1MDB.
A source also told WSJ that the investigation on Avestra and those involved in it is still ongoing. Australian regulators are reportedly willing to cooperate with Malaysian authorities.
Citing a copy of an affidavit by the Australian Securities and Investments Commission (ASIC), WSJ said in its report that Avestra focused on Malaysian penny stocks and obscure merger finance.
ASIC said in a statement last Tuesday that following its application, provisional liquidators have been appointed to Queensland-based Avestra.
The Australian corporate watchdog said matters to be investigated include whether there have been any suspected breaches of the law, any losses suffered by members of investment schemes, and whether the schemes ought to continue in operation under a new responsible entity or whether they should also be wound up.
ASIC said in a statement on September 16 that it accused Avestra of borrowing money on an unsecured basis from the property of its schemes, and invested scheme property in entities and offshore funds connected to its directors without proper due diligence or regard for the interests of members.
Australian paper The Australian reported last September ASIC senior investigator Glenn Childs as alleging that Avestra had failed to disclose investments that involved conflicts of interest, including a US$5.4 million loan to Zenith City Investments, a company registered in tax haven Seychelles and run by Malaysian businessman Datuk Eddie Chai.
Childs was quoted saying that the loan may have been used for Zenith and Chai to attempt to take over the board of Malaysian company Harvest Court Industries.
ASIC also reportedly accused Avestra of diverting investors’ money to unregulated entities in tax haven the Cayman Islands.
