Independent journalist Clare Rewcastle Brown, at the risk of her safety and without the protection of a news organization, has exposed the flow of billions of public Malaysian dollars from the government’s 1MDB development fund to the country’s top leaders and many others. She says democracies need strong, cynical, courageous media to help protect the public against the powerful.

Clare Rewcastle Brown has never been a stranger to controversy. She made a name for herself as a dogged reporter for the BBC, Sky News and ITV in the ’80s and ’90s. She married the brother of former U.K. Prime Minister Gordon Brown, and in 2009, about 17 years after the wedding, found herself defending her husband and brother-in-law from accusations they’d used government expenses improperly. (See Gordon Brown’s family defends him over MPs’ expenses row, The Telegraph, May 11, 2009.)

That might be enough excitement for one lifetime for most people, but Brown’s real story doesn’t fully begin until 2005 when she returned to her birthplace of Sarawak in Malaysia. She was interested in the ongoing, widespread deforestation there and its effect on the native people of the region. As she dug deeper into who was profiting from the destruction of the jungle, she found corruption that began in the local level and climbed all the way up to the national government. (See The Accidental Whistle-Blower: How a Retired London Journalist Uncovered Massive Corruption Half a World Away, by Nash Jenkins, Time magazine, Jan. 6, 2017.)

“It was kind of incremental. I was following a strand that concerned me about what was going on and how our global systems were being managed to the enormous disadvantage of people in the environment and what appeared to be very dodgy practice,” Brown says in a recent interview with Fraud Magazine. “Of course, what I found is every time I uncovered the corruption, I was just getting higher and higher. The reason why nothing was being done about any of these appalling actions was because the corruption went right to the top.”

Brown founded the Sarawak Report and a radio channel, Radio Free Sarawak, in 2010 to report on local issues in the region. As she continued to follow the money from the deforestation and surrounding corruption, she traced many currents of corruption from local government officials to 1Malaysia Development Berhad (1MDB), a Malaysian state fund publicly worth billions that was supposedly earmarked for construction and infrastructure improvements for the southeastern Asian nation.

When she started running up against roadblocks in her investigation and reporting, she pushed through — thanks to her journalistic instincts and her ties to the people in the region she’d lived in from birth until age eight.

“I could see it was a massive and underreported scandal of vast proportions,” Brown says. “I asked why no one was covering it, and for some time I hoped someone else would. Then I realized all the local people who knew about it felt disempowered.

“What seemed blatantly scandalous and criminal to me, many local people had become resigned to or just learned to accept as a way of life,” she says. “I was trying to remind people that just because it’s happening doesn’t make it right and doesn’t mean it has to go on happening.”

Brown, a keynote speaker at the 29th Annual ACFE Global Fraud Conference, June 17-22, in Las Vegas, will receive The Guardian Award, which the ACFE presents annually to a journalist whose determination, perseverance and commitment to the truth has contributed significantly to the fight against fraud. The award inscription reads: “For Vigilance in Fraud Reporting.”

Regional interest leads to national theater

Many parties were tied to 1MDB as investors, brokers or politicians benefiting from the goodwill that the promise of increased development would bring to the country. Big players included Goldman Sachs; PetroSaudi, a mysterious company with ties to the Saudi royal family; a Hong Kong-based Malaysian financier, Jho Low; and Malaysian Prime Minister Najib Razak. (See 1MDB: The inside story of the world’s biggest financial scandal, by Randeep Ramesh, The Guardian, July 28, 2016.)

“There were so many people taking 1MDB’s money,” Brown says. “The web of characters and high-profile organizations, the major banks that have been caught up with major failings and their due diligence and worth in all of this. … I mean, it’s very colorful stuff.”

In the course of her reporting, Brown began uncovering unaccounted money flowing out of the 1MDB fund — not a few thousand here and there but hundreds of millions. About the same time that she’d begun asking questions about where the money had gone, she was hearing about Low’s lavish yacht parties and luxury real estate purchases in New York.

In 2010, Najib’s stepson, Riza Aziz, bought a production company, Red Granite Pictures, which produced the blockbuster movie, “The Wolf of Wall Street.” Leonardo DiCaprio, the star of the hit, even thanked Aziz and Low in his acceptance speech after winning a Golden Globe for Best Actor in 2013. (See From IMDb to 1MDB and Leonardo DiCaprio Dragged Into Growing ‘Wolf of Wall Street’ Money-Laundering Scandal, by Alex Ritman, The Hollywood Reporter, July 21, 2016.)

After hearing that acceptance speech, Brown really began to dig into the potential 1MDB scandal on the Sarawak Report. “I wrote my first article raising questions about the money,” Brown says. “I didn’t mince my words raising real concerns about where young Riza Aziz had got the money to fund ‘The Wolf of Wall Street.’ ”

Brown eventually began seeing strong enough patterns in her research to start openly alleging that a substantial amount of money missing from the 1MDB account had gone directly into the bank accounts of the prime minister, his family and their close associates.

“I was actually pretty worried that this story would get buried. … Very powerful legal forces were working hard to dissuade mainstream media from covering it. … The amount of legal hard-hitting that’s gone on to try and shut up the media on this story has been actually almost unprecedented,” she says.

In 2015, Brown caught a big break with the help of Xavier Justo, a whistleblower and former employee of PetroSaudi. Justo gave her more than 90 gigabytes of data from PetroSaudi including 227,000 emails related to the joint venture between PetroSaudi and 1MDB. Now that Brown had hard evidence of the inner workings of the partnership between PetroSaudi and 1MDB, she published a number of exclusive stories on the Sarawak Report. (See The Dodgy USD$700,000,000 Loan Deal At The Heart Of 1MDB’s Mega Debt Crisis EXCLUSIVE, Sarawak Report, Feb. 18, 2015.)

In August 2015, Justo was arrested in Thailand on charges that he attempted to blackmail and extort PetroSaudi in return for not leaking the documents. According to Thai police, Justo confessed to attempting the crime. After a little more than a year in prison, he was deported back to Switzerland. (See Swiss man linked to 1MDB investigation released from Thai prison, Reuters, Dec. 20, 2016.)

Brown also has relied on several other informants she believes adds invaluable insight to her reporting. “In the end it’s all about your sources. There is a tendency to rely on data these days as if it has some hidden magic, but in my experience the data can only go so far, and it is people who give you the insight and who are the key to any story I have done,” Brown says.

“You have to work hard on listening and talking to as many people near to the situation as you can, and you also develop a sixth sense about people who approach you with possible information. Often someone that approaches me who might sound nutty or suspicious can turn out to be that crucial insider who has a massive insight into what is going on,” she says.

“I am always ready to listen before I discount something, and I am always ready to put in the time and respect that such sources deserve as the brave and endangered individuals they often turn out to be. You just have to keep watching your back and checking everything.”

Despite the imprisonment of one of her sources, Brown continued to charge on in her reporting. She published 199 pieces in 2016 on the Sarawak Report and brought her findings to major newspapers around the world. “It was really hard to get this story out, and I had to just keep sort of interfacing, trying to pass information onto other bigger outfits than myself to make sure that it couldn’t be dismissed and that had to be taken seriously,” she says.

“I’d give my stories to other papers really just to make sure it got out there. And at the same time it served to gently bully regulators and say, well look, this is getting out in the media,” she says. “If you’re not going to be covering it, here it is documented here, here are the documents, and I’ve given them to you. And if you don’t do anything everyone’s going to know you didn’t.”

Fallout from investigating

Justo was released from prison in December 2016, but his imprisonment wasn’t the only consequence of 1MDB investigations. As Brown butted heads with elected officials, she was surprised at their reaction to questions from others in the media.

She says the Malaysian government owns the media. “People [in Malaysia] weren’t used to defiant reporting or my lack of ‘due respect’ for criminals who happened to have obtained positions of power. So, I gave everyone else a news story to talk about and report on just for speaking out when other local media were forced to continually self-censor,” she says.

“Also, the reaction was extreme, and that surprised me, since in freer media environments politicians have learnt to play it cooler. In Malaysia, people who were used to being all powerful in their little patch reacted with outrage and fury that anyone should point out their defects, which of course stoked the story,” Brown says.

As her investigation and reporting continued, she was stalked in London. (See British journalist Clare Rewcastle Brown given police protection after being followed and photographed in Hyde Park, by Ian Burrell, The Independent, Aug. 5, 2015.) The Malaysian government issued a warrant for her arrest in 2015.

The ACFE saw some of the direct effects of these efforts to discredit Brown’s work when she was scheduled to speak at the 2016 ACFE Fraud Conference Asia-Pacific. A week before the conference in Singapore, she received an anonymous tip that Malaysian officials had heard of her travel plans and would make arrangements with the Singaporean police to arrest her upon landing. Because Singapore has extradition agreements with Malaysia, she opted to stay in London and address the crowd via satellite video. (See Clare Rewcastle Brown Takes Conference Attendees Through Twisted Tale of 1MDB, by Sarah Hofmann, CFE, Fraud Conference News, Nov. 21, 2016.)

The fallout from her work has affected not just her, but her family as well. “It has frightened my kids actually. They, being younger, take ugly threats and nasty depictions of their mother much more to heart. I just tell them it’s cheap,” Brown says.

“On the other front, I know that desperate and criminal people can do desperate things. So, while I live my life fairly unaffected, I do have to take precautions and avoid going in harm’s way,” she says. “Some very brave people have met awful ends or disappeared in Malaysia, and we all know that many journalists have been the subject of revenge and attempts to silence them.”

As part of the smear campaigns against her, she’s been accused of being on the payroll of Najib’s political competitors. “[Najib’s] put a great deal of money attempting to undermine, discredit and attack me. I’m the one with the facts,” she says. “[According to him] I’m making it all up and am involved in some kind of nefarious plot with some kind of opposition. He keeps changing who’s paying me but, apparently, I’m being heavily paid to do this, the fabrication, forge. It’s all a bunch of nonsense that anyone can see that.”

She says she’s also been labeled as biased, unprofessional and disparagingly called more of an activist than a journalist. “I would prefer morally motivated individuals as journalists than moral-vacuum robotic reporters. I have no problem admitting that I am biased against criminal behavior, abusive behavior and the violation of accepted human rights,” she says.

“There has also been a great drive in society to create a class of ‘professional’ dispassionate journalists who are opinion free. Their duty is made out that it is to ‘report both sides’ with total moral equivalence for the ‘public to decide,’ ” Brown says.

The challenges she’s faced, though, haven’t dampened her spirit or belief in the power of investigation and reporting on corruption and wrongdoing. “Democracies need a strong, cynical, brave media cohort to look out for the public interest against people entrusted with positions of great power,” she says. “Every journalist treads a dangerous path every day if they write anything about the rich and powerful. Lying in wait are PR companies, lawyers, political voices and doubtless other journalists who are attached to the views of the rich and powerful who will come down on them like a ton of bricks. If they get it wrong, it can destroy them financially and reputationally in an instant.”

How 1MDB fits into the international corruption landscape

After years of raising questions about where the money from 1MDB had gone, Brown started seeing the story pick up steam globally in 2015. The connections she helped draw between the missing money and off-shore account arrangements (largely facilitated by Low) sparked even more public interest when the massive document leak dubbed the Panama Papers broke in April 2016. (See Panama Papers Show How Rich United States Clients Hid Millions Abroad, by Eric Lipton and Julie Creswell, The New York Times, June 5, 2016.)

“The Panama Papers confronted this whole world of offshore shady parallel finance. 1MDB fitted rather well into it because that was a case study that I’d worked from the bottom up,” Brown says. “1MDB was a perfect story of how a huge sum of criminal money was using the system — the offshore Panama system — to launder its way into the global economy.”

In 2015, Swiss authorities froze millions of assets and began to probe holdings linked to 1MDB. The U.K. Serious Fraud Office and the U.S. Justice Department publicly joined in a probe of the fund. In 2016, the Monetary Authority of Singapore also investigated 1MDB funds in their banks and seized approximately S$240 million in connection with the investigation. S$120 million allegedly belonged to Low and his family. Luxembourg, the Seychelles and UAE all said they were holding their own investigations as well. (See How Malaysia’s 1MDB Fund Scandal Reaches Around the World, by Shamim Adam and Cedric Sam, Bloomberg, July 22, 2016.)

Despite the flurry of interest shown in the 1MDB case in 2015 and 2016, 2017 was a relatively quiet year. Malaysian officials assured international regulatory bodies that all the money that was supposed to be in 1MDB had been accounted for appropriately. Najib began gearing up for another election, and public attention seemed to wane.

Brown isn’t concerned, however. “Unfortunately, these sorts of investigations take a very long time,” she says. “2017 may have been quiet, but there is a long way still to go with 1MDB.” She’s also wary of any optimism that her reporting on 1MDB could influence the upcoming election involving Najib.

“The election is a huge question in all this. It would be tragic for Malaysia if they are unable to get a massive kleptocrat, supported by a gang of thieves, out of office,” she says. “However, the system is massively skewed and gerrymandered, and cheating and bribing by the incumbent regime is established practice.”

However, even if Najib wins reelection, Brown’s work is certainly not for nothing. She believes her reporting on 1MDB will have long-reaching effects larger than just Malaysian political concerns. “What is useful in this process is that the entire unraveling of this scandal is continuing to shine a light on certain systemic failures that need dealing with,” she says. “For example, fraudster Jho Low is still traversing the world on a St. Kitts and Nevis passport that gives him access to the Shengen area and beyond. He was able to just buy that, and the pressure that has gone into supporting these various dubious passport regimes around the globe has started overlapping with a criminal element itself,” she says.

“This all is being exposed, along with the disgraceful and deliberate failures of bank after bank when dealing with their prime customers through their ‘wealth management’ divisions. Regular people go through anti-money laundering hell to move $10k legitimately, but there are no such problems for the rich billionaires who have been laughing with banks at how they tick the ‘compliance’ boxes in 99 percent of cases.”

Reflections on her work

Despite the hardship, roadblocks and threats she’s had to endure, Brown has no intention of slowing down her investigation. Rather, she sees it as part of a larger picture to combat systematic fraud. “I think it is important not to let the lessons of the scandal be forgotten or the overall problem players off the hook. This example has been a rare opportunity to demonstrate exactly why unregulated off-shore systems are a menace. They enable anyone who has an illegitimate source of wealth to hide it and then inject their wealth — and their own unwanted presence — into legitimate societies, where their wealth provides them with an undesirable level of influence,” Brown says.

“It is like a cancer of corruption that we are allowing to infiltrate our own social orders via this parallel world of illegitimate finance. If we do not cut it out then the consequences are very worrying — this is money that is going on to influence decision makers in our countries to give such people more power and position.”

While many of her feelings and experiences while investigating and reporting on 1MDB have been frustration, anger, stubbornness and even fear, the resolution she’s encountered has encouraged her. “I am most proud of the Malaysians who have bravely taken up this issue and transformed their political landscape in response to the evidence of corruption — they deserve a reformed government.”

She’s also reminded of the importance of journalism in the fabric of investigations into corruption and widespread abuses of power. “Journalistic experience was all I really had to offer when I first joined the various people who were concerned and trying to raise awareness about what was going on in Sarawak and indeed elsewhere in Malaysia and Borneo,” she says. “There’s a role there for journalists to interface with people who are trying to get information out for whatever reason and there are usually mixed reasons for wanting to get information out.

“I managed to dig out 1MDB, but remember, it’s the tip of the iceberg as Jho Low himself complained,” Brown says. “He said everyone else is doing it, so why is he the whipping boy? The answer is, someone had to get caught. But now the music must stop.”

Sarah Hofmann, CFE, is the ACFE’s public information officer. Reach her at: shofmann@ACFE.com.

 




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