1MDB bond settlement: MACC's action on law firms in bad faith - lawyer

MACC's attempt to circumvent solicitor-client privilege via a lawsuit is purely in bad faith and to obtain an unfair advantage in the ongoing dispute between the government and Goldman Sachs in relation to the US$6.5 billion (RM30 billion) 1MDB bond settlement, contended a lawyer.

In an affidavit in response to MACC's legal action against Chetan Jethwani & Company, the law firm's sole proprietor Chetan Jethwani contended that this solicitor-client is in relation to documentation involving the firm's client Goldman Sachs.

The lawyer contended that MACC and its officers abused their powers to concoct the impression of wrongdoing to obtain an unfair advantage against his client and smear his reputation.

Chetan contended that the reliefs sought by MACC through the court action are too wide and indiscriminate.

The anti-graft agency has also not exhausted all available means to secure the information it seeks without needing to breach a solicitor-client privilege, he added.

"A substantial amount of the information sought is already available and within the custody of the applicant (MACC) or is otherwise unnecessary to the alleged investigation," Chetan said.

Search and seizure

Two weeks ago, MACC and officers from the Inland Revenue Board (IRB) attempted a search and seizure at two law firms including Chetan Jethwani & Company.

In a media statement following the incident, Chetan said he objected to the attempted search and seizure on the ground that the conduct of the MACC and IRB officers was unlawful and indiscriminate, and would result in a violation of legal professional privilege.

The lawyer contended that MACC and IRB officers did not comply with the applicable legal provisions set out in the MACC Act 2009 and the Income Tax Act 1967.

Following the incident, FMT reported that MACC had filed a lawsuit at the Kuala Lumpur High Court last week for a court order to compel the law firm to hand over several documents in the probe into a settlement entered between Goldman Sachs and the government on the 1MDB bond issue.

It was also reported that MACC had filed legal action against law firm Rosli Dahlan Saravana and Partnership over the same matter.

Procedural bungling

According to his affidavit, Chetan contended that a series of procedural bungling was committed by the officers while at his law firm, rendering the raid unlawful.

The lawyer claimed that among them was an MACC officer unwilling to provide specific details of what they were seeking under the MACC Act 2009 until Chetan pointed out to him that the search order cited was so broad and undefined, such that it would lead to the officers having unrestricted access to any file in the law office.

Chetan contended that two IRB officers, who claimed to be exercising power under Section 80 of the Income Tax Act 1967, only produced a blank, unaddressed, and unsigned notice on the lawyer without providing any compelling reasons as to why the document was unsigned or state any basis for searching the law firm.

"I informed the officers that in any event, I was asserting legal professional privilege over the entirety of my firm. I pointed out that Section 46 of the MACC Act, Section 47 of the AML Act (Anti-Money Laundering Act) and Section 126 of the Evidence Act 1950.

“I explained to them that unless they had secured an order from a High Court judge, I would not be able to comply with any attempt to search my firm or to allow the seizing of any documents from my firm.

"This was particularly necessary given the extremely indiscriminate nature of the search and seizure order. I state that the privileged material is protected under Section 46(2) of the MACC Act in any event," Chetan said.

Broad request

The lawyer said when the officers informed him they only wanted limited information regarding Goldman Sachs, he became alarmed as the bank was presently in dispute with the government and 1MDB, in particular with MACC's anti-money laundering division being involved in central aspects of the dispute.

Chetan said when the officers said they wanted to conduct a search and seizure to obtain his appointment letter and his firm's financial ledgers, he reiterated the need for the officers to secure a High Court order, repeating that their request was too broad and indiscriminate and thus would affect privileged material.

The lawyer added that the officers were not able to secure any documents from the firm and that MACC then summoned him to record his statement, which he dutifully did at MACC headquarters in Putrajaya at 4pm on the same day.

Chetan explained that during the MACC interview, he told the anti-graft watchdog that instead of trying to get privileged information from his client, the agency should instead be interviewing several representatives of the government who were present during multiple rounds of negotiations involving the country, 1MDB, and Goldman Sachs over the then settlement agreement.

The lawyer pointed out that among them were high-level representatives from the Attorney-General's Chambers, MACC itself, the Securities Commission, IRB, the National Anti-Financial Crime Centre, and the Treasury Department of the Finance Ministry.

The MACC's legal action against Chetan's law firm is set for case management before the Kuala Lumpur High Court earlier today, while the agency's action against the other law firm is set for case management before the court tomorrow.

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