Swiss probe of Malaysia fund sees $4 bil­lion pos­si­ble mis­use

The Pak Banker - - BUSINESS -

Switzer­land's pros­e­cu­tors are seek­ing le­gal as­sis­tance from Malaysia af­ter a probe into a govern­ment in­vest­ment fund re­vealed "se­ri­ous in­di­ca­tions" that about $4 bil­lion may have been mis­ap­pro­pri­ated from state com­pa­nies in the South­east Asian na­tion.

The Swiss At­tor­ney-Gen­eral's of­fice said in a state­ment Fri­day that dur­ing an in­ves­ti­ga­tion of 1Malaysia De­vel­op­ment Bhd., four cases in­volv­ing al­le­ga­tions of crim­i­nal con­duct and oc­cur­ring be­tween 2009 and 2013 have so far come to light. It has been as­cer­tained a small amount of funds were trans­ferred to Swiss ac­counts of for­mer Malaysian pub­lic of­fi­cials, ac­cord­ing to the state­ment. The Swiss au­thor­ity is seek­ing help from the Malaysian at­tor­ney gen­eral to de­ter­mine whether funds were mis­ap­pro­pri­ated.

"The monies be­lieved to have been mis­ap­pro­pri­ated would have been ear­marked for in­vest­ment in eco­nomic and so­cial de­vel­op­ment projects in Malaysia," the Swiss au­thor­ity said in the state­ment. "To date, how­ever, the Malaysian com­pa­nies con­cerned have made no com­ment on the losses they are be­lieved to have in­curred. The ob­ject of the re­quest for mu­tual as­sis­tance is there­fore to ad­vise the com­pa­nies and the Malaysian govern­ment of the re­sults of the Swiss crim­i­nal pro­ceed­ings, with the aim of find­ing out whether losses on this scale have been sus­tained."

1MDB, whose ad­vi­sory board is headed by Prime Min­is­ter Na­jib Razak, has been the sub­ject of over­lap­ping in­ves­ti­ga­tions in Malaysia, as well as over­seas ju­ris­dic­tions in­clud­ing Sin­ga­pore and Hong Kong amid al­le­ga­tions of fi­nan­cial ir­reg­u­lar­i­ties. 1MDB said in a state­ment Satur­day that it hasn't been con­tacted by any for­eign le­gal au­thor­i­ties on any mat­ters re­lat­ing to the com­pany.

"1MDB re­mains com­mit­ted to fully co­op­er­at­ing with any law­ful au­thor­ity and in­ves­ti­ga­tion, sub­ject to ad­vice from the rel­e­vant do­mes­tic law­ful au­thor­i­ties, and in ac­cor­dance with in­ter­na­tional pro­to­cols gov­ern­ing such mat­ters," the com­pany said in the state­ment.

Swiss au­thor­i­ties in Au­gust opened crim­i­nal pro­ceed­ings against two ex­ec­u­tives of 1MDB and what it clas­si­fied as "per­sons un­known" on sus­pi­cions of bribery of for­eign pub­lic of­fi­cials, mis­con­duct in pub­lic of­fice, money laun­der­ing and crim­i­nal mis­man­age­ment. The pro­ceed­ings were based on no­ti­fi­ca­tions of sus­pi­cious trans­ac­tion re­ports by the Swiss fi­nan­cial in­tel­li­gence unit MROS, the at­tor­ney-gen­eral's of­fice said in Septem­ber.

While the Swiss state­ment on Fri­day didn't iden­tify any in­di­vid­u­als, it named com­pa­nies "in con­nec­tion" to its in­ves­ti­ga­tion of 1MDB. The sus­pected cases that were dis­cov­ered were "each in­volv­ing a sys­temic course of ac­tion car­ried out by means of com­plex fi­nan­cial struc­tures," ac­cord­ing to the state­ment. Gent­ing Bhd., one of the com­pa­nies men­tioned by the Swiss pros­e­cu­tor, de­clined to com­ment. 1MDB built an en­ergy busi­ness by ac­quir­ing as­sets from Gent­ing and Tan­jong Plc. Calls af­ter of­fice hours to Tan­jong, an­other com­pany cited in the state­ment, weren't an­swered.

While an ini­tial Malaysian au­di­tor gen­eral's re­port in July on 1MDB didn't re­veal any sus­pi­cious ac­tiv­ity, the na­tion's cen­tral bank had made re­quests for the at­tor­ney gen­eral to ini­ti­ate crim­i­nal pro­ceed­ings against the debt- rid­den com­pany. The Malaysian at­tor­ney gen­eral's of­fice dis­missed the cen­tral bank's re­quests, which al­leged that 1MDB breached the Ex­change Con­trol Act.

Sep­a­rately, the at­tor­ney gen­eral closed the door on a graft in­ves­ti­ga­tion into Na­jib this month, clear­ing him of wrong­do­ing over a "per­sonal con­tri­bu­tion" of $681 mil­lion from Saudi Ara­bia's royal fam­ily, and funds from a com­pany linked to 1MDB that ap­peared in his per­sonal bank ac­counts. Un­der Malaysia's fed­eral con­sti­tu­tion, the de­ci­sion to ini­ti­ate crim­i­nal pros­e­cu­tion lies solely with the at­tor­ney gen­eral.

Shaikh Mo­hammed bin Rashid Al Mak­toum (right) with Shaikh Mo­hammed bin Zayed.

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