‘1MDB was used as a Ponzi scheme’
SWISS A-G Michael Lauber says it is investigating six people and two Swiss banks for their alleged involvement in the scandal. He adds about US$7 billion from 1MDB and SRC International flowed through the global financial system from 2009 to 2015.
FORMER A-G DENIES NOT COOPERATING WITH SWISS COUNTERPART
KUALA LUMPUR: The 1Malaysia Development Bhd (1MDB) economic development fund was used as a Ponzi scheme by a clutch of conspirators to pay bribes and enrich themselves, Switzerland’s top prosecutor said days after former prime minister Datuk Seri Najib Razak was charged with corruption for his role in the affair.
Swiss authorities were investigating six people for their alleged involvement in the multibillion ringgit 1MDB scandal and two Swiss banks — Falcon Private Bank and BSI SA — remain under suspicion, Swiss Attorney-General Michael Lauber said on Tuesday in Putrajaya following a meeting with his Malaysian counterpart, Tommy Thomas.
Switzerland has been investigating how billions of dollars earmarked for economic development through 1MDB were diverted and made its way into Swiss banks for the personal enrichment of the accused.
Lauber, working with Singaporean and United States authorities, had been critical in the past of Malaysian officials for their lack of cooperation. After Najib lost his bid for re-election in May to Tun Dr Mahathir Mohamad, the new government said it would reopen a graft probe.
“We think it was a pretext. It was kind of a Ponzi scheme,” Lauber said after the briefing.
“It was used for bribery of foreign officials, it was used for paying interest, it was used for motivating new officials to run against the legal requirements or it was simply to reward them.”
Lauber did not identify any of the people he was referring to in his comments.
Swiss prosecutors in May revealed they had opened criminal proceedings into two former officials of PetroSaudi. Under the pretense of investing about US$1 billion (RM4 billion) in a joint venture between 1MDB and PetroSaudi, 1MDB officials and others instead transferred about US$700 million to an account not associated with PetroSaudi, the US Justice Department alleged in a 2016 seizure order.
Lauber said about US$7 billion of funds from 1MDB and its former unit SRC International Sdn Bhd flowed through the global financial system from 2009 to 2015 and he’s still assessing how much of that was misappropriated.
Lawyers for PetroSaudi have denied any wrongdoing. Najib has pleaded not guilty to the charges against him and was released on RM1 million bail. Spokesmen for EFG and Falcon Bank declined to comment.
Word of both banks’ involvement is not new and they have come in for punishment. Zurichbased Falcon and BSI, since bought by larger rival EFG International AG, were ordered in 2016 to shut down their Singapore banking units as punishment for facilitating illicit payments.
BSI was fined 95 million Swiss francs (RM385 million) last year for ignoring “clear warning signals”. Falcon, owned by Abu Dhabi investors, is the subject of a criminal investigation by Swiss federal prosecutors.
Coutts & Co, sold by Royal Bank of Scotland Group Plc in 2016, was fined US$6.5 million last year for allowing US$2.4 billion worth of assets related to 1MDB to flow through its accounts in Switzerland.