Malaysia's central bank urged attorney-general to begin criminal prosecution of 1MDB, it says

Bank Negara Malaysia said its investigations showed 1MDB had secured permissions for investment abroad based on inaccurate or incomplete disclosure of information.
Bank Negara Malaysia said its investigations showed 1MDB had secured permissions for investment abroad based on inaccurate or incomplete disclosure of information.PHOTO: REUTERS

KUALA LUMPUR (Reuters/AFP) - Malaysia's central bank said on Friday (Oct 9) it had formally recommended that the country's attorney-general begin criminal proceedings against troubled fund 1Malaysia Development Berhad (1MDB) after completing its investigation, piling more pressure on Prime Minister Najib Razak, who chairs the fund's advisory board.

The recommendation, which has since been dismissed by the Najib-appointed attorney-general, was first made by the central Bank Negara in August but only disclosed for the first time on Friday.

In its statement, Bank Negara Malaysia also said 1MDB had secured permits for investment abroad based on inaccurate or incomplete disclosure of information, thus breaching domestic regulations.

The central bank added it revoked three permits granted to 1MDB for investments abroad totalling US$1.83 billion (S$2.58 billion) and ordered the state fund to repatriate the funds to Malaysia.

"On its part, the Bank concluded that permissions required under the ECA for 1MDB's investments abroad were obtained based on inaccurate or without complete disclosure of material information relevant to the Bank's assessment of 1MDB's applications," the statement said.

Bank Negara Malaysia said it had recommended to the Attorney General to initiate criminal prosecution against 1MDB for breaches under the Exchange Control Act 1953 (ECA). The bank added that the decision to initiate criminal prosecution lies solely with the Attorney-General.

The central bank's statement comes just one day after the attorney-general said it had seen a report of the central bank's investigation and concluded that 1MDB officials had not committed any offence.

The attorney-general, appointed by the Prime Minister in late July, also said it had rejected a central bank request for a review of the decision.

1MDB did not immediately respond to a request for comment. The attorney-general's office declined to comment.

At the centre of a political crisis over its debt of nearly RM42 billion (S$14 billion) and alleged financial graft, 1MDB is the subject of several probes by different authorities, including Malaysia's central bank.

In July, the Wall Street Journal reported that investigators looking into 1MDB had identified a payment of nearly US$700 million into a bank account under Datuk Seri Najib's name. Reuters has not independently verified the report.

Mr Najib has denied taking money for personal gain.

The central bank did not specify which permits were revoked or where it believed the US$1.83 billion was being held.

Earlier this year, 1MDB said it redeemed US$1.1 billion from the Cayman Islands and parked it in BSI Bank Limited Singapore, a local unit of Swiss asset manager BSI.