Swiss prosecutor seeks KL's help in 1MDB probe

Traffic passes a 1Malaysia Development Berhad (1MDB) billboard at the Tun Razak Exchange development in Kuala Lumpur.
Traffic passes a 1Malaysia Development Berhad (1MDB) billboard at the Tun Razak Exchange development in Kuala Lumpur.PHOTO: REUTERS

A-G investigating alleged misappropriation of $5.7b in funds from Malaysian state firms

Throwing new financial controversy at the feet of Prime Minister Najib Razak, the Swiss Attorney-General has asked Malaysia to aid in a probe into the alleged misappropriation of US$4 billion (S$5.7 billion) linked to 1Malaysia Development Berhad (1MDB) - the first time that a foreign-government investigator has openly waded into the 1MDB affair.

Previous explosive allegations involving financial problems at the state investment firm were made mostly by the foreign media using documents sourced from Malaysian investigators.

The Swiss on Friday said funds were transferred to Swiss accounts belonging to former Malaysian public officials.

The claim comes just a week after Datuk Seri Najib was cleared by Malaysia's Attorney-General of graft claims concerning US$700 million deposited into his bank accounts via companies linked to 1MDB. Malaysian Attorney-General Apandi Ali had said then that he was satisfied the bulk of funds received by Mr Najib was from Saudi Arabia, and most had been returned to the Saudis.

But Switzerland's Office of the Attorney-General (OAG) said in a statement widely quoted by the international media yesterday that it needs help from its Malaysian counterpart for information on 1MDB and its former subsidiary SRC International. The OAG is also seeking information on Genting and Tanjong - conglomerates controlled by Malaysian tycoons - said to be connected to the money missing from government companies.

ALLEGATIONS OF CRIMINAL CONDUCT

The criminal investigation conducted by the OAG has revealed serious indications that funds have been misappropriated from Malaysian state companies.

SWITZERLAND'S OFFICE OF THE ATTORNEY-GENERAL, on its probe into funds linked to Malaysian state firms.

"The criminal investigation conducted by the OAG has revealed serious indications that funds have been misappropriated from Malaysian state companies," it said.

The OAG said there were four cases involving allegations of criminal conduct - bribery of foreign public officials, misconduct in public office, money laundering and criminal mismanagement. It said these occurred between 2009 and 2013 relating to PetroSaudi, Genting and Tanjong, SRC and Abu Dhabi Malaysia Investment Company (ADMIC), with the cases "each involving a systematic course of action carried out by means of complex financial structures".

"So far, it has been ascertained that a small portion of the money was transferred to accounts held in Switzerland by various former Malaysian public officials and both former and current public officials from the United Arab Emirates," the OAG said of the probe it opened in August last year.

Saudi energy firm PetroSaudi was involved in a plan in 2009 to jointly develop an oil field with 1MDB but the venture was aborted, with questions raised over the return of 1MDB's initial investments.

Genting and Tanjong sold power plants to 1MDB at what were considered inflated prices in 2012. ADMIC was a joint venture between Abu Dhabi's state fund Aabar Investments and 1MDB to jointly develop the Tun Razak Exchange financial hub in Kuala Lumpur.

Malaysian A-G Apandi responded in a statement yesterday that his office would "take all possible steps to follow up and collaborate with our Swiss counterparts, and we look forward to receiving the findings of their investigations".

1MDB, in its response, said it has not been contacted by any foreign investigators, but that it would cooperate fully with any probe.

It is unclear if the probe would pin down Mr Najib specifically, and analysts also noted the Swiss could take years to complete the investigations. Still, the probe has opened up uncomfortable questions about how the 1MDB investigations were handled in Malaysia, analysts and opposition leaders say.

With Malaysia's politicians already looking at tea leaves for the 2018 elections, the 1MDB scandal that was thought to have cooled off just weeks earlier is now hot again.

S. Rajaratnam School of International Studies fellow Oh Ei Sun sees PM Najib and his coalition being hurt by 1MDB in the coming elections, but said that any "regime change is next to impossible under the current electoral arrangement".

A version of this article appeared in the print edition of The Sunday Times on January 31, 2016, with the headline 'Swiss prosecutor seeks KL's help in 1MDB probe'. Print Edition | Subscribe