The civil lawsuits filed by the US Department of Justice (DOJ) on Wednesday to seize assets worth over US$1 billion (S$1.4 billion) stolen from Malaysia's state fund, 1MDB, are sending ripples across the globe.
These are the largest set of cases brought to court under the DOJ's Kleptocracy Asset Recovery Initiative. The 1MDB fund, started in 2009 ostensibly for national development purposes by Malaysian Prime Minister Najib Razak soon after he came to power, is being investigated in at least six other jurisdictions, including Singapore, Switzerland, Hong Kong and, of course, Malaysia.
The alleged offenders involve "an international conspiracy to launder money misappropriated from 1MDB", the US DOJ said. It mentioned the Prime Minister's stepson Riza Aziz, the founder of Red Granite Pictures, whose film production The Wolf Of Wall Street was nominated for an Oscar; Malaysian financier Low Taek Jho; and two government officials from Abu Dhabi, Mr Khadem Abdulla Al-Qubaisi and Mr Mohammed Ahmed Badawy Al-Husseiny.
In Malaysia, the repercussions of alleged wrongdoings involving 1MDB have seen the sacking of top politicians who had openly criticised the Prime Minister's handling of the fund, and other heavy-handed actions against whistle-blowers. All the legal avenues within the country for bringing perpetrators to court have, thus far, proved ineffective.
Internationally, the Malaysian authorities have threatened legal action against the Wall Street Journal which had, along with the London-based Sarawak Report website, published reports on the highly dubious behaviour of key persons in 1MDB's international network. These threats were repeated over many months but never carried out.
In Singapore, state prosecutors have called investigations into 1MDB "the most complex and largest money-laundering case ever to have taken place in Singapore". The Monetary Authority of Singapore has withdrawn the licence of the Swiss bank, BSI SA, to operate locally, and senior BSI officials are being investigated. Two have been charged.
The details now provided in the cases filed by the US DOJ are astonishingly thorough. These particulars delivered so publicly cannot but stimulate and hasten the execution of further legal actions in other countries, each building its case with help from revelations made by the others.
In Switzerland, the attorney-general's office began investigations against two former Malaysian officials in August last year and have since indicted at least two more suspects. The Swiss allege that 1MDB had violated their embezzlement laws when money from a fraudulent bond agreement it made with UAE officials was routed through Swiss banks.
Switzerland has also asked Luxembourg and Singapore for assistance. Luxembourg has responded and is investigating whether hundreds of millions of dollars sent to one of its banks did in fact originate from 1MDB.
Hong Kong's anti-corruption agency, as a rule, does not provide details on cases under investigation, but bank accounts there of unnamed individuals related to 1MDB were reportedly frozen in May this year.
In April this year, the United Arab Emirates authorities froze the personal assets of two former officials of the US$80 billion Abu Dhabi investment fund called International Petroleum Investment Company (Ipic). The two former officials are now named in the US lawsuits - Mr Khadem Al Qubaisi, an Emirati who was managing director of Abu Dhabi's Ipic, and Mr Mohammed Badawy Al Husseiny, an American who was chief executive of another state investor called Aabar Investments PJS, which is part of Ipic.
In Malaysia, Datuk Seri Najib was investigated after it became known that US$681 million had been transferred to a personal bank account apparently started for that purpose. That led to then investigating Attorney-General Abdul Gani Patail being replaced. The new Attorney-General, Mr Mohamed Apandi Ali, soon found Mr Najib innocent of any crime.
The US lawsuits do state that US$681 million was transferred to the bank account of "Malaysian Official 1", who was "a high-ranking official in the Malaysian government who also held a position of authority with 1MDB". The implication could not have been more direct, short of his name being mentioned.
In Malaysia, the 1MDB saga has had deep repercussions on the country's political dynamics, with strategies and counter-strategies being applied between those opposed to the Prime Minister, and those calling for a thorough and independent investigation into the goings-on of the ill-fated investment fund. It even led the 91-year-old former Malaysian prime minister Mahathir Mohamad to travel the country collecting signatures calling for the removal of his erstwhile protege, Mr Najib. When that attempt failed to achieve its desired effect, Dr Mahathir formed a new political party to work with his former political enemies in the opposition parties to topple the Najib administration.
The ripples emanating from 1MBD across the world look poised to turn into a big wave, if not a tsunami.
- The writer is deputy director of Iseas-Yusof Ishak Institute, Singapore
