Malaysia's central bank said it had recommended that the public prosecutor bring charges against state investor 1Malaysia Development Berhad (1MDB) for inaccurate or incomplete disclosure of information about its investments of US$1.83 billion (S$2.58 billion).
While it acknowledged a decision to initiate criminal prosecution lies solely with the Attorney-General, Bank Negara Malaysia (BNM) said in a statement yesterday that it has revoked three permissions granted to 1MDB for the investments. The central bank did not say which transactions allegedly broke foreign exchange laws, but one of 1MDB's biggest investments went into Saudi Arabia-based oil and gas firm PetroSaudi International.
Responding to BNM's statement, 1MDB yesterday said a total of US$2.318 billion from the venture, which included its profits, had been "substantially utilised" towards settling debt, with just US$940 million remaining and earmarked for a "debt for asset swap" with Abu Dhabi sovereign fund Aabar.
The BNM statement came a day after Attorney-General Apandi Ali said his chamber's review of the central bank's investigation had determined that 1MDB officials had not committed any crimes.
BNM's statement indicates a clear disagreement between Tan Sri Apandi and central bank governor Zeti Akhtar Aziz, whose contract expires in April.
The scrutiny of 1MDB's massive money transactions continues to raise concern because the firm's advisory board chief is Prime Minister Najib Razak. 1MDB has struggled to meet obligations due from a RM42 billion (S$14 billion) debt pile it raked up in just five years. Yesterday, BNM said it had ordered 1MDB to bring home the US$1.83 billion.
"The Bank concluded that permissions required under the ECA ( Exchange Control Act) 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. Therefore, the Bank has revoked three permissions granted to 1MDB ... for investments abroad totalling US$1.83 billion and also issued a direction... to repatriate the amount of US$1.83 billion to Malaysia..."
The central bank has said the unresolved issues surrounding 1MDB have weighed on investor sentiment in Malaysia, whose currency is Asia's worst-performing this year. It is unclear when BNM ordered 1MDB to bring the money back to Malaysia, or if it can enforce any punishment on the finance ministry-owned firm if it refuses to comply.
Yesterday, the central bank - which itself has been probed for allegedly leaking investigation papers on 1MDB - acknowledged that "under the Federal Constitution, the decision to initiate criminal prosecution lies solely with the Attorney-General". Mr Apandi was appointed the country's top lawyer after his predecessor Abdul Gani Patail was removed on July 28.