Wednesday 13 April 2016
The state-owned fund is linked to PM Najib Razak, with two suspects indicted over an alleged phony bond deal
Switzerland has widened its corruption probe into a Malaysian state-owned fund linked to prime minister Najib Razak, with two new suspects indicted over an alleged phony bond deal.
The Swiss attorney general’s office (OAG) said the new suspects – who are accused of fraud, bribery and other offences – are officials from the United Arab Emirates who were in charge of sovereign funds based in Abu Dhabi.
In a statement, the OAG said it had evidence that the management of the 1MDB fund violated Swiss embezzlement laws through a fraudulent bond agreement with the UAE officials, with money routed through Swiss banks.
Allegations that billions were looted from 1MDB in a vast campaign of fraud have shaken Najib’s government.
The scandal intensified last week when a Malaysian parliamentary committee clearly suggested misconduct had occurred, in the first condemnation from an official body in Kuala Lumpur.
Switzerland opened its own criminal probe into 1MDB last August, targeting two former Malaysian officials “and persons unknown” on suspicion of bribery, money laundering and other offences.
The OAG has said that up to $4bn of public funds in Malaysia may have been misappropriated, with a portion of the money transferred to Swiss accounts controlled by former Malaysian officials and people based in the UAE.
Concerning the latest allegations, Swiss authorities are scrutinising bonds issued by 1MDB subsidiaries officially intended to finance electric power plant projects in Malaysia.
The OAG statement said that sovereign funds based in Abu Dhabi issued guarantees on the bonds, but that evidence indicated 1MDB subsidiaries did not make proper payments in exchange for those guarantees.
“The Swiss authorities have elements in hand allowing them to suspect that the amounts paid in connection with this guarantee were not (paid) to the Abu Dhabi sovereign fund that supported the commercial risk,” the statement said.
“To the contrary, these funds would have benefited others, particularly two public officials concerned as well as a company related to the motion picture industry,” it added.
Swiss authorities provided no details on the film industry allegations, but The Wall Street Journal has reported that some of the money used to make Hollywood hit The Wolf of Wall Street, a movie about financial corruption starring Leonardo DiCaprio, was laundered from 1MDB.
Highlighting the broad scope of the IMDB scandal, Switzerland said it had asked both Luxembourg and Singapore for help with the investigation.
Singapore’s attorney general said it had received a request for help from its Swiss counterparts “for information and documents on certain fund flows flowing from (1MDB) and entities related to it”.
It added in a statement that “the request is receiving attention and (we) will render all possible assistance to the (Swiss prosecutors) expeditiously”.