The new year has been a bumpy one for Malaysia, with the international multi billion dollar 1MDB kleptocratic money-laundering scandal continuing to make waves and headlines worldwide.
The Australian Federal Police has announced that they are working with international law enforcement agencies to investigate companies associated with the 1MDB scandal – joining at least half a dozen countries, including Switzerland, Singapore and the United States, which have initiated criminal or legal actions concerning the international 1MDB money-laundering scandal.
In Singapore, the fourth banker had been convicted by Singaporean courts in relation to 1MDB-related accounts – Jens Fred Sturzenegger, a Swiss national and branch manager of the Falcon Private Bank in Singapore who pleaded guilty to six charges related to Singapore’s probe on 1MDB.
Sturzeneggar was sentenced to 28 weeks jail and fined S$128,000.
Falcon Private Bank is owned by Abu Dhabi’s International Investment Company (Ipic) and its Singapore operations was shut down by Monetary Authority of Singapore (MAS) in October last year for failing to fulfil anti-money laundering controls and improper conduct by the bank’s senior management.
Singaporean prosecutors had told the court Malaysian businessman Jho Low had control over four accounts with the bank.
According to Channel News Asia, Sturzenegger pleaded guilty to charges of failing to report potentially criminal transactions involving billions of dollars and for lying to authorities to protect Low’s financial interest.
He was also charged for lying to MAS officers to distract them from probing bank accounts controlled by Low by claiming that the accounts were “beneficially owned” by Eric Tan Kim Loong, a known associate of Low’s.
Sturzenegger was said to have lied to investigators about never having made contact with Low.
According to the US Department of Justice, portions of the US$3 billion raised by 1MDB Global Investments Ltd in 2013 through Goldman Sachs had flowed into the Falcon accounts.
In October last year, the Swiss attorney-general’s office (OAG) announced that it was initiating criminal proceedings against Falcon, which had offices in Abu Dhabi, Dubai and London apart from Singapore and Zurich.
According to its Oct 5 press release last year, “The criminal proceedings being conducted by the OAG focus primarily on misappropriation from the 1MDB sovereign fund of monies intended for investment in the Petrosaudi, Tanjung/Genting and Admic (Abu Dhabi Malaysia Investment Company) projects, as well as the misappropriation of investments in the SRC sovereign fund in the area of natural resources.”
Meanwhile, the Swiss Financial Market Supervisory Authority (Finma) are investigating a total of six banks over the scandal, including Falcon, for potential breaches in financial and anti-money laundering regulations in Switzerland in relations to the 1MDB scandal.
According to Finma, Falcon had several business relationships with a number of 1MDB subsidiaries, and executed US$2.5 billion on behalf of two of these companies. All told, a total of US$3.8 billion in assets associated to 1MDB had been moved through Falcon.
Finma also made mention of a ‘young Malaysian businessman’ who is supposedly a client of the bank and has links to individuals in Malaysian government circles. The person was not named in the press release, but his government ties would have qualified him as a ‘politically exposed person’ (PEP) and should have been subjected to extra scrutiny by the bank.
According to Finma, the bank had failed to conduct adequate background and risk profile checks on the transactions involving the 1MDB companies.
“It did not sufficiently query or assess the plausibility of the proffered documents and information about the supposed financing of energy projects, nor did it question the commercial background of the US$1.3 billion which was immediately transferred from one account to another (pass-through transactions),” it said.
As for the businessman, the regulator said, “The bank did not verify how this individual had been able to acquire assets of US$135 million in an extremely short period of time or why a total of US$1.2 billion was transferred to his accounts at a later date – a transaction which was clearly at variance with the information he had provided when opening the account.”
In the United States, the Department of Justice’s (DOJ) lawsuits to forfeit US$1 billion 1MDB-linked assets said the misappropriation from 1MDB had occurred in three phases. Falcon was alleged to be involved in the latter two, dubbed the ‘Aabar-BVI phase’ and the ‘Tanore phase’.
The DOJ alleged that in 2012, 1MDB Energy had remitted US$1.367 billion from its Falcon account to Aabar-BVI’s BSI bank account under the guise of being a ‘security deposit’ for Aabar.
The money came from two separate bond issuances by 1MDB, which totalled US$3.5 billion. It bonds were co-guaranteed by Aabar’s parent company, IPIC.
IPIC and Aabar denies having any ties with Aabar-BVI, which is the intended recipient of the US$1.367, but 1MDB and the Malaysian government claimed that it has proof to show otherwise.
The matter is now at the heart of a dispute being heard before the London Court of International Arbitration.
From Aabar-BVI, according to the DOJ, the money was allegedly distributed for the personal benefit of various individuals, including officials at 1MDB, IPIC or Aabar, the document reads.
Among them includes a certain ‘Malaysian Official 1’ (MO1), who supposedly received US$30 million during this phase.
In 2013, during the Tanore phase, US$1.26 billion was allegedly siphoned out of a 1MDB US$3 billion bond issuance through a certain ‘Tanore Finance Corporation’ bank account in Falcon’s Singapore unit, and another Falcon account held under the name of Granton Property Holdings Limited.
The money was originally intended for a 1MDB-Aabar joint venture called Admic.
Again, the money was supposedly used for the benefit of unrelated individuals, including US$681 million that went to MO1’s personal bank account in Malaysia.
With the criminal convictions of four bankers in Singapore in relation to 1MDB-money laundering activities and the US DOJ lawsuits to forfeit US$1 billion of 1MDB-linked assets in the United States, United Kingdom and Switzerland, can the Malaysian authorities, especially the Attorney-General’s Chambers, the MACC, the Police and Bank Negara pretend that everything about 1MDB is hunky-dory and super-duper and continue to dig their heads deeper in the sand?
The Malaysian authorities, including the new MACC leadership which have recently been possessed by a bout of evangelical preachings about the evils of corruption, should realise that they have no credibility whatsoever to talk about fighting corruption until and unless they address the 1MDB kleptocratic scandal and the identity of “MO1”.
Singaporean authorities have frozen the assets of Malaysian Jho Low, although he has not been charged with any offence related to 1MDB but has been identified as a person of interest in related investigations.
May be Malaysia should emulate China and have an Operation Fox-hunt and Sky-net to bring economic or corruption fugitives like Jho Low and others involved in the 1MDB and SRC International scandals back to justice in Malaysia!
Will the MACC and the Attorney-General’s Chambers work on this possibility?