This article first appeared in The Edge Financial Daily, on April 19, 2016.

KUALA LUMPUR: CIMB Group Holdings Bhd is conducting an independent review of the transfer of US$7 million by its chairman Datuk Seri Nazir Razak as requested by his brother and Prime Minister Datuk Seri Najib Razak in the run-up to the general election in 2013.

The banking group has hired audit firm Ernst & Young to undertake the review.

Speaking to the media after CIMB’s annual general meeting yesterday, Nazir, who steadfastly said he had done no wrong by assisting with the transfer of cash to Barisan Nasional’s politicians and would do nothing to jeopardise the bank’s position and corporate governance, took a voluntary leave of absence starting yesterday until the internal review is completed in the next few weeks.

Nazir said he had told the board that unless he is completely absent from the bank during the review process, CIMB would not be practising the highest standards of corporate governance.

“When the review is complete, the board will then deliberate on the outcome of the review and it will make the decision on whether to welcome me back or not,” he told a room packed with reporters yesterday.

Even at the media briefing yesterday, the 49-year-old banker said he did not know where the money came from and elaborating on the fund’s source would be speculative. The Wall Street Journal (WSJ), which first reported the transfer on March 30, claimed that the authorities’ investigation documents showed the money trail originated from 1Malaysia Development Bhd (1MDB).

CIMB group chief executive officer Tengku Datuk Seri Zafrul Tengku Abdul Aziz, meanwhile, said the internal review is to assess whether the fund transferred had violated the bank’s anti money laundering policy.

The review is an initiative by CIMB’s board of directors to uphold the banking group’s corporate governance standards and transparency, with the idea birthed from a special board meeting on April 5 to give a chance to Nazir to tell his side of the story to CIMB’s directors.

“We invited Nazir to give an explanation, which he did so, and then he excused himself from the meeting. Then the board invited its internal compliance officer to brief us on what happened, and that’s when we decided that it was best to appoint an independent party to advise the board on top of the internal review that is happening today (yesterday),” said Zafrul.

Still, Nazir said CIMB had informed Bank Negara Malaysia (BNM) of this internal review, given the central bank’s role in regulatory matters.

“We communicate with BNM on all matters. It monitors us and will expect us to handle this matter in the right way. If we handle it in the right way, there is no reason for BNM to have to do anything,” he said.

Nazir said that even on the ethical side of things, the fund transfer was nothing to be questioned about. This was why he never came out to inform he had done so until the WSJ report was published.

However, he reiterated that he regretted helping out Najib, who is also Umno’s president, with the transfer because of the controversy surrounding 1MDB, causing him “to be dragged into the whole conversation”.

“There was nothing in the air in 2013, and I looked at what my brother asked of me — it was a favour — and it didn’t seem to involve anything illegal or any inappropriate use of my position, so I obliged. It was as simple as that.

“Every time I am asked for a favour, or asked to do something, I always evaluate whether it is legal, whether there is anything inappropriate for it,” Nazir said.

This, however, was the only one time Najib had requested Nazir to transfer funds to politicians, the latter said.

The press conference by CIMB Group Holdings Bhd was packed with journalists, armed with questions for the banking group’s chairman Datuk Seri Nazir Razak on helping his brother and Prime Minister Datuk Seri Najib Razak for the transfer of US$7 million to Barisan Nasional politicians before the country’s poll in 2013. The following are excerpts from the press conference:

Given that The Wall Street Journal (WSJ) only recently published the report on the money going into your account, why did you wait this long before making a statement?

Nazir: As I told you, I have been very clear that what I did was legal and did not compromise my position [as CIMB chairman] in any way. Therefore, I did not see any reason for me to make a statement [earlier]. However, since the story has appeared in WSJ, I was happy to be transparent and confirm that it is true.

Given the nature of the funds ...

Nazir: You are making assertions about the source of the funds, etc ... however, that it is all merely media speculation. There is no confirmation of anything. But the fact is, as far as I am concerned, I was very clear about my legal position, about the right and wrong of what I did.

Has Bank Negara Malaysia (BNM) been notified of this recent development or have they shown any concern about this incident?

Nazir: Bank Negara is the banking regulator; we are always in communication with BNM on all matters. We communicate with BNM on all matters. So you would expect BNM to engage us on every matter. Certainly, this issue is something that will interest BNM. However, they are a supervisory regulator. They monitor us and will expect us to handle this matter in the right way. So if we handle it in the right way, there is no reason for them to have to do anything.

You said you did not have any knowledge of the source of the funds at that point in time. Do you now know where it came from?

Nazir: Well, obviously not. There has been no confirmation of anything. Anything I say will be speculative. What I do know is at that point of time — I have been a banker for 26 [years] and I know what the law is — there was no reason to think there was any question mark around the funds.

Do you recall how many times the funds were transferred?

Nazir: No, I do not want to comment on any other details. This thing is being reviewed, etc. What’s important is what I said just now. I am very clear that nothing I did was illegal and I did not misuse my position at CIMB. But given the media attention, I understand that it makes my stakeholders uncomfortable, so I want to make sure that the firm/institution does the right thing in dealing with this. And I think the best way is for me to get out of the way, go on a holiday ... and then the outcome will be determined thereafter.

Do you maintain that you have done nothing wrong when you accepted and distributed money on your brother’s behalf? Is it because political donations are not illegal in this country? Is that the reason why you are saying nothing is wrong?

Nazir: No. As I said, I do not want to comment anymore on the details. My point is I know the law; I know my position, what is right and what is wrong, so I look forward to the review and the outcome.

If you think that you did nothing wrong, why did you say that you wished you hadn’t done it?

Nazir: I said I wished I hadn’t done it because since 2014, there has been a lot of controversy around 1MDB (1Malaysia Development Bhd). So I regret it because it has dragged me into that whole conversation. So I regret being part of that conversation. But as I said, there was nothing in the air in 2013, and I looked at what my brother asked of me — it was a favour — and it didn’t seem to involve anything illegal or any inappropriate use of my position, so I obliged. It was as simple as that.

Was that the one and only time?

Nazir: There are favours of many natures; that’s what families do. So I can’t really answer that question. But every time I am asked for a favour, or asked to do something, I always evaluate whether it is legal, whether there is anything inappropriate for it. I have been in this business for 26 years, and I have survived by maintaining that stance always — that it must be legal and must not compromise my position, and that’s it.

Does that mean there were other instances of this nature where you helped transfer money to certain political parties?

Nazir: The answer is no. There was no other time when my brother asked for this kind of assistance.

You mentioned the legalities. But you didn’t comment on the ethics of the matter — that it may not be ethical, although it is legal.

Nazir: Yes, I also looked at that and I did not see any issue with it. You would expect me to look at everything from all those tenets.