Thursday 28 Mar 2024
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This article first appeared in The Edge Financial Daily, on April 13, 2016.

 

KUALA LUMPUR: The Swiss authorities suspect that money paid for the guarantee of bonds issued to fund 1Malaysia Development Bhd’s (1MDB) power plants had benefited “two public officials” and “a company related to the motion picture industry.”

“The Swiss authorities have elements in hand allowing them to suspect that the amounts paid in connection with this guarantee were not returned to the Abu Dhabi sovereign fund that supported the commercial risk.

“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.

“A former 1MDB body, already accused in the Swiss proceedings, has also benefited from these amounts,” said the Office of the Attorney-General of Switzerland (OAG) in a statement posted on its website yesterday.

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This comes after Abu Dhabi sovereign fund International Petroleum Investment Co (IPIC) and its unit Aabar Investments PJS (Aabar) on Monday denied ownership of British Virgin Islands firm Aabar Investments PJS (Aabar BVI).They also denied receiving payments from Aabar BVI or of assuming any liabilities on behalf of the firm.

1MDB had previously stated that it made a total of US$3.5 billion (RM13.62 billion) in payments to Aabar BVI, with US$1.4 billion — from a privately placed bond that Goldman Sachs raised in 2012 — as a security deposit.

The Public Accounts Committee (PAC), in its report on its investigation into 1MDB, noted that the state fund’s board of directors did not approve the US$1.4 billion security deposit.

The PAC report also noted that 1MDB had also made payments of US$855 million, US$933 million and US$295 million as security deposits and other guarantees for the bond to Aabar BVI.

OAG, in its statement, said that as part of the criminal proceedings on suspicion of embezzlement committed against 1MDB, OAG has extended its proceedings to two former Emirati officials, in charge of Abu Dhabi sovereign funds.

The two former Emirati officials are under investigation for fraud, criminal mismanagement, misconduct in public office, forgery of a document, bribery of foreign public officials and money laundering, it said.

“The extension of the criminal proceedings took place within the Genting/Tanjong chapter, one of the four main chapters of the Swiss investigation opened on Aug 14, 2015.

“1MDB subsidiaries issued two series of bonds to finance investments in electric power plants.

“This chapter of the proceedings covers the circumstances in which these subsidiaries obtained the guarantee to repay these bonds from an Abu Dhabi sovereign fund,” it added.

OAG also said that as part of the Swiss criminal proceedings, it has issued two new requests for mutual legal assistance to Luxembourg and Singapore.

“Given the international cooperation, the OAG is thus working to establish the facts,” it said.

Reuters reported that Singapore’s Attorney-General’s Chambers confirmed yesterday that it has received a request for mutual legal assistance in criminal matters from the OAG.

The Wall Street Journal, in a series of articles, had alleged that Red Granite Pictures, the production company behind the Oscar-nominated film The Wolf of Wall Street, had obtained the capital to produce the movie after receiving funds diverted from 1MDB. The chairman of Red Granite Pictures is Prime Minister Datuk Seri Najib Razak’s stepson Riza Aziz.

Red Granite Pictures have repeatedly denied that the movie, which received five nominations at the 2014 Academy Awards, was funded by capital from 1MDB.

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