Swiss and Malaysian AGs hold talks on 1MDB

This article first appeared in The Edge Malaysia Weekly, on July 9, 2018 - July 15, 2018.
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PROGRESS is being made on the international front with regard to the 1Malaysia Development Bhd (1MDB) graft scandal, as the Attorney General of Switzerland, Michael Lauber, has discussed cooperation with his Malaysian counterpart, Tommy Thomas.

“The future of this cooperation and the resumption of mutual legal assistance was the focus in the phone call between Lauber and Thomas on June 14, 2018,” the Office of the Attorney General (OAG) of Switzerland told The Edge in an email response.

It repeated its earlier view that it is “very much interested in renewing dialogue with the competent authorities in Malaysia in order to establish the most efficient form of cooperation, and to ensure good coordination of the criminal investigations between partnering authorities”.

On May 15, the OAG said that it “favours an exchange between partnering authorities at their earliest convenience”.

Lauber had earlier requested from law enforcement authorities in Putrajaya mutual legal assistance for ongoing probes into 1MDB on two occasions. However, these requests were rejected by former AG Tan Sri Apandi Ali. This had prevented, among other things, the verification of a RM2.6 billion donation from a Saudi prince to former prime minister Datuk Seri Najib Razak. Najib claims that it was a gift.

According to recently appointed Malaysia Anti-Corruption Commission chief commissioner Datuk Seri Mohd Shukri Abdull, Apandi also refused to authorise mutual legal assistance to other countries such as the US, Singapore and the United Arab Emirates, which was required by investigators to record statements from non-Malaysians overseas.

Upon his appointment on June 5, Thomas vowed to take action against those suspected of wrongdoing in the billion-dollar corruption scandal. He is currently leading the prosecution against Najib on charges of corruption and criminal breach of trust related to 1MDB subsidiary, SRC International.

“At this stage of the proceedings, six persons are under investigation and two banks are suspected of involvement,” said the OAG, referring to proceedings it started on Aug 1, 2015, investigating two former 1MDB officials, two former officials from the United Arab Emirates who had been in charge of sovereign funds in Abu Dhabi and two officials from the PetroSaudi Group. The investigations involved suspicion of bribery of foreign public officials, misconduct in public office, money laundering, criminal mismanagement as well as fraud and document forgery.

The two banks, BSI SA and Falcon Private Bank SA, are accused of organisational deficiencies that facilitated the offences related to 1MDB. Enforcement proceedings had been initiated in May 2016 on BSI and in October of the same year on Falcon.

In a recent report, Bloomberg said six executives of BSI met Goldman Sachs bankers Roger Ng and Tim Leissner, as well as Malaysian businessman Low Taek Jho, over dinner in early 2012 to discuss a US$1.75 billion bond offering from 1MDB.

In May of that year, US$577 million in proceeds from a 1MDB bond sale ended up in an account at BSI in Switzerland the following day, the report added.

Three former bankers at the Singapore branch of BSI were jailed in June and July last year. BSI Singapore managing director Yak Yew Chee and his subordinate Yvonne Seah were found guilty of forgery and failing to report suspicious transactions, while Yeo Jiawei was jailed for more than 4½ years after pleading guilty to money laundering and cheating.

In Switzerland, investigations were opened in response to reports from the Money Laundering Reporting Office of Switzerland (MROS) and the OAG’s analysis of MROS’ information.

“The OAG is investigating the use of financing obtained by 1MDB and SRC International Bhd. The financing was earmarked for investment in economic development projects, in particular the PetroSaudi, Tanjong/Genting and Abu Dhabi Malaysia Investment Co Ltd projects, as well as in an SRC investment project involving natural resources. All or part of the financing obtained is alleged to have been used for other purposes, most particularly for the personal enrichment of the persons involved,” the Swiss authority noted.

With regard to the assets seized, the Swiss OAG was unable to provide details. It maintained that the presumption of innocence applies for all parties involved.

However, the assets are known to be worth more than US$100 million after the Swiss parliament rejected on March 15 a bid to return the seized bank profits to Malaysia. Although Swiss law allows for the repatriation of assets seized from toppled regimes, confiscated bank profits are typically channelled to the country’s general budget, said a Reuters report.

In contrast, Finance Minister Lim Guan Eng has said that the US’ Department of Justice (DoJ), which has recovered assets such as the US$250 million yacht, Equanimity, will monetise seized assets and return the money to Malaysia as soon as possible.

A Reuters report in early June also cited sources as saying that the Malaysian government is mulling asking the DoJ to get Goldman Sachs to return almost US$600 million earned as fees for 1MDB bonds that had been raised.

On top of that, the special task force investigating 1MDB in Singapore has agreed to cooperate with its Malaysian counterpart to return 1MDB funds to the Malaysian government.



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