This article first appeared in The Edge Malaysia Weekly on February 28, 2022 - March 6, 2022

PROSECUTION star witness Tim Leissner dropped a bombshell on Tuesday (Feb 22) when he testified to Bank Negara Malaysia’s approval of an overnight transfer of US$1 billion in funds to PetroSaudi International (PSI) in 2009. Leissner insinuated that Datuk Tawfiq Ayman, the husband of former Bank Negara governor Tan Sri Dr Zeti Akhtar Aziz, had received a bribe, allegations which Tawfiq subsequently denied.

Leissner said former Goldman Sachs banker Roger Ng Chong Hwa told him that “bribery” was involved in the “unprecedented” approval of such a sizeable transfer. He was quoted as saying: “In 2009, there were still capital controls in place and a billion dollars was wired overnight to the joint venture (JV) because the husband of the then governor had received a bribe.” Leissner said, however, that he could not independently verify whether this was true.

Tawfiq, in a press statement later, vehemently denied receiving bribes in any transactions linked to the 1MDB scandal. He added that he did not know Leissner or Ng, nor had he met or communicated with the duo.

He was quoted as saying: “I wish to categorically state that throughout my entire life, I have never received any bribe from anyone.”  

In that controversial transfer, the 1MDB board had directed that the US$1 billion be deposited into the accounts of 1MDB PetroSaudi Ltd, the fund’s JV company with PetroSaudi.  Ignoring the board’s directive, however, 1MDB’s management abided by the instructions of PSI’s law firm instead and transferred the money in two separate sums of US$300 million to the JV firm’s Swiss-based JP Morgan account and US$700 million to a company called Good Star, which belonged to Low Taek Jho, or Jho Low.

In a statement released late on Wednesday (Feb 25), Bank Negara said all investments abroad by resident entities are subject to the requirements under the Exchange Control Act 1953 (since replaced by the Financial Services Act 2013), which was in force prior to 2013.

“All submissions made by 1MDB, including the said application, were subject to the same approval criteria and internal governance process that apply to any submission by other entities to Bank Negara,” it said, adding that all requirements and criteria are transparent and published on its website.

This is not the only 1MDB-related woe for Tawfiq. In March 2021, The Edge published a damning report linking him to ill-gotten gains from fugitive-financier Jho Low’s companies. Based on documents and correspondence, it reported that the Commercial Affairs Department (CAD) of the Singapore Police Force alerted Bank Negara to the dubious transactions involving Iron Rhapsody Ltd, which had a bank account at UBS in Singapore. The report pointed out that Tawfiq and a son are beneficial owners of Iron Rhapsody.

It added that some transactions in 2008 and 2009, which triggered the suspicious transaction report (STR) alerts, were flagged years later in 2015 and 2016, following 1 Malaysia Development Bhd (1MDB)-related investigations in Singapore, Malaysia, Switzerland and the US.

According to CAD, Iron Rhapsody received a total of US$16.22 million from Jho Low’s companies/bank accounts in five separate transactions. CAD also confirmed that portions of this money originated from profits made by Jho Low and cohorts from the flipping of the RM5 billion 1MDB/TIA (Terengganu Investment Authority) bonds arranged by AmBank in May 2009.

Bank Negara did not respond to the issue then, stating that it was “bound by the international protocol for sharing of financial intelligence”.

This transpired while Zeti was still at the helm of the central bank. She retired as its governor in April 2016 after serving in the post for 16 years.

It was reported that then Commercial Crime Investigation Department director Datuk Zainuddin Yaacob confirmed that police were investigating Tawfiq under Section (4)(1)(a) of the Anti-Money Laundering, Anti-Terrorism Financing and Proceeds of Unlawful Activities Act.

The section criminalises anyone who “engages, directly or indirectly, in a transaction that involves proceeds of an unlawful activity” and carries a maximum 15-year jail sentence penalty and a fine of at least five times the sum of the proceeds or RM5 million, whichever is higher.

In December 2020, Zeti denied any wrongdoing, insisting that any 1MDB-related allegations regarding her or her family were “false and malicious”. Tawfiq had also been quizzed by the police over the matter in 2021. Theedgemarkets.com reported in April 2021 that police recorded his statement over three hours.

According to news reports, Deputy Home Minister Datuk Seri Ismail Mohamed Said told Parliament on Dec 9, 2021, that investigation papers on the matter were submitted to the Attorney-General’s Chambers (AGC) in October 2021 and that the “AGC ordered police to conduct several actions and further investigations”. There have been no updates so far, although it was reported last month that the Malaysian Anti-Corruption Commission (MACC) are investigating Zeti and former minister in the Prime Minister’s Department Tan Sri Nor Mohamed Yakcop over ties to 1MDB funds.

In a separate development in November 2021, MACC said in a statement that the Singapore government had repatriated US$15.4 million to Malaysia involving the accounts of Cutting Edge Industries Ltd, owned by Tawfiq and one Samuel Goh.

Meanwhile, in the same statement released on Wednesday, Bank Negara added that it had furnished information to the relevant law enforcement agency in 2016 in response to reports about information it received from “foreign financial intelligence units” on the accounts belonging to Tawfiq.

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