FBI Probing Malaysia’s 1MDB Scandal

Hata Wahari

2015-09-21
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150921-MY-1mdb-620 A woman walks past the construction site of the 1Malaysia Development Berhad (1MDB) flagship Tun Razak Exchange in Kuala Lumpur, July 3, 2015.
AFP

The U.S. Federal Bureau of Investigation (FBI) has launched a money-laundering investigation in connection with Malaysia’s debt-ridden state investment fund, 1Malaysia Development Berhad (1MDB), news reports said.

The Wall Street Journal, which reported the story Saturday, cited a “person familiar with the matter” and said the scope of the investigation was not known.

The FBI declined to say whether such an investigation was under way. “It is standard practice for the FBI not to confirm or deny the existence of investigations,” Susan McKee, acting unit chief of the FBI’s National Press Office, told BenarNews in an email.

In July, the Wall Street Journal reported that U.S. $700 million dollars from the 1MDB had been deposited into accounts allegedly belonging to Malaysian Prime Minister Najib Razak before Malaysia’s last general election, which took place in May 2013.

Najib and 1MDB officials denied any wrongdoing. The prime minister called the reports an attempt at political sabotage and said he had “never taken funds for personal gain.”

Malaysia’s Anti-Corruption Commission later said the funds were donations from the Middle East. It did not say who the donors were, what the money was used for, or why such a large sum had entered the country unreported.

‘A form of sabotage’

On Friday, Malaysian authorities arrested a whistle-blower in the case, after preventing his departure for the United States, where he had planned to meet with FBI officials, Agence France-Presse quoted the man’s lawyer as saying.

Khairuddin Abu Hassan, a former official in Najib’s ruling United Malays National Organization (UMNO), had already traveled to Switzerland, Britain, France and Hong Kong to draw attention to the 1MDB case, according to his attorney, Matthias Chang.

He has now been arrested and charged with plotting to “undermine parliamentary democracy,” Chang said, according to AFP.

Khairuddin has already filed a police report on alleged misuse of funds linked to 1MDB, and investigators need time to look into it, Malaysian Inspector General of Police Khalid Abu Bakar said in statement Sunday from Mecca, where he was undertaking the Hajj pilgrimage.

“However, he still choose to use foreign legal channels to seek international attention and also impose pressure on Malaysia,” Khalid said.

“This action is clearly aimed at discrediting the Malaysia legislation system and local law enforcement agencies and invites foreign interference into the country's democratic system,” he added. “His actions are a form of sabotage which could destabilize the country's economy and sovereignty.”
Khairuddin filed his 1MDB police report in December 2014.

International probes

Earlier this month, the Journal reported that more than U.S. $2 billion were missing in 1MDB money that was supposed to have been paid to a fund based in Abu Dhabi. Payments of U.S. $1.4 billion and another U.S. $993 million were now unaccounted for, the paper reported, citing officials in the capital of the United Arab Emirates (UAE).

1MDB rejected the reports as biased, poorly sourced and full of errors.

“We confirm that no executives or board members of 1MDB are the subject of any criminal proceedings by the Swiss attorney general’s office. We further confirm that no 1MDB bank accounts have been frozen by either the Swiss or Singapore authorities,” said a furious 1MDB statement issued Friday.

“We, however, reiterate our readiness and willingness to assist in the investigations conducted by any foreign government agency, subject to advice from the relevant Malaysian authorities and adherence to any relevant international protocols governing such matters.”

‘Public wants answers’

The 1MDB state fund is now part of international investigations unfolding in Singapore, Hong Kong, Switzerland, Britain and the UAE, according to reports.

Former Prime Minister Mahathir Mohamad – Najib’s predecessor and now constant critic – said Najib should be cautious about travelling abroad. The prime minister is due to travel to New York next week to attend the U.N. General Assembly along with other foreign leaders.

“He might be arrested if he left the country. So he has to remain here, like how he withdrew the passports of some people and barred them from going overseas,” the Malaysian Insider quoted the 90-year-old former PM as saying Sunday in a video published on the Din Turtle blogsite.

On Monday, Malaysia’s central bank chief said the ongoing scandal was strangling the country’s economy, and needed to be resolved with transparency.

"Right now, we know that the public wants answers to these questions, and they deserve to get the answers," Bank Negara Malaysia Gov. Zeti Akhtar Aziz said in Kuala Lumpur during a discussion on the economy, the Malaysian Insider reported.

“All issues pertaining to 1MDB should be resolved. It is only then [that] we can see the ringgit rebound,” Astro Awani quoted her as saying, referring to Malaysia’s struggling currency.

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