Najib and Malaysian authorities have undergone exhaustive means to curtail the domestic investigation into allegations that the prime minister funneled money from the fund into his personal account through Swiss banks and the Middle East. The regime gutted the committee appointed to investigate the allegations, shut down a news source, replaced the deputy prime minister and attorney general, and arrested former members of Najib’s political party, including Khairuddin Abu Hassan as he was preparing to travel to the U.S. to urge investigators to help with the probe.
The FBI has joined a global investigation into allegations of money laundering involving a fund whose board is chaired by Malaysian Prime Minister Najib Razak, who is also the subject of a massive investigation in his country that has led to a widespread instability. The state development fund entitled 1Malaysia Development Bhd, or 1MDB, is under more than $11 billion in debt. Najib and Malaysian authorities have undergone exhaustive means to curtail the domestic investigation into allegations that the prime minister funneled money from the fund into his personal account through Swiss banks and the Middle East. The regime gutted the committee appointed to investigate the allegations, shut down a news source, replaced the deputy prime minister and attorney general, and arrested former members of Najib’s political party, including Khairuddin Abu Hassan as he was preparing to travel to the U.S. to urge investigators to help with the probe. The Malaysian investigation discovered that nearly $700 million flowed through several accounts associated with 1MDB, before reaching Najib’s account shortly before a hotly contested 2013 election.
Sources close to the FBI told the Wall Street Journal that the scope of the agency’s probe is unknown, although it will be one of several investigations into the alleged global conspiracy. The FBI will join authorities from Switzerland, Hong Kong, Singapore, and Abu Dhabi who have also been investigating the missing funds, as well as several other suspicious activities. Anticorruption authorities in Malaysia called the $700 million deposited into the prime minister’s account “a gift” from a Middle Eastern source that has yet to be identified. Two deposits were transferred from accounts in a Singapore branch of a private Swiss bank and routed through Wells Fargo, who declined to comment on the matter. The missing funds from 1MDB’s account revolve around transactions that 1MDB made to Abu Dhabi’s International Petroleum Investment Fund. In 2012, the Abu Dhabi fund agreed to guarantee $3.5 billion of bonds associated with building power plants, with 1MDB offering the Abu Dhabi fund options for a stake in the assets. Instead however, the parties agreed to terminate the deal in 2014, with 1MDB purportedly repurchasing the options from the Abu Dhabi fund.
What happened next is a bit of a mystery. According to a draft report that the Wall Street Journal reviewed from Malaysia’s auditor general, 1MDB made a $993 transfer to a subsidiary of the Abu Dhabi fund, Aabar Investment. Neither Aabar nor the Abu Dhabi fund recorded any significant transactions during this period however; only mentioning in its financial reporting that 1MDB owes the Abu Dhabi fund $481.3 million in outstanding debt. This was the second transaction that the Abu Dhabi fund claims that it hasn’t received. Another payment of $1.4 billion was made from 1MDB to the fund with the transaction record claiming it was collateral as part of the loan guarantees. The $1.4 billion transaction spawned Malaysia’s internal investigation, leading to massive protests by both pro and anti-regime supporters. Many international experts have raised fears of a potential civil war in the country over the matter. For their part, Najib and other 1MDB executives claim that they do not know where the missing money is either, and they are investigating the transactions as well.
Although Swiss officials said last month that tens of millions were frozen in bank accounts related to 1MDB and have opened up criminal cases against two executives, 1MDB claims that no assets have been frozen and that no executives are involved in criminal proceedings. Former Prime Minister Mahathir Mohamad, who belongs to the same ruling party, has led the call for Najib to resign, which he has refused to do. Instead, Najib has attempted to consolidate his power, appealing to Islamic fundamentalists as well as silencing opposition within the country. Meanwhile Najib’s opposition leader, Anwar Ibrahim, has been serving a five-year sentence on charges of sodomy, a conviction that has been deemed as “trumped up,” while his daughter Nurul Izzah Anwar is fighting charges of allegedly purchasing stolen data from 1MDB. Human rights groups worldwide have condemned the charges and sentences. Ibrahim, in particular, has experienced declining health during his prison stay.
Sources:
Sydney Morning Herald – Lindsay Murdoch
Wall Street Journal– Bradley Hope and Tom Wright
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