US prosecutors said yesterday over US$3.5 billion was diverted from the 1Malaysia Development Bhd (1MDB) fund that Najib founded in 2009 shortly after coming to power.
The US civil lawsuits are seeking to seize US$1 billion of the allegedly embezzled assets that were transferred into the United States using shell companies.
The lawsuit does not name Najib but refers to a “Malaysian Official 1" – described as a high-ranking government official – who received some of the misappropriated funds, including US$681 million in March 2013. A source familiar with the investigation later confirmed that “Malaysian Official 1" is Najib.
Political risk consultants Eurasia said that since Najib was not directly named in the lawsuits, that “will afford him protection”.
“Najib has become accustomed to weathering international investigations,” Eurasia said in a note to clients.
“Najib supporters placed in key positions across government (including in the Attorney-General’s Office and the anti-corruption commission) will continue to shield the prime minister from any probe by blocking access to information or evidence that could implicate him,” the note said.
Najib has consistently denied any wrongdoing. Local investigations have also cleared him, although transactions related to 1MDB are under investigation in at least six countries for money-laundering, fraud and other offences.
Najib has sacked critics of the scandal within his ruling United Malays National Organisation (Umno), including members of his cabinet.
When the US Justice Department announced the lawsuits, Najib was attending an open house dinner and from where he posted pictures on his Twitter account, laughing and shaking hands with the guests.
The first response from the Malaysian government to the US actions came around 12 hours later, with a Najib spokesperson saying Malaysia will cooperate fully with any lawful investigation of its companies or citizens.
A cabinet minister said today Malaysia has nothing to hide and that “1MDB has been the subject of an unprecedented politically-motivated attack, the objective of which was to unseat a democratically-elected head of government”.
The action by the Justice Department may strain diplomatic ties between the United States and predominantly Muslim Malaysia, which have flourished under Najib. The Obama administration sees Kuala Lumpur as a key partner in its fight against radical Islamists and Najib as a key ally in Obama’s strategic pivot to Asia.
Malaysia media ignores story
The story about the US lawsuits made headlines around the world, but not in Malaysia, where major local newspapers, controlled directly or indirectly by the government, and the state news agency largely ignored it today.
In the past, the government has cited the need to maintain public order in justifying its restrictions on stories about the 1MDB scandal.
Malaysians, who have borne the brunt of the allegations as the ringgit currency fell to a 17-year low in 2015 at the height of the corruption allegations, took to Twitter to praise the US action.
“The Malaysian people were defrauded on an enormous scale...” FBI deputy director Andrew McCabe said at a briefing in Washington last night.
The hashtag #MalaysianOfficial1 was trending today.
The scandal does not appear to have hurt Najib at recent polls.
Najib’s coalition won big electoral victories in state and parliamentary by-elections last month, as local issues took prominence over the 1MDB scandal.
Malaysia’s fragmented opposition parties have been in disarray over policy differences after winning the popular vote in the last general election in 2013. Their most popular leader Anwar Ibrahim is in jail on a sodomy conviction critics allege was politically motivated.
But former prime minister Dr Mahathir Mohamad said today Malaysians should push for a referendum on Najib’s leadership as he launched a new opposition front that Anwar has endorsed.
- Reuters
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Singapore seizes assets, to take action against major banks in 1MDB probe
Singapore widened a crackdown on alleged money laundering in a probe tied to scandal-hit Malaysian state fund 1MDB, seizing assets and announcing it will take action against some of the biggest banks based in the city-state
Singapore authorities said in a statement on Thursday that they had seized S$240 million ($177 million) of assets in an investigation of 1MDB-related fund flows for possible money laundering.
They also said they found problems at three major banks, top local lender DBS Group Holdings Ltd, the world's largest private bank UBS AG, and UK-based bank Standard Chartered.
"The preliminary findings are that there were instances of control failings in all three banks and, in some cases, weaknesses in the processes for accepting clients and monitoring transactions. There was also undue delay in detecting and reporting suspicious transactions," the Monetary Authority of Singapore (MAS) aid in a statement.
An onsite inspection of another Swiss bank, Falcon PBS, owned by one of the world's leading sovereign wealth funds - Abu Dhabi's International Petroleum Investment Company (IPIC), in April 2016 found "substantial breaches" of anti-money laundering regulations, MAS said.
It was the first time 1MDB, or 1Malaysia Development Bhd, has been mentioned by the Singapore authorities in official statements about the money laundering investigation. In May, they said they were closing down the operations of Swiss private bank BSI AG in Singapore for serious breaches of anti-money laundering rules, the first such action in 32 years. They didn't identify 1MDB in that announcement, though Swiss authorities did in a related move against BSI.
Thursday's joint statement by MAS, the Attorney-General's Chambers and the Commercial Affairs Department (CAD) came the day after U.S. prosecutors filed civil lawsuits to seize more than $1 billion in assets they said were tied to money stolen from the Malaysian state development fund.
Of the asset seizure announced on Thursday, about half belonged to Malaysian financier Low Taek Jho, known as Jho Low, and his immediate family, according to the statement.
Authorities did not detail the potential action they might take against the banks. Under Singapore law, the banks could face fines or other penalties, and individuals directly involved could face prosecution.
"The criminal investigations by CAD are targeted at individuals suspected of committing offences in Singapore related to these flows, while MAS has been examining the financial institutions through which the funds flowed for possible regulatory breaches and control lapses," the statement said. (bit.ly/29OG3qd)
"EGREGIOUS FINANCIAL CRIME"
1MDB, which was founded by Malaysian Prime Minister Najib Razak in 2009 shortly after he came to office, is being investigated for money-laundering in several countries.
Both 1MDB and Najib have repeatedly denied any wrongdoing.
Ties between Singapore and Malaysia have improved in recent years. Singapore was part of Malaysia after the end of British colonial rule but they separated acrimoniously in 1965, clouding diplomatic and economic dealings for decades.
The MAS said it has carried inspections at DBS, and the local units of both Asia-focused Standard Chartered and UBS.
"The MAS' inspections did not reveal pervasive control weaknesses or staff misconduct within these banks, unlike in the case of BSI Bank," the statement said.
DBS, Standard Chartered said they will fully cooperate with the authorities.
"Egregious financial crime is highly sophisticated and intentionally designed to evade systems and controls. DBS has previously identified certain questionable activities and voluntarily reported these to the relevant authorities," DBS said.
Standard Chartered said it had also reported suspicious transactions whenever it discovered them, adding that it had strengthened its anti-money laundering controls and processes.
UBS said it "self-reported the suspicious transactions" and is working closely with regulators.
"Combating sophisticated international financial crime is complex and UBS is constantly enhancing its comprehensive AML (anti money laundering) processes," it said in a statement.
"SUBSTANTIAL BREACHES"
Falcon's inadequacies included "failure to adequately assess irregularities in activities pertaining to customers' accounts and to file suspicious transaction reports," MAS said.
It said that Falcon's management of key client relationships were done out of the bank's head office in Switzerland and that the examination was still ongoing.
Falcon said it is in "full cooperation" with authorities and will comment further when investigations are complete.
The statement from Singapore authorities also mentioned Singapore-based Raffles Money Change, a money changer and remittance agent, which was found to have inadequate risk management and oversight.
The 1MDB-related investigations, which began in March 2015, are ongoing and Singapore has requested information from other countries as part of its probe.
"Appropriate actions will be brought against those who have broken Singapore's laws," the statement said. - 21 July 2016
(Reporting by Marius Zaharia and Aradhana Aravindan; Additional reporting by Anshuman Daga; Editing by Martin Howell)
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