Malaysia 1MDB scandal

Malaysia: scrutiny of ‘insolvent’ 1MDB wealth fund intensifies as ex-PM Najib Razak is questioned again in corruption scandal

Former PM quizzed for six hours by anti-graft investigators looking into alleged theft and money laundering at state investment fund he founded

PUBLISHED : Thursday, 24 May, 2018, 7:50pm
UPDATED : Thursday, 24 May, 2018, 11:32pm

Scrutiny of Malaysia’s 1MDB has intensified after the new government said the state investment fund was “insolvent” and unable to repay debts, which the company previously said totalled more than US$7 billion.

The government will honour 1MDB’s obligations as it had done in recent years, Finance Minister Lim Guan Eng said on Thursday.

Separately, a Malaysian task force investigating the fund met with officials from the US Federal Bureau of Investigation and the Department of Justice to discuss the focus and direction of probes.

Malaysia, under newly-elected Prime Minister Mahathir Mohamad, is trying to uncover the extent of alleged embezzlement or money laundering at 1MDB, set up by former premier Najib Razak in 2009 to attract foreign investment.

There are global criminal and regulatory probes as investigators try to decipher how money may have flowed out through a complex web of opaque transactions and fraudulent shell companies – to finance what the US said were spending sprees by corrupt officials and their associates.

“We will continue to search for assets but whether or not they can be recovered, that is another matter,” Lim said.

Malaysians are angry because their money was used “to pay off debts of one of the largest scandals in history,” he said.

1MDB’s directors had disputed the value and existence of US$2.5 billion purported investments held overseas and the company’s management failed to supply proof of such holdings over the past two years, according to a finance ministry statement.

A former 1MDB chief financial officer told the government in March the company wouldn’t be able to service interest payments due in April and May, Lim said.

“I have instructed that the Ministry of Finance take steps to appoint PwC to conduct a special position audit and review of 1MDB so that Malaysians would know the true financial state of affairs in 1MDB,” Lim said Wednesday.

“We would then be able to determine the cost of the shenanigans to the taxpayers.”

Lim’s statement on Wednesday – which included strongly worded criticism of 1MDB President Arul Kanda in a manner unusual in official government communications – shows how 1MDB is dominating the agenda of the newly-installed government, after it campaigned on alleged wrongdoing at the fund in the May election.

Najib appeared at the Malaysian Anti-Corruption Commission (MACC) headquarters on Thursday for additional questioning related to 1MDB.

After being grilled for about six hours, he left the building and told reporters: “I have answered all the questions to the best of my ability and the MACC have done their job with professionalism.”

Najib added that he would not need to return for further questioning. He was earlier grilled for several hours on Tuesday.

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He is being probed by the anti-corruption body over SRC International, an energy company that was originally a subsidiary of 1MDB.

According to an investigation by The Wall Street Journal, 42 million ringgit (US$10.6 million) originating from SRC was transferred to Najib’s personal bank accounts, just one small part of the graft scandal.

Xavier Andre Justo, a whistle-blower in the 1MDB case who met with Mahathir earlier this week, also appeared at the anti-graft agency on Thursday just before Najib arrived.

Since Najib’s ouster, police have seized cash reportedly amounting to at least US$25 million, plus jewels and handbags in raids on properties linked to him and his unpopular wife.

Mahathir, who had been prime minister for 22 years until 2003 and was spurred out of retirement by the 1MDB scandal, has vowed there will be “no deal” for Najib, saying he will “face the consequences” if found guilty of wrongdoing.

Bloomberg, Agence France-Presse, Associated Press