Malaysia letters deepen mystery over fate of 1MDB cash – Financial Times

Malaysia letters deepen mystery over fate of 1MDB cash

The fate of more than $1bn paid out by Malaysia’s scandal-hit 1MDB state investment fund has come under a fresh spotlight after leaked central bank letters suggested it went to a mysterious offshore company controlled by a flamboyant young financier.

The company in question is the Seychelles-registered Good Star. It is owned, according to claims in one of the central bank letters, by Jho Low, a 34-year-old Malaysian dealmaker and socialite known for partying lavishly with celebrities such as Paris Hilton.

Mr Low has since emerged as a figure of increasing interest as international investigations on several continents gradually reveal more about a case that Swiss authorities say may involve the misappropriation of $4bn from Malaysian state companies.

US authorities are focusing on the Good Star cash flows, according to a person familiar with the matter.

Meanwhile, BSI, the Swiss private bank that counted both 1MDB and Mr Low as clients, is facing a criminal investigation in Switzerland and the shutdown of its Singapore operation over alleged serious money-laundering breaches in relation to the Malaysian fund.

Neither Swiss nor Singaporean authorities named Mr Low, who has not been accused of any offences. He has always denied any wrongdoing in connection with 1MDB.

The 1MDB payments to Good Star were $700m in late 2009 and $330m in May 2011, according to a Malaysian central bank letter dated March 23 and seen by the FT. The letter from deputy governor Nor Shamsiah Yunus to Hasan Arifin, chairman of the Malaysian parliament’s public accounts committee, relates to a committee investigation into 1MDB. Neither Ms Nor nor Mr Hasan responded to requests for comment.

In a second letter on April 6, Ms Nor said two unnamed foreign authorities had told the central bank that Mr Low seemed to be the beneficial owner of Good Star. The overseas agencies provided the information on condition their identities not be revealed, the letter added.

One of the foreign authorities said Mr Low appeared to be the ultimate controller of both Good Star and a bank account in the company’s name opened at RBS Coutts in Zurich in June 2009, the central bank letter said. Swiss authorities are currently investigating hundreds of millions of dollars of 1MDB payments into this account. The letter did not make clear whether the ownership of either Good Star or the bank account had changed since then.

Mr Low did not respond to a request for comment sent to Jynwel Capital, the Hong Kong-based Low family company where he is chief executive.

In the Seychelles, where Good Star is registered, details of shareholders and directors are not openly available from corporate registries. The archipelago’s financial intelligence unit said last month it was assisting international probes into 1MDB.

The central bank letters are prompting new questions about Good Star’s ownership and appear to be at odds with an account given earlier this week by Malaysia’s prime minister.

Najib Razak reportedly told parliament in a written answer that, according to 1MDB records, Good Star was owned by PetroSaudi International, a Saudi oil company, at the time of the fund transfers. Those transfers, he added, were related to a joint venture between 1MDB and PetroSaudi that lasted from 2009 to 2012.

Malaysia letters deepen mystery over fate of 1MDB cash
Michael Peel, Jeevan Vasagar, Anjli Raval and Kara Scannell
May 27, 2016 – Financial Times


Swiss approve dissolution of bank linked to 1MDB scandal

Najib Razak 1MDB scandal: Swiss approve dissolution of scandal-hit bank

Swiss financial regulators have approved the dissolution of Lugano-based BSI Bank over its links to a corruption scandal engulfing Malaysia’s Prime Minister Najib Razak.

Swiss supervisor FINMA accused BSI, a merchant bank, of “serious breaches” of money-laundering regulations in its dealings with the Malaysian sovereign wealth fund 1MDB, which is at the heart of the corruption allegations.

In the toughest punitive action yet announced in the affair, FINMA said it was approving the takeover of the merchant bank by Zurich-based private banking group EFG International on the condition that BSI is integrated “and thereafter dissolved” within 12 months.

It ordered the seizure of $US96 million of BSI’s “illegally generated” profits.

“In the case of 1MDB, the bank executed numerous large transactions with unclear purpose over a period of several years and, despite clearly suspicious indications, did not clarify the background to these transactions,” the Swiss regulator said.

FINMA also said it was investigating two former top managers to determine what they knew about the illegal activities, warning that it may launch further probes.

Earlier on Tuesday, the Swiss Attorney-General’s office said that it had opened criminal proceedings against parent firm BSI SA “based on information revealed by the criminal proceedings in the 1MDB case”.

In a statement noting the Swiss actions, 1MDB said “it has not been contacted by any foreign lawful authority on matters relating to the company”, and was prepared to cooperate with foreign investigators subject to guidance from Malaysia’s Government.

The fund’s investments had not been impacted by the Swiss announcements, the statement added.

On the same day, Singapore’s central bank said it was kicking out BSI, for “serious breaches of anti-money laundering requirements, poor management oversight of the bank’s operations, and gross misconduct by some of the bank’s staff”.

In a statement, the Monetary Authority of Singapore (MAS) said it had also asked state prosecutors to investigate six senior executives of BSI Bank Limited, including its former chief executive for possible criminal offences.

Two Singaporean executives of the bank already face charges in the city-state.

Najib Razak 1MDB scandal: Swiss approve dissolution of scandal-hit bank
24 May 2016 – ABC News


How Malaysia’s 1MDB probe was flawed

How Malaysia’s 1MDB probe was flawed

Investigations ordered by Malaysia’s leader into graft allegations at a state-development fund have been undermined by political pressure and a lack of transparency, according to documents and interviews with people involved.

Evidence possibly central to the probes was placed off limits or ignored, The Wall Street Journal found. Potentially crucial clues weren’t scrutinised. And at least one key figure, Malaysian Prime Minister Najib Razak himself, wasn’t interviewed by investigators.

The promise of a thorough and transparent accounting of what happened at the fund, 1Malaysia Development Bhd, or 1MDB, has helped Mr Najib fend off domestic criticism. Now, though, with six foreign countries investigating allegations of corruption at 1MDB, pressure is rising at home for greater transparency.

Mr Najib in March 2015 pledged an independent probe into 1MDB, which he founded to spur economic development. He ordered the auditor general, an investigative agency whose findings are typically public, to compile a report on the fund’s activities. And he ordered the contents to be reviewed and debated by the Public Accounts Committee, a parliamentary body.

But the auditor general’s report into 1MDB, completed in March, was classified under Malaysia’s Officials Secrets Act, shielding it from public view.

The auditor general separately provided some information in a presentation to the Public Accounts Committee, said people who were present. Tony Pua, an opposition lawmaker who sits on the committee, said in a statement this month that the auditor general “has specifically confirmed that $US7 billion of 1MDB assets and transactions overseas cannot be verified or traced.”

The committee, however, made no mention of the $US7 billion estimate when it published its report on 1MDB in April and said only that an unspecified amount of money was unaccounted for.

“The issues are of such public importance that there cannot be any excuse for making the auditor general’s report an official secret,” said Razaleigh Hamzah, a senior politician with the United Malays National Organization, Mr Najib’s ruling party.

Hasan Arifin, a ruling-party politician who heads the committee, didn’t call Mr Najib to testify even though Mr Najib was chairman of 1MDB’s board of advisers and also is Malaysia’s finance minister, giving him ultimate oversight over the fund. Other participants in the inquiry repeatedly asked him to seek Mr Najib’s testimony, said Mr Pua and two current and former ruling-party politicians on the committee.

The auditor general didn’t respond to requests for comment.

When asked by Malaysian journalists why Mr Najib had not been called as a witness, Mr Hasan said, “I have to earn a living.” He later said the remark was a joke. Mr Hasan didn’t respond to requests for comment for this article.

Mr Hasan also didn’t inform the Parliamentary committee of evidence from a senior central bank official — transmitted in an April 6 letter to Mr Hasan — that $US1 billion in 1MDB funds had been transferred to an offshore company owned by a close associate of Mr Najib, said Mr Pua and the current ruling-party member. They said Mr Hasan never shared with the committee any of the contents of the letter, a copy of which was reviewed by the Journal.

How Malaysia’s 1MDB probe was flawed
May 27, 2016 – The Australian


Malaysia 1MDB investigations didn’t examine key evidence, interview Najib: WSJ

Malaysia 1MDB investigations didn’t examine key evidence, interview Najib: WSJ

Malaysia’s investigations into troubled state-development fund 1Malaysia Development Berhad (1MDB) didn’t examine key evidence or interview Prime Minister Najib Razak, the Wall Street Journal reported.

Najib, who was chairman of 1MDB’s board of advisors as well as Malaysia’s finance minister, had ordered the auditor general to produce a report on 1MDB that was to be reviewed by a parliamentary committee, but that report was declared “classified” under Malaysia’s Officials Secrets Act, which meant it could not be revealed to the public, the WSJ reported.

The auditor general’s report said that $7 billion of 1MDB assets were unaccounted for, but the parliamentary committee didn’t mention this in its published report, nor did the committee’s head, Hasan Arifin, tell the committee about a letter he received from a senior central bank official that $1 billion of 1MDB funds were transferred to an offshore company owned by a close associate of Najib, the WSJ reported.

Najib has repeatedly denied wrongdoing in relation to 1MDB.

When Malaysian journalists asked why Najib wasn’t called to testify, Hasan said “I have to earn a living,” although he later said the remark was a joke, the Wall Street Journal reported, adding that Hasan did not comment for its story.

Najib’s office, 1MDB and Hasan didn’t immediately return emails from CNBC seeking comment.

Malaysia 1MDB investigations didn’t examine key evidence, interview Najib: WSJ
27 May 2016 – CNBC


1MDB scandal starting to unravel in foreign legal jurisdictions

1MBD Starts to Come Apart

MAS probe probably will be followed by charges in other global jurisdictions

The decision on May 24 by the Monetary Authority of Singapore to force the closure of BSI Bank Ltd – the first merchant bank to be closed in Singapore in 32 years – means that after months of last-ditch defense in Malaysia, the scandal over the state-backed 1Malaysia Development Bhd is finally starting to unravel in legal jurisdictions across the world.

The implications may well go beyond 1MDB, according to sources in Kuala Lumpur, who say businessmen and politicians have been rattled by the charges. In addition to 1MDB, they say, BSI also handled a large volume of banking business for other Malaysian VIPs wanting access to a Swiss account.

The MAS also fined the bank S$13.3 million for 41 cases of breaches of money laundering and other laws. MAS Managing Director Ravi Menon called BSI Bank “the worst case of control lapses and gross misconduct that we have seen in the Singapore financial sector.”

The monetary authority also said it is investigating “several other financial institutions and bank accounts through which suspicious and unusual transactions have taken place.”

They are likely to include a variety of institutions connected to the flamboyant Malaysian Chinese financial Jho Taek Low including an entity called Good Star Ltd and other Swiss institutions such as Falcon Bank, which was involved in transactions around a mysterious US$681 million “donation” to Najib’s personal accounts. The money was deposited in Najib’s Ambank account in in Kuala Lumpur in March 2013 and just as mysteriously transferred out a few months later to a Swiss intermediary in Singapore before it simply disappeared.

Seven countries probing irregularities

The MAS action takes place against the backdrop of investigations into 1MDB’s affairs by seven jurisdictions including the United States, Abu Dhabi, Luxembourg and Hong Kong. On the same day of the Singapore action, the office of the Swiss Attorney General announced it would open criminal proceedings against the parent BSI SA over what authorities called “links to corruption allegations against Malaysia’s 1MDB fund.”

The Swiss attorney general’s office said it had information suggesting “the offences of money laundering and bribery of foreign public officials currently under investigation in the context of the 1MDB case could have been prevented” by BSI.

In a separate statement, BSI Switzerland, which has since been sold to EFG International, a bank authorized by FINMA and headquartered in Switzerland, said it would cooperate with the investigation and described the case as involving “legacy issues and removing uncertainty for clients and staff in relation to 1MDB.” BSI Singapore’s assets and liabilities are to be transferred to the Singapore branch of EFG.

The Swiss authorities also said they would seize SFR95 million from BSI SA and begin enforcement procedures against two former BSI staff. BSI group chief executive Stefano Coduri has quit.

Six members of senior management and staff in Singapore have been referred to the public prosecutor for possible prosecution. They are Hans Peter Brunner, former CEO, Raj Sriram, the former Deputy CEO, Kevin Michael Swampillai, Head of Wealth Management Services, Yak Yew Chee, former Senior Private Banker, Yeo Jiawei, former Wealth Planner; and Seah Yew Foong Yvonne, former Senior Private Banker. Swampillai has been suspended by the bank and Yeo Jiawei has already been arrested.

Numerous acts of gross misconduct

The deeply-detailed 1,032-word statement by the MAS accuses the bank of “widespread control failures which led to numerous serious breaches of various anti-money laundering regulations, poor and ineffective oversight by the senior management of BSI Bank, an unacceptable risk culture, with blatant disregard for compliance and control requirements as well as MAS’ regulations and numerous acts of gross misconduct by certain staff.”

But what is never mentioned in the statement is that BSI, the Singapore unit of the Swiss parent BSI Bank, was inextricably involved with 1MBD’s operations. 1MBD’s chief economic adviser and the man tasked with signing off all major financial decisions was Prime Minister Najib Razak. 1MDB is now being wound up, with its assets being sold off in the midst of unfunded liabilities estimated to be as high as RM42 billion. It is arguably the biggest financial scandal in Malaysian history.

Despite that, the story got scant treatment in Malaysia, with the New Straits Times carrying a Reuters story that didn’t mention 1MDB. The Star story only mentioned a “Malaysian state fund” without naming 1MDB. Only the online news portal Malaysiakini gave the story full treatment.

1MBD Starts to Come Apart
May 25, 2016 – Asia Sentinel


Singapore probing complex transactions involving ‘many shell companies’ in 1MDB case

Singapore probing complex transactions involving ‘many shell companies’ in 1MDB case

SINGAPORE authorities are probing “complex and layered transactions” with “cross border elements” involving many shell companies in their investigations into 1Malaysia Development Berhad (1MDB), according to prosecutors here.

This was revealed by Singapore’s chief prosecutor Tan Ken Hwee at the third mention in the state court in the case involving Kelvin Ang Wee Keng, who was charged with corrupt transactions in a massive ongoing probe into 1MDB.

While the submission in court again made no mention of 1MDB, it is widely accepted that the case involves the probe into the money trail of Malaysia’s troubled state-backed firm.

“Unravelling, unpacking, and comprehensively analysing all the transactions has taken and will continue to take a significant amount of time,” said Mr Tan in his submission for Ang to be further remanded for another week.

Ang, 34, was charged on April 20 for corruptly giving a gratification sum of S$3,000 sometime between 2013 and 2014 to research analyst Lee Chee Waiy to expedite preparation of a favourable valuation report to be issued by his equity research firm.

Ang, who appeared in court via video link, is believed to be employed in the finance sector.

He also dealt extensively for over two years with another accused in the 1MDB case, ex-private banker of BSI Singapore Yeo Jiawei and “some others implicated in improper dealings”, according to Mr Tan.

Singapore probing complex transactions involving ‘many shell companies’ in 1MDB case
4 May 2016 – Business Times


Swiss Open Criminal Proceedings Against BSI Over Malaysia Fund Allegations – NY Times

Swiss Open Criminal Proceedings Against BSI Over Malaysia Fund Allegations

GENEVA — The authorities in Switzerland said on Tuesday that they had begun criminal proceedings against one of the country’s oldest banks, BSI, after allegations that it had laundered huge sums for “politically exposed” individuals linked to a scandal-plagued Malaysian state investment fund.

The Swiss attorney general’s office said in a statement that it suspected “deficiencies in the internal organization of the BSI S.A. bank” and believed “that due to these deficiencies, the bank was unable to prevent the commission of offenses currently under investigation in the criminal proceedings relating to” the investment fund, 1Malaysia Development Berhad.

The prosecution arose from an investigation that Switzerland started last year into suspected misappropriation of billions of dollars from the Malaysian fund, also known as 1MDB, and that it has pursued in cooperation with the authorities in Luxembourg, Singapore and the United States.

The investigation has strained relations with Malaysia and embarrassed its prime minister, Najib Razak, who is fighting a scandal that has roiled Malaysian politics involving allegations that $681 million was paid into his bank accounts.

The Monetary Authority of Singapore announced separately on Tuesday that it was withdrawing the license of BSI’s Singapore branch “for serious breaches of anti-money laundering requirements, poor management oversight of the bank’s operations, and gross misconduct by some of the bank’s staff.”

The authority said it had considerable evidence of “gross dereliction” of duty by BSI management and had sent prosecutors the names of six senior managers to investigate whether they had committed criminal offenses.

The Swiss attorney general’s office said that it had started proceedings against BSI, the oldest bank in the Swiss canton of Ticino, as a result of its own investigations into transactions linked to 1MDB and on the basis of an investigation by the Swiss Financial Market Supervisory Authority.

In a separate statement on Tuesday, the financial market authority said that “through business relationships and transactions linked to the corruption scandals surrounding the Malaysian sovereign wealth fund 1MDB,” BSI had “committed serious breaches of money laundering regulations.”

Swiss Open Criminal Proceedings Against BSI Over Malaysia Fund Allegations
MAY 24, 2016 – NY Times

All that is necessary
for the triumph of evil
is for good men
to do nothing.

- Edmund Burke
Where have 2.6 stars gone?
When the people
fears their government,
there is TYRANNY;
when the government
fears the people,
there is LIBERTY.

- Thomas Jefferson
Do you hear the people sing?


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