Fresh Troubles For 1MDB As Bank Negara Initiates Punitive Action Against The State Fund

The controversial state fund has failed to support its reasons for not moving USD1.83 billion (USD2.5 billion at current exchange rate) from abroad back to Malaysia.

Cover image via Matthew Lloyd/Bloomberg

State-owned strategic investment fund 1MDB has failed to substantiate the reasons it gave to Bank Negara Malaysia (BNM) as to why it could not repatriate the USD1.83 billion (USD2.5 billion at current exchange rate) overseas fund

According to BNM Governor Dr Zeti Aziz 1MDB was told to submit documentation evidence in October 2015 to back up its purported need to keep the funds overseas to repay the state-owned firm’s foreign debts, Malay Mail Online reported.

Following which, the central bank is now in the process of pursuing appropriate administrative enforcement actions against the controversial fund.

Zeti, who was speaking at a news conference 23 March, said:

“At this stage we have not received documentary evidence and within a certain timeline that has been stipulated to them, as we assess that they have not fully complied with the bank’s direction, the bank is pursuing appropriate administrative enforcement action as allowed by laws under which the bank operates and the bank has commenced the due process under the law."

Explaining the administrative action, the outgoing BNM Governor said that the central bank's action on the state-owned fund is purely administrative and could possibly result in penalties or compounds

She stressed that it is different from the criminal action that A-G Apandi had decided not to pursue.

The central bank earlier last year cancelled the permit and ordered the repatriation of the fund due to inaccurate and incomplete disclosure on the part of 1MDB. However, Attorney-General Apandi said there was no need to bring back the money as there was no evidence of wrongdoing.

"This is an administrative action, it is under Bank Negara's rules and regulations,” said Dr Zeti. “We would like to see the rules and regulations complied with, not only by 1MDB but everyone else who is doing business in this country."

Dr Zeti said she would like to see the process completed during her remaining days in central bank so that she can hand over a clean slate to her successor.

However, BNM will be submitting its recommendation for the administrative action to the A-G, whose decision will be final

However, the proposed administrative enforcement actions, which the central bank will submit to the Attorney-General's Chambers (AGC) before Zeti's tenure ended, will be subject to endorsement by the AGC, said Zeti.

Previously it was reported that Irwan Serigar Abdullah is expected to succeed Zeti as Bank Negara Malaysia Governor. The move, however, has been objected by Zeti:

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