Why The Swiss Authorities Have Opened A Criminal Investigation Linked To 1MDB

The case involves suspected corruption of public foreign officials, dishonest management of public interests and money laundering.

Cover image via FT

On Saturday, 22 August 2015, Malaysians woke up to the news of Swiss authorities opening criminal proceedings linked to 1MDB

According to Reuters, Switzerland's Office of the Attorney-General (OAG) has opened criminal proceedings relating to Malaysia's troubled state investment fund 1MDB, a spokesperson in Zurich said

"The Office of the Attorney-General confirms that, on Aug 14 2015, it opened a criminal procedure against two entities of 1MDB as well as against an unknown person," the OAG spokesperson said in an email.

He added that the proceedings involved suspected corruption of public foreign officials, dishonest management of public interests and money laundering.

The criminal proceedings follow two communications from the Money Laundering Reporting Office Switzerland (MROS), according to Le Temps, a Swiss Newspaper which first reported on the news

Image via FT

According to Reuters, Swiss financial regulator FINMA said on Wednesday, 19 August, it was checking with some of the country's banks whether they carried out business with 1MDB.

"Finma is in contact with several banks about this matter," the spokesperson said. "In the framework of our supervisory role, we are clarifying whether and to what extent Swiss banks are involved and how the terms of Swiss regulatory laws were implemented."

1MDB, whose advisory board is chaired by Prime Minister Najib Razak, is already being examined by Malaysian authorities investigating accusations of financial mismanagement and graft. The state-fund has been dogged by controversy over its USD11 billion debt and alleged financial mismanagement.

The criminal proceedings are against two "entities" of 1MDB and "unknown" third parties. While, at the time of publishing this story, it remains unclear who these "entities" exactly are, it's highly likely that one of them is a Geneva-based joint venture between 1MDB and the Saudi Oil group, PetroSaudi International.

Both joint venture partners have been accused of money laundering by Sarawak Report and various international media such as WSJ.

Meanwhile, Swiss-based NGO Bruno Manser Fund (BMF), which had lodged complaints about 1MDB in its home country, cited an email communication, saying that the probe is being conducted under article 305bis (money laundering), article 314 (misconduct in public office) and article 322septies (bribery of foreign public officials) of the Swiss criminal code.

Since the end of 2014, BMF also filed two complaints under criminal law against 1MDB, PetroSaudi International and various banks and persons involved in the Malaysian money-laundering operation.

While welcoming the step, the Swiss-based NGO has also called on the Swiss authorities to extend the criminal proceedings against several banks involved in the 1MDB money-laundering operation, namely Coutts, JP Morgan, Falcon Private Bank and BSI

The compliance offices of these banks have completely failed in their legal due diligence duties. The banks should thus be held responsible under articles 102 (corporate criminal liability) and 305bis (money laundering) of the Swiss criminal code.

Previously, on 20 August, former Batu Kawan UMNO Vice Chief Khairuddin Abu Hassan revealed that he had submitted evidence on the 1MDB fiasco to the Swiss Attorney-General two days ago

Khairuddin Abu Hassan at the Malaysian Anti-Corruption Commission headquaters in Putrajaya on 15 January.

Image via TMI

In a statement posted on his Facebook page, Khairuddin said he handed the evidence and chronology of the scandal about 2:30pm, Swiss time, on Tuesday.

“I was accompanied by my lawyer Matthias Chang and we want the Swiss authorities to investigate comprehensively the (alleged) wrongdoings in 1MDB involving Swiss banks and several international banks,” he said.

Khairuddin was accompanied by lawyer Matthias Chang, a former aide of ex-premier Dr Mahathir Mohamad, when submitting the evidence to Swiss authorities.

Khairuddin, who says the 1MDB scandal case must be fought to the end to save government funds, which is public money, he says, from being abused, claimed he is "dejected with Malaysia's law and financial enforcers as it is apparent they did not investigate" the 1MDB matter "professionally and transparently".

Khairuddin was sacked from his UMNO post and was subsequently declared bankrupt with a money-laundering probe brought against him after he began attacking Prime Minister Najib Razak on 1MDB.

He added that he had made reports to the Malaysian police and Bank Negara but unfortunately, they were investigating other matters. For example, the Umno member said, police are busy investigating former Petro-Saudi director, Xavier Justo and Sarawak Report editor, Claire Rewcastle Brown, but not Low.

“Till now there is no investigation on Low and he is a free man till today. This is despite several police reports lodged against him. However, there is no true effort to investigate Low's involvement. Why?” he further asked.

Questioning why Jho Low is being given special treatment despite several reports he made to the MACC, Bank Negara and the American Embassy in KL, the former Batu Kawan UMNO Vice Chief said, "Frankly, I have lost trust and do not believe our law enforcers"

"As civil servants and law enforcement officers they have to do their jobs with trust and dedication. They should fear Allah, not humans. Do not forget in the hereafter, we will be questioned on our actions. Take action based on what the religion wants us to and do not be afraid of humans, especially those who are corrupted," he said.

Previously on SAYS:

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