Malaysia central bank urges 1MDB investigation, asks for $1.8bn payback

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1MDB-umbrellaMalaysia’s central bank Bank Negara said on October 9 it had urged the country’s attorney general to begin criminal prosecution of troubled fund 1Malaysia Development Berhard, or 1MDB, after completing its investigation, piling more pressure on Prime Minister Najib Razak who chairs the fund’s advisory board.

The announcement comes shortly after sultans of Malaysia’s nine states have joined influential figures in the country’s ruling party calling for a swift and transparent investigation into a political scandal involving prime minister Najib Razak. In a rare intervention in politics, the sultans said Najib’s failure to resolve allegations of corruption in debt-ridden 1MDB has created a “crisis of confidence” in the country.

The central bank’s statement came a day after the attorney general said it had seen a report of the central bank’s investigation and concluded 1MDB officials had “not committed any offense.”

The attorney general, however, was  appointed by the Prime Minister in late July, after Najib sacked his predecessor whop was critical of 1MDB.

In detail, the central bank said 1MDB had secured permits for investment abroad based on inaccurate or incomplete disclosure of information, thus breaching domestic regulations. As a result, the central bank revoked three permits granted to 1MDB for investments abroad totaling $1.83 billion and ordered the state fund to repatriate the funds to Malaysia.

1MDB said in response that the $1.83 billion overseas investments related to equity and murabaha finance investments in a joint venture with PetroSaudi in 2009 to 2011 were converted in September 2012 into fund units valued at $2.318 billion.

This sum was redeemed in 2014 and 2015, with proceeds being substantially utilised, it said, adding that the funds had either been spent or were earmarked for debt settlement.

However, 1MDB said it respected Bank Negara’s decision to ask for the money to be repatriated and is working with the central bank on a resolution to the matter.

Asia Sentinel, a Hong Kong based on-line publication that reports extensively on Malaysia’s politics, says a long list of Malaysia’s most prominent and influential figures have asked Najib to resign in recent weeks, including his three brothers and party veterans.

The report quotes insiders as saying Najib agreed to hear the appeals but that his influential wife Rosmah Mansor had insisted he remain in office.

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Reading Time: 2 minutes

Malaysia’s central bank Bank Negara said on October 9 it had urged the country’s attorney general to begin criminal prosecution of troubled fund 1Malaysia Development Berhard, or 1MDB, after completing its investigation, piling more pressure on Prime Minister Najib Razak who chairs the fund’s advisory board.

Reading Time: 2 minutes

1MDB-umbrellaMalaysia’s central bank Bank Negara said on October 9 it had urged the country’s attorney general to begin criminal prosecution of troubled fund 1Malaysia Development Berhard, or 1MDB, after completing its investigation, piling more pressure on Prime Minister Najib Razak who chairs the fund’s advisory board.

The announcement comes shortly after sultans of Malaysia’s nine states have joined influential figures in the country’s ruling party calling for a swift and transparent investigation into a political scandal involving prime minister Najib Razak. In a rare intervention in politics, the sultans said Najib’s failure to resolve allegations of corruption in debt-ridden 1MDB has created a “crisis of confidence” in the country.

The central bank’s statement came a day after the attorney general said it had seen a report of the central bank’s investigation and concluded 1MDB officials had “not committed any offense.”

The attorney general, however, was  appointed by the Prime Minister in late July, after Najib sacked his predecessor whop was critical of 1MDB.

In detail, the central bank said 1MDB had secured permits for investment abroad based on inaccurate or incomplete disclosure of information, thus breaching domestic regulations. As a result, the central bank revoked three permits granted to 1MDB for investments abroad totaling $1.83 billion and ordered the state fund to repatriate the funds to Malaysia.

1MDB said in response that the $1.83 billion overseas investments related to equity and murabaha finance investments in a joint venture with PetroSaudi in 2009 to 2011 were converted in September 2012 into fund units valued at $2.318 billion.

This sum was redeemed in 2014 and 2015, with proceeds being substantially utilised, it said, adding that the funds had either been spent or were earmarked for debt settlement.

However, 1MDB said it respected Bank Negara’s decision to ask for the money to be repatriated and is working with the central bank on a resolution to the matter.

Asia Sentinel, a Hong Kong based on-line publication that reports extensively on Malaysia’s politics, says a long list of Malaysia’s most prominent and influential figures have asked Najib to resign in recent weeks, including his three brothers and party veterans.

The report quotes insiders as saying Najib agreed to hear the appeals but that his influential wife Rosmah Mansor had insisted he remain in office.

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