Switzerland could turn the scales in Malaysia’s 1MDB scandal

Reading Time: 3 minutes

1mdb_Greater KLAlthough the Malaysian government is trying its best to return to a normal agenda after the scandal surrounding state-owned fund 1Malaysia Development Berhad has been calming down a bit, at least in the public, there is a lot going on behind the scenes.

First of all, Swiss financial regulator FINMA said on August 19 that it will check with some of the country’s banks on whether they carried out any business with 1MDB and whether fishy transactions were involved.
“We are contact with several banks in this matter,” a FINMA spokesman said, adding that the regulatory body is “clarifying whether and to what extent banks were involved and how the terms of Swiss regulatory law were implemented.”

While he did not name the banks, at least four are known to have dealt with 1MDB: Falcon Private Bank, a subsidiary of Abu Dhabi-based Aabar investment and Lugano, Switzerland -headquartered private bank BSI, both through their Singapore branches, as well as JP Morgan (Swiss), the house bank of Saudi oil company PetroSaudi, and Zurich-based bank Coutts & Co. Overall, according to Swiss media reports, there are at least “half a dozen” Swiss banks under scrutiny, and some of them have already been ordered to block accounts during investigations.

Secondly, the Swiss Attorney General’s Office confirmed on August 22 that it has opened criminal proceedings against two entities of 1MDB as well as against an unknown person and will investigate Swiss banks and businesses over their role in the scandal. The related complaint, alleging money laundering and other financial offenses, was filed by Basel, Switzerland-based Bruno Manser Fund, a non-governmental organisation and legacy of Swiss-born environmental activist Bruno Manser, who in the 1990s fought for rainforest preservation and against timber corruption in Malaysia’s state of Sarawak but disappeared in the Borneo jungle without a trace in 2000 and is presumed dead. Since then, the fund is at loggerheads with the Sarawak government in particular and the Malaysian government in general. Its representatives call on Swiss authorities in particular to investigate the legal compliance of the Singapore subsidiaries of Swiss banks Falcon Private Bank and BSI with Swiss banking laws. According to the Swiss penal code, Swiss banks and businesses are forbidden to get involved in money laundering or corruption anywhere in the world.

Particularly helpful for the investigation is data material including account details and payment receipts that have been brought into circulation by former PetroSaudi employee Xavier Justo. The Swiss national, acting from Thailand, confessed to stealing data from PetroSaudi and trying to blackmail his former employer. He was caught by Thai authorities and handed a three-year prison sentence on August 17 at a Bangkok criminal court. But the information made it to several whistleblowers, among them Khairuddin Abu Hassan, a former politician of Malaysia’s ruling UMNO party who was sacked earlier this year because of his criticism of 1MDB. Khairuddin said on his Facebook page that he personally submitted documents and evidence on 1MDB to the Swiss Attorney General’s Chambers in Bern, Switzerland, on August 18, saying he was “disappointed with law enforcement and monetary agencies in Malaysia.” Khairuddin also lodged a police report with French police last month against 1MDB and one with UK police on August 21.

In the 1MDB case, the whereabouts of $1.8 billion of its funds are unknown. A probe found that around $680 million made their way on a private bank account of Malaysia Prime Minister Najib Razak, who denied any wrongdoing and claimed that the money was a “donor” from Saudi Arabia, meant as of appreciation to Malaysia for “championing Islam” and fighting militant group Isis.

However, unease is growing in the Middle East over the issue. The Saudi government is reportedly not amused about making in into the headlines in the 1MDB case, and at Falcon Private Bank’s parent, Aabar Investment, which is a subsidiary of Abu Dhabi-government-owned International Petroleum Investment Company, two top executives, Chairman Khadem al Qubassi and CEO Mohamed al Husseiny, have been shown the door.

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Reading Time: 3 minutes

Although the Malaysian government is trying its best to return to a normal agenda after the scandal surrounding state-owned fund 1Malaysia Development Berhad has been calming down a bit, at least in the public, there is a lot going on behind the scenes.

Reading Time: 3 minutes

1mdb_Greater KLAlthough the Malaysian government is trying its best to return to a normal agenda after the scandal surrounding state-owned fund 1Malaysia Development Berhad has been calming down a bit, at least in the public, there is a lot going on behind the scenes.

First of all, Swiss financial regulator FINMA said on August 19 that it will check with some of the country’s banks on whether they carried out any business with 1MDB and whether fishy transactions were involved.
“We are contact with several banks in this matter,” a FINMA spokesman said, adding that the regulatory body is “clarifying whether and to what extent banks were involved and how the terms of Swiss regulatory law were implemented.”

While he did not name the banks, at least four are known to have dealt with 1MDB: Falcon Private Bank, a subsidiary of Abu Dhabi-based Aabar investment and Lugano, Switzerland -headquartered private bank BSI, both through their Singapore branches, as well as JP Morgan (Swiss), the house bank of Saudi oil company PetroSaudi, and Zurich-based bank Coutts & Co. Overall, according to Swiss media reports, there are at least “half a dozen” Swiss banks under scrutiny, and some of them have already been ordered to block accounts during investigations.

Secondly, the Swiss Attorney General’s Office confirmed on August 22 that it has opened criminal proceedings against two entities of 1MDB as well as against an unknown person and will investigate Swiss banks and businesses over their role in the scandal. The related complaint, alleging money laundering and other financial offenses, was filed by Basel, Switzerland-based Bruno Manser Fund, a non-governmental organisation and legacy of Swiss-born environmental activist Bruno Manser, who in the 1990s fought for rainforest preservation and against timber corruption in Malaysia’s state of Sarawak but disappeared in the Borneo jungle without a trace in 2000 and is presumed dead. Since then, the fund is at loggerheads with the Sarawak government in particular and the Malaysian government in general. Its representatives call on Swiss authorities in particular to investigate the legal compliance of the Singapore subsidiaries of Swiss banks Falcon Private Bank and BSI with Swiss banking laws. According to the Swiss penal code, Swiss banks and businesses are forbidden to get involved in money laundering or corruption anywhere in the world.

Particularly helpful for the investigation is data material including account details and payment receipts that have been brought into circulation by former PetroSaudi employee Xavier Justo. The Swiss national, acting from Thailand, confessed to stealing data from PetroSaudi and trying to blackmail his former employer. He was caught by Thai authorities and handed a three-year prison sentence on August 17 at a Bangkok criminal court. But the information made it to several whistleblowers, among them Khairuddin Abu Hassan, a former politician of Malaysia’s ruling UMNO party who was sacked earlier this year because of his criticism of 1MDB. Khairuddin said on his Facebook page that he personally submitted documents and evidence on 1MDB to the Swiss Attorney General’s Chambers in Bern, Switzerland, on August 18, saying he was “disappointed with law enforcement and monetary agencies in Malaysia.” Khairuddin also lodged a police report with French police last month against 1MDB and one with UK police on August 21.

In the 1MDB case, the whereabouts of $1.8 billion of its funds are unknown. A probe found that around $680 million made their way on a private bank account of Malaysia Prime Minister Najib Razak, who denied any wrongdoing and claimed that the money was a “donor” from Saudi Arabia, meant as of appreciation to Malaysia for “championing Islam” and fighting militant group Isis.

However, unease is growing in the Middle East over the issue. The Saudi government is reportedly not amused about making in into the headlines in the 1MDB case, and at Falcon Private Bank’s parent, Aabar Investment, which is a subsidiary of Abu Dhabi-government-owned International Petroleum Investment Company, two top executives, Chairman Khadem al Qubassi and CEO Mohamed al Husseiny, have been shown the door.

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