Sunday Times 2
US$ 700m bank deposits scandal haunts Malaysian PM Najib
In the post-Mahathir era Malaysia has battled with pervasive corruption and a rise in organised crime.But now the country’s incumbent Prime Minister Najib Rajazk is contesting allegations that US$700m (Rs. 93.4 billion) had been deposited into what are suspected to be his personal bank accounts from a money trail that appears linked to the state investment fund that has gone financially out of shape.
Najib has repeatedly denied the allegations.Malaysia is a leading investor in Sri Lanka, including in telecom and luxury hotels. Direct investment exceeded US$ 1.5b as of last year. In a statement on Friday, the Prime Minister’s Office called the allegations stemming from a government investigation, “political sabotage”.
State news agency Bernama reported that Najib’s office said “there had been concerted efforts by certain individuals to undermine confidence in the economy, tarnish the government and remove a democratically-elected prime minister, despite Najib’s successful stewardship of Malaysia’s economy against global headwinds”.
“It has been reported that criminal leaking of documents, doctoring and extortion have taken place to mislead the media and public,” the statement said.The state investment fund, 1MDB, (1Malaysia Development Berhad), responded on Friday, “the company has never provided any funds to the Prime Minister. To suggest otherwise, as some media outlets have done, is highly irresponsible and a deliberate attempt to undermine the company”.
The fund doubts the authenticity of documents that led to the allegations.”Recent revelations have raised concerns about the veracity of a number of ‘leaked’ documents which certain media outlets, and online blogs such as Sarawak Report, have used to mislead the public and justify spurious allegations against the company and the government.
“According to press reports, these documents were found to have been tampered with, and were being used by an individual — who is currently under arrest in a foreign country — to extort and blackmail his former employer.”We are therefore surprised that documents such as these, whose existence and authenticity have not been publicly verified, continue to be used as a basis to create new unsubstantiated allegations against 1MDB.”
Referring to the arrested individual in a foreign country, Malaysia’s New Straits Times, alleged it was Swiss citizen Xavier Andre Justo, whom the paper said was a former employee of PetroSaudi International. NST said Justo “had been recently detained by Thai police over claims that he had attempted to blackmail his former employer using documents obtained during his time at the company”.
The Wall Street Journal reported on Thursday, citing Malaysian government documents that it had seen, that this is the first time Najib “has been directly connected to the probes into the state investment fund”.The Journal says, however, the “original source of the money” is not clear.
The state investment fund, 1MDB, is groaning under multi-billion dollar liabilities.Citing the documents it reviewed, the Journal reports that investigators have identified five separate deposits into Najib’s accounts originating from two sources.Deposits of US$620 million and US$61 million in March 2013, during an election campaign, were by far the biggest transactions, the Journal found, according to documents it has seen.
The cash came from a company registered in the British Virgin Islands via a Swiss bank owned by an Abu Dhabi state fund. The fund, International Petroleum Investment Co., has guaranteed billions of dollars of 1MDB’s bonds and in May injected US$1 billion in capital into the fund to help meet looming debt repayments. A spokeswoman for IPIC couldn’t be reached for comment. The British Virgin Islands company, Tanore Finance Corp., couldn’t be reached, the Journal said.
Another set of transfers, totalling 42 million ringgit (US$11.1 million), originated within the Malaysian government, according to the investigation, the Journal reports. Investigators believe the money came from an entity known as SRC International Sdn. Bhd., an energy company that originally was controlled by 1MDB but was transferred to the Finance Ministry in 2012. Najib is also the finance minister.
The money moved through another company owned by SRC International and then to a company that works exclusively for 1MDB, and finally to Najib’s personal accounts in three separate deposits, government documents show, the Journal reports.
Nik Faisal Ariff Kamil, a director of SRC International, declined to comment. Kamil had power of attorney over Najib’s accounts, according to documents that were part of the government investigation.
A 1MDB spokesman said, referring to the transfers into Najib’s account: “1MDB is not aware of any such transactions, nor has it seen any documents to this effect.” The spokesman cautioned that doctored documents have been used in the past to discredit 1MDB and the government, the Journal said.
The Journal reports that four investigations into the state fund are being done by Malaysia’s central bank, Bank Negara Malaysia, a parliamentary committee, the auditor general, and police. The central bank, the police chief and a member of the parliamentary committee have declined comment, the Journal said. The auditor general will present an interim report on the fund’s accounts to parliament on July 9.