Malaysia’s central bank closes its investigation after 1MDB pays fine

KUALA LUMPUR — Malaysia’s central bank, Bank Negara Malaysia (BNM), announced on Thursday (May 26) that it has closed its investigations into the troubled 1Malaysia Development Berhad (1MDB) after the state investment firm paid a fine imposed by BNM for non-compliance with local financial regulations.

“As far as we are concerned, 1MDB has paid their compound and with that, that is the conclusion of our
investigation within Bank Negara Malaysia’s rules and regulations and the law that we administer,” newly-­appointed BNM governor Muhammad Ibrahim told the Malaysian media on the sidelines of the 20th Malaysian Banking Summit.

In April, BNM issued a letter of administrative compound to 1MDB for the firm’s failure to comply with directions issued under the Financial Services Act 2013.

This includes a requirement for 1MDB to repatriate monies remitted abroad, following the revocation of the three permissions granted by BNM to 1MDB in 2009, 2010 and 2011.

BNM had also said 1MDB failed to provide evidence to justify its inability to fully comply with the repatriation order. It had given 1MDB until May 30 to pay the compound, the amount of which was not stated.

However, 1MDB said on Wednesday that it had made full payment of the fine.

1MDB, which was founded by Prime Minister Najib Razak in 2009 shortly after he came to office, is being investigated in at least six countries, including Switzerland, the United States and Singapore, over allegations it was used to funnel money to politically-connected individuals.

Both Mr Najib and 1MDB have denied any wrongdoing.

Mr Najib has been under pressure to quit following the alleged financial irregularities in 1MDB as well as US$681 million (S$939 million) deposited into his personal bank account. The Malaysian Attorney-General’s office in January cleared Mr Najib of any criminal offences or corruption, declaring that the money deposited into his personal bank account was a gift from Saudi Arabia’s royal family.

A Swiss private bank, BSI, which has dealings with 1MDB, was ordered shut by the Monetary Authority of Singapore on Tuesday, citing serious breaches of anti-money-laundering rules.

The move came as Switzerland announced on Tuesday it had started criminal proceedings against BSI’s parent bank, based on information revealed in a global probe into 1MDB, with the Swiss Attorney-General’s office pointing to “deficiencies in the internal organisation”.

Mr Muhammad said on Thursday that “there are other laws administered by other authorities”, when asked if BNM would reopen investigations into 1MDB following the Swiss proceedings against BSI. But, he said, BNM would continue to cooperate on matters pertaining to 1MDB.

Despite the dragnet tightening around 1MDB, Malaysia’s Finance Ministry on Wednesday insisted that there was no misappropriation but only administrative weakness in the firm. However, 1MDB will be barred from borrowing public funds.

Malaysia’s Deputy Finance Minister, Mr Johari Abdul Ghani, said 1MDB will be dissolved once it pays off its debts. The firm currently has debts totalling RM50 billion (S$16 billion) as of January, as opposed to assets of RM53 billion. AGENCIES