A RESOLUTION TO the scandal at Malaysian state investment company 1MDB came a step closer last week thanks to an intervention by the US authorities.
Having written about 1MDB for the best part of four years already, this wasn’t quite the approaching punchline I had hoped for in the whole steamy saga.
The US Justice Department filed lawsuits last Wednesday seeking to seize US$1bn in assets to recover part of the US$3.5bn it claims was siphoned from 1MDB. The money was spent in the US on “investment” in hotels, prime real estate in New York and Los Angeles, funding for the film “The Wolf of Wall Street” as well as a private jet and fine art, Las Vegas gambling bills and other frivolities (see page 16).
The stepson of Malaysia’s prime minister Najib Razak as well as notorious jet-setting party-goer Jho Low were named in the suit as beneficiaries of the looted state funds.
No criminal charges have been filed in what represents the biggest single asset seizure on behalf of the Justice Department’s kleptocracy asset recovery initiative since it was established in 2010.
There may be no prison terms looming, but the civil action by the US, detailed in a 130-page document filed last week in a Los Angeles court, brings 1MDB back into the spotlight in Malaysia with intense illumination.
Central to that illumination is “Malaysian Official 1”, whose description aligns closely with that of Mr Najib. The court documents refer to hundred of millions of dollars paid into the account of the said official, involving several offshore companies, 1MDB executives and officers of Middle Eastern oil companies.
ADDING TO THE mounting pressure was the decision last Thursday by the Singapore authorities to freeze accounts in the city state containing US$184m, of which US$88m is in the accounts of Mr Low and his family.
So, over to you Mr Najib. Having steadfastly denied any wrongdoing on his part since the 1MDB scandal erupted exactly a year ago, the Malaysian prime minister now has to decide on his response. Will he simply wait and see how the process plays out in the US courts? Will he declare the proceedings politically motivated?
In the dark and increasingly bizarre theatre of Malaysian politics, it seems anything is now possible. But there’s no doubting that last week the ante was upped to a whole new level.
Unlike Malaysia’s claims that investigative journalist Clare Rewcastle-Brown of the Sarawak Report forged crucial documents in the alleged 1MDB embezzlement case – on the basis of which Malaysia issued a somewhat farcical international warrant for her arrest – the country’s authorities will have no such claim against the undoubted stringency of the United States Justice Department.
And it’s not just there that the troubles lie, but also in Singapore, where the compliance standards of its biggest bank, DBS, as well as Standard Chartered and UBS, have been called into question on the basis of their dealings with 1MDB and associated companies.
Probes there are ongoing, as they are in Switzerland, Hong Kong and Luxembourg, which are all investigating the alleged fraud at 1MDB.
AN INTRIGUING NEW twist to the story is the revelation from US Justice Department officials that Malaysia’s Anti-Corruption Commission cooperated in the US investigation (in the process showing “tremendous courage”). What exactly does that mean?
Could it mean that the Malaysian political establishment over which Mr Najib has exerted an ever-tightening grasp might be preparing to throw him to the wolves.
The framing of the action against 1MDB as a civil rather than criminal suit as well as the anonymity of “Malaysian Official 1” seems to have been designed to honour the lines of international diplomacy. To have a head of state of a nation as significant on the global stage as Malaysia named in such a case creates tremendous embarrassment. All the more so when America’s “pivot” towards Asia in its foreign policy contains Malaysia as a crucial regional player.
Malaysia’s opposition leader Tony Pua suggested last week immediately after the suit was filed that Malaysia has become a global laughing stock.
He’s right, of course, but it’s for that country to do something to change the label on the bottle. And that can only happen courtesy of Malaysia’s legal institutions rather than the long arm reaching over the pond.
It’s perhaps ironic that Malaysia’s neighbour the Philippines has just elected a president in the form of Rodrigo Duterte, who has pledged to rid the country of its notoriously rampant corruption. I may not be his greatest fan, but the new broom he represents in that fight is just what Malaysia could do with right now. Perhaps the country’s body politic is beginning to realise that too.
