FBI joins probes into Malaysia development fund

September 21, 2015 08:32
Prime Minister Najib Razak has denied taking money from the Malaysian state fund for personal gain. Photo: AFP

United States federal investigators are looking into allegations of money-laundering related to a Malaysian state investment fund.

The Wall Street Journal is reporting the scope of the investigation is unclear but it's quoting a person familiar with the mater as saying it is the latest in a series of international investigations related to the fund that have been revealed in the past several weeks.

The international investigations center on entities related to 1Malaysia Development Bhd., which was set up by Prime Minister Najib Razak in 2009 to help drive the economy.

The fund is having difficulty repaying more than US$11 billion of debt and is at the center of investigations that are destabilizing the government.

A Malaysian government probe found that nearly US$700 million moved through banks, agencies and companies linked to 1MDB before being deposited into Najib’s alleged private bank accounts ahead of a close election in 2013, WSJ reported in July.

The source of the money is unclear and the government investigation hasn’t detailed what happened to the funds that allegedly went into Mr. Najib’s personal accounts.

Malaysia’s anticorruption body in August said the funds were a donation from the Middle East.

The donor was not named.

Najib has denied wrongdoing and denied taking money for personal gain.

On Friday, a former member of Malaysia’s ruling party who had raised questions about money transfers to the Malaysian prime minister was arrested on charges of attempting to undermine democracy, his lawyer Matthias Chang said.

The arrest of Khairuddin Abu Hassan, who remained in custody on Saturday, prevented him from traveling to New York where he planned to urge US authorities to investigate the transfers, Chang said.

A spokeswoman for the FBI’s New York office said that no agent in the office had arranged to speak with Khairuddin or had any previous contact with him.

Two of the transfers were made through the Singapore branch of a Swiss private bank and routed via Wells Fargo & Co. Wells Fargo declined to comment.

The Swiss attorney general’s office has opened criminal proceedings against two unidentified executives of 1MDB on suspicion of corruption and money-laundering.

It has frozen tens of millions of dollars in Swiss bank accounts, officials said in August.

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