Bank Negara on 1MDB trail

From the Edge:

Bank Negara Malaysia (BNM) has started a “formal enquiry” on whether 1Malaysia Development Bhd (1MDB) and its officers had breached central bank rules and regulations.

In a statement yesterday, the central bank said the following developments will normally trigger a formal enquiry: 

•     When monies for which approvals are given are not used for the purpose indicated in the submission.

•     When incorrect or false information is provided in the submission.

•     Failure to comply with the conditions in the approval.

“With respect to 1MDB, a formal enquiry has commenced to examine any contravention of the central bank’s rules and legislation. This involves the issuance of a legal directive requiring information from the entity,” BNM said.

It is also taking statements from individuals involved in the governance process of 1MDB and obtaining information from other relevant domestic and foreign parties.

The legal directive requires information in accordance to the relevant Acts that the central bank administers.

This will require the board and management of 1MDB to provide the information within a specified time frame. Under the Financial Services Act 2013, failure to meet this request can result in a fine of up to RM50 million or up to 10 years in prison or both.

Since 2009, 1MDB has raised around US$7 billion (RM25 .76 billion) in foreign-denominated debts. It has also remitted billions overseas. These include:

•     US$1.83 billion for an aborted joint venture with PetroSaudi International Ltd (PSI) and subscription to Islamic murabaha notes by PSI.

•     Around RM4.25 billion deposited with Abu Dhabi’s Aabar Investments for co-guaranteeing a loan.

•     Parking overseas most of the US$3 billion raised for the development of the Tun Razak Exchange.

BNM said it had also forwarded information received from foreign authorities to local investigation agencies, which are probing other possible breaches after obtaining the permission from the foreign authorities, as  it has no power to investigate fraud, tax evasion, corruption, cheating and criminal breach of trust.

The 1MDB plot has thickened.  What is most unusual is that the enquiry has only started after Singapore has given bank Negara the necessary information on 1MDB Singapore's accounts.  Thus more than likely they have seen something which is quite disturbing.

Banks don't do investigations until they have ample evidence of something afoot.

Cabinet members better think twice about not resigning.