Malaysian Authorities must undertake an Immediate Inquiry


August 13, 2016

Malaysian Authorities must undertake an Immediate Inquiry

by Steven Thiru

The Malaysian Bar is deeply disturbed by the grim disclosures contained in the complaint filed by the United States Department of Justice (“DOJ”)[1] “to forfeit assets involved in and traceable to an international conspiracy to launder money misappropriated from 1Malaysia Development Berhad (“1MDB”)…”[2]  The DOJ has made serious allegations of siphoning or diversion of funds, fraud, and the misuse of the banking system for illegal activities, by the individuals and entities named in the complaint.

Various persons have in the past weeks sought to interpret the DOJ’s 136-page complaint.  It is appalling that some have deliberately set out to distort the proceedings, and have attempted to create confusion, ostensibly to protect­ wrongdoers.  In the interest of upholding the rule of law and the cause of justice, the thrust, purpose and ramifications of the DOJ proceedings must be appreciated.

The legal proceeding commenced by the DOJ seeking the forfeiture of assets — including rights to profits, moveable assets and real property — constitute a civil action.  These assets, located primarily, but not exclusively, in the United States, are alleged to be proceeds from criminal conduct.  The DOJ maintains that this is the largest single asset seizure action ever brought under its Kleptocracy Asset Recovery Initiative.[3]

The DOJ’s court document states that the assets to be forfeited represent “a portion of the proceeds of over [US]$3.5 billion misappropriated from 1MDB.”[4]  It has been reported that the United States authorities intend “to recover more than [US]$1 billion that was laundered through the United States and traceable to the conspiracy.”[5]  In this regard, it would appear from the court document that the United States authorities possess comprehensive knowledge of the movement of the alleged misappropriated funds, have sighted relevant documentary evidence, and even reviewed telephone conversations.  The substance, depth and reach of the allegations are compelling, and should not be ignored.  The affected parties will have the opportunity to challenge the DOJ’s action in court, hence the process is transparent and adheres to the principles of natural justice.

The complaint made by the DOJ does not preclude criminal action, as the forfeiture is but a first step to prevent dissipation of the specified assets.  The act of money laundering, and involvement in a conspiracy to do so, are criminal offences.  Thus, upon forfeiture of the assets, it is likely that there would be criminal proceedings to prosecute those responsible for the alleged misappropriation of 1MDB funds and the laundering of those funds in the United States and elsewhere.

Such proceedings in the United States should not surprise our law enforcement agencies or officers.  There are similar provisions in our law for the freezing or forfeiture of assets in Malaysia that are connected with money laundering activities or are the proceeds of crime, whether or not any individuals are prosecuted.[6]  These have often subsequently led to the prosecution of individuals.  The laws in Malaysia also allow for criminal proceedings against individuals for alleged money laundering activities, even if those activities occur outside Malaysia.[7]

It is noteworthy that the Malaysian Anti-Corruption Commission has issued a statement confirming that it cooperated with the United States Federal Bureau of Investigation in the latter’s investigations.[8]  In international efforts to stop money laundering and curb corruption, many countries — including Malaysia — have passed laws that allow for “universal jurisdiction” in respect of money laundering activities or corrupt practices.  Such legal actions cannot in any way be categorised as attempts to interfere in the domestic affairs of a sovereign state.

The principal aim of international crime prevention and anti-corruption treaties such as the United Nations Convention against Corruption, which Malaysia ratified in 2008, is to specifically provide for the prosecution of those involved in international or transnational criminal activities.  No country that is a signatory to such treaties or conventions should attempt to hide or shield such persons, or permit such persons to evade or avoid prosecution, or to block access to evidence or information.

It is untenable to hold that the DOJ document does not show that money has been misappropriated from 1MDB.[9]  The allegations of financial improprieties concerning 1MDB funds — described as having been “stolen, laundered through American financial institutions and used to enrich a few officials and their associates”[10] — are referred to in no fewer than 193 paragraphs in the document.

Further, it has been reported that 1MDB is being investigated for alleged financial irregularities and possible money laundering in at least nine countries: Australia, Hong Kong, Luxembourg, Singapore, Switzerland, Thailand, United Arab Emirates, United Kingdom and United States of America.[11]  It is significant that immediately after the DOJ announced its action, Singaporean authorities declared that they have seized bank accounts and properties amounting to S$240 million in total, as a result of their own investigations into the flows of 1MDB-related funds through Singapore, which began in March 2015 and are still in progress.[12]

There are parties who have stated that 1MDB has not suffered any losses but only “has debts”.[13]  This is a perverse and unsustainable position, given that the PAC report reportedly named members of 1MDB’s senior management that it said should face a criminal investigation,[14]  and that five of the twelve members of the PAC have reportedly stated that the PAC’s report shows that a total of US$7 billion have flowed out from 1MDB and were unaccounted for.[15]

Several individuals have been specifically named in the DOJ’s court document, but not the Prime Minister.  However, this is not to say that he cannot be identified from the descriptive statements contained in the court document.[16]  The conclusion — based on any clear reading of those descriptive statements — that the person named as “MALAYSIAN OFFICIAL 1” in the court document is the Prime Minister appears irresistible.

The court document contains many other troubling disclosures.  It is alleged that in March 2013, USD681 million was transferred to a bank account belonging to “MALAYSIAN OFFICIAL 1”,[17] and that this sum emanated from a 1MDB bond sale.  This allegation contradicts statements by our authorities that the funds were a “personal donation” to the Prime Minister from the Saudi royal family, given to him without any consideration.[18]

In addition, the court document also alleges that USD20 million and a further USD30 million traceable to 1MDB funds, were transferred to the same personal bank account owned by “MALAYSIAN OFFICIAL 1” in 2011 and 2012, respectively.[19]  It would appear that the transfer of these funds had not been previously uncovered or disclosed by any of our enforcement agencies.  These allegations therefore expose deficiencies and flaws in the investigations that have been conducted so far in Malaysia, and a lack of transparency regarding the findings that such investigations have yielded.

While the DOJ’s proceedings and any other possible related proceedings in the United States of America must be allowed to take their course and not be prejudged, a fresh and comprehensive investigation of all persons directly or indirectly implicated in the allegations made by the DOJ must be pursued.  These allegations must not be ignored or permitted to be swept under the carpet, as that would only fuel the already existing perception of a cover-up.  In this regard, the recent statement by the PAC, in the wake of the DOJ proceedings, that any further investigation into 1MDB is unnecessary, is deeply disconcerting.

There is a palpable need for greater fervour, transparency and accountability in the investigation by our enforcement authorities, and for appropriate and concrete action to be taken against all wrongdoers, without delay.  The truth must be revealed and justice must be done.                                                                                 
Footnotes:

[1] Civil suit document filed by the United States Department of Justice dated 20 July 2016 (“DOJ civil suit”).

[2] DOJ civil suit, para 5.

[3] Press statement by the United States Department of Justice entitled “United States Seeks to Recover More Than $1 Billion Obtained from Corruption Involving Malaysian Sovereign Wealth Fund” dated 20 July 2016 (“DOJ press statement”).

[4] DOJ civil suit, para 33.

[6] Section 41 of the Malaysian Anti-Corruption Commission Act 2009, and Sections 44, 45, 50, 51 and 52 of the Anti-Money Laundering, Anti-Terrorism Financing and Proceeds of Unlawful Activities Act 2001.

[7] Sections 44, 45, 50, 51 and 52 of the Anti-Money Laundering, Anti-Terrorism Financing and Proceeds of Unlawful Activities Act 2001.  Sections 44 and 53 also deal with the freezing and seizure of assets located outside Malaysia.

[8] Press statement issued by the Malaysia Anti-Corruption Commission entitled “SPRM Bekerjasama Dengan FBI” dated 22 July 2016.

[9] Press statement by the Attorney General of Malaysia Tan Sri Dato’ Sri Haji Mohamed Apandi Bin Haji Ali entitled “US DEPARTMENT OF JUSTICE FILING OF CIVIL ACTION” dated 21 July 2016.

[12] Joint statement by the Attorney-General’s Chambers of Singapore, Commercial Affairs Department of the Singapore Police Force and the Monetary Authority of Singapore entitled “Investigations into 1MDB-Related Fund Flows through Singapore” dated 21 July 2016.

[13] “Don’t be blindsided by 1MDB: Najib”, New Straits Times Online, 9 August 2015.

[14] “Malaysia’s Probe Into 1MDB Fund Was Flawed”, Wall Street Journal, 26 May 2016.

[15] “PAC members: We never said no wrongdoing, cash went missing”, MalaysiaKini, 12 April 2016.

[16] (a) DOJ civil suit, para 28: “MALAYSIAN OFFICIAL 1 is a high-ranking official in the Malaysian government who also held a position of authority with 1MDB. During all times relevant to the Complaint, MALAYSIAN OFFICIAL 1 was a “public official” as that term is used in 18 U.S.C. § 1956(c)(7)(B)(iv) and a “public servant” as that term is used in Section 21 of the Malaysian Penal Code.”
(b) DOJ civil suit, para 129: “[RIZA SHAHRIZ BIN ABDUL] AZIZ is a relative of MALAYSIAN OFFICIAL 1 and a friend of LOW [TAEK JHO].”
(c) DOJ civil suit, para 39: “Upon its formation, MALAYSIAN OFFICIAL 1 assumed a position of authority with 1MDB. MALAYSIAN OFFICIAL 1 had the authority to approve all appointments to, and removals from, 1MDB’s Board of Directors and 1MDB’s Senior Management Team. In addition, any financial commitments by 1MDB, including investments, that were likely to affect a guarantee given by the government of Malaysia for the benefit of 1MDB or any policy of the Malaysian government, required, the approval of MALAYSIAN OFFICIAL 1.”
(d) DOJ civil suit, para 238: “The Government of Malaysia provided a “Letter of Support,” dated March 14, 2013, in connection with the Project Catalyze transaction… the letter is signed by MALAYSIAN OFFICIAL 1.”, read together with “A 1MDB default would test limits of Najib’s support: Gadfly”, StockHut, 19 April 2016.
(e) DOJ civil suit, para 263: “… a press release issued on January 26, 2016, the Malaysian Attorney General confirmed that, “the sum of USD681 million (RM2.08 billion) [was] transferred into the personal account of [MALAYSIAN OFFICIAL 1] between 22.03.2013 and 10.04.2013,” and that, “ In August 2013, a sum of USD620 million (RM2.03 billion) was returned by [MALAYSIAN OFFICIAL 1]. . . .” The Malaysian Attorney General ultimately characterized the payment of $681 million as a “personal donation to [MALAYSIAN OFFICIAL 1] from the Saudi royal family which was given to him without any consideration.”

[17] DOJ civil suit, para 229:  “…between approximately March 21, 2013, and March 25, 2013, $681,000,000 was transferred from the Tanore Account to an account belonging to MALAYSIAN OFFICIAL 1.”

[18] Press statement by the Attorney General Tan Sri Dato’ Sri Haji Mohamed Apandi bin Haji Ali entitled “IN RELATION TO THE INVESTIGATION PAPERS RETURNED BY MACC ON SRC INTERNATIONAL AND “RM2.6 BILLION” dated 26 March 2016.

[19] DOJ civil suit, para 261.

10 thoughts on “Malaysian Authorities must undertake an Immediate Inquiry

  1. The Malay led government with the Bugis warrior leader have been embarrassed that they have been hoodwinked by a ChinaPek and 2 Arabs selling snake oil salesmen. Thus the Malay led government agencies such as BNM, MACC, POLIS, AGC and the Ministers are putting on a brave front that everything is honky dory with 1MDB. STrange that every Malay PM always had a ChinaPek behind him, remember Patrick Badawi?

    It needs a Gwailoh to take corrective measures to stop the looting and take the culprits to court and returning the ill gotten assets. However the actions of the Gwailoh have been interpreted as meddling in domestic affairs and even go so far as an attempt to ‘kill’ the Malays says a Chief Minister. Guess English education only goes so far. After years of Malay first and Bahasa first education, the politicos have difficulties reading and understanding English even those that went to Oxbridge.

    THe DoJ is being polite is using MO1 instead of naming the official. Imagine what kind of reaction and how UMNOb will capitalize on the issues if MO1 is named. UMNOB will go all out to claim that DoJ is trying to overturn the government of Malaysia. No,one is trying to overturn the government of Malaysia. All they are trying to do is get rid of the PM. The PM is not the government of Malaysia. So far Malaysia have changed PM 5 times but life and the government of Malaysia continues.

    Life of UMNOb Malay under the coconut shell. Now more and more Ministers are joining the chorus of “who can say the stupidest thing”. wonder what is the grand prize.

  2. Where’s the Bahasa translation for this piece?
    In a place where the sun don’t ever shine?
    There’s really no point in preaching to the already converted..
    Poor Melayus’ are being lynched by the genocidal USofA – esp DoJ who have their paws on Jibros-centric WMD.

    There are 4 ways in which MO1 gets away scot free:
    1. Over-saturation/stimulation of ‘facts’ and waiting for the usual ‘mudah lupa’ syndrome to kick in;
    2. Abysmal religio-racist political posturing with a huge dose of gerrymandering and xenophobia;
    3. Cash-is-King aka Gua-Lu-Tolongism in perpetuity. Therefore, PRC SOEs’ and other opaque enterprises will surely buy up Bolehland and turn it into Wrongwaystan;
    4. Useless, nonoperational, emasculated, divided and confused Oppo.
    *(of course, you folk are free to add other methods, cuz i ain’t crooked enough)

    MO1 claimed today, that he is a ‘moderate’ and definitely not a dictator.. Wow! Such Clarity of Conscience and Purpose.

    Yup. And my pet goldfish gave live-birth to a chicken.

  3. I m not well versed with laws
    Can bar council Sue bnm chief for deleriction of duty?
    Looks like he is condoning money laundering by closing the case despite evidence from doj?

  4. There is no question that Riza, Jho Low and several others will be prosecuted in the US courts in due course because without an eventual successful criminal prosecution for money-laundering, there is no basis for the civil property seizure in the first place.

    So let’s wait for the criminal charges which will surely come, may be months from now, or just in time for GE 14.

    The real fun starts when the DoJ applies for Interpol’s assistance to locate and arrest Riza, Jho Low and others. I sometimes wonder how these people can sleep soundly at night even in their luxurious super yacht and hitherto un-seized penthouses knowing that when they wake in the morning there is another live TV press conference announcing criminal charges and Interpol Red Notices.

    The only hope is a future Malaysia-Najib-friendly US president who may at most delay the prosecutions, probably after GE 14. But to stop the civil / criminal proceedings altogether, no way, not after the grand, live TV press conference, and the daily bad-mouthings spewing out from Najib’s paid mouth pieces. The Americans also need to save their faces as well, especially with China snapping at their heels to become World #1.

  5. If the Malaysian government felt that it was wrong and unjust, they could apply to the American court to resist jurisdiction and capacity of the court. Why didn’t they do that?

  6. Bank Negara just announced that it has finished all the investigation, fined 1MDB and the case is closed. NFA.

  7. A greatly appreciated highlight by the Bar Council of Malaysia , because we can see ‘blood ‘ in the Finger-prints of these perpetrators who have managed to do this heinous crime to try and fool the entire world…..And, this cross-border of criminal activities which they think they can evade with impunity , IS NOT ONLY A CIVIL PROCESS OF SEIZURE AND RECOVERY OF ASSETS – from trickery & cunning skill – BUT ONE OF CRIMINAL CONDUCT TO CORRODE , TO CORRUPT HUMAN VALUES TO HUMANITY AS A WHOLE , BUT ALSO TO UNDERMINE ‘ CIVILIZATION ‘ ITSELF ( since we have evolved this far today ) :

    NOTHING IS WORSE THAN CORRODING & CORRUPTING OUR CIVILIZED WAY OF THE FINANCIAL & BANKING SYSTEMS OF THE WORLD ……So, its not only a Civil process , but a Criminal Activity of the highest order……The arms of the Law is long enough to reach these perpetrators….. (even if they are hiding in their mouse-hole , just gas and poison them out of their holes….) =

    Btw, kudos to our colleagues Orang Malaya, Wayne and CLFamiliaris for their stinging doses , but also appreciation to our out-spoken and courageous Blog host for carrying this Highlight by the Malaysian Bar – thank you for the fact that I have learnt something from this outrageous Crime against Humanity…..)

  8. “If the Malaysian government felt that it was wrong and unjust, ..” Frankie L.

    You have conflated ‘the Government’ with the Pee-Em and his sycophants – which most folks, including the indigenous village inbreds are wont to do. The Malaysian Government is called a ‘Kerajaan’, that is the equivalent to UK’s Her Majesty’s Service. It not called a ‘Gomen’ as in Republican Indonesia. It is supposed to be independent of the Executive, Judiciary and Legislative Assembly until it becomes a promulgated policy.

    Unfortunately over the years and bucket-loads of tears, UMNOb has usurped the Constitutional Monarchy (with good reasons at the beginning, some might add) to an emasculated Feudalistic anachronism. Nowadays, the Conference of Rulers have to appeal to the peoples commonsense and moral compass in thwarting the despicable machinations and corruption of the Executive. Even that hasn’t worked due to progressive moral-ethical degeneration and apathy of the Malay polity, who had initially fought the Malayan Union during Independence from the British – citing their 3 pillars of Race, Religion and Royalty (3 R’s, like basic education).

    Given a free rein, the Kerajaan would not ‘resist’ but in fact assist DoJ in pursuance of Justice for all Malaysians.. Are you aware that the previous Attorney General, top 3 Commissioners of MACC, senior police officers and even central bank governor have been unceremoniously dumped? Also a whole host of unsung heroes/antiheroes (including a vicariously murdered banker and attorney) have been silenced, in this mother of all FUBAR?

    Aware Malaysians are not only fighting corruption on a global scale, but our distinct version of Dajjal.

    I think commentators here need awareness and erudition. Meeting Tony Pua, being an Oxford alumnus and visiting UM and so on in the 70s’ – is a function of beta amyloid accretion and neuro-fibilliary entanglement.

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