Swiss NGO Wades into 1MDB Mess

The Geneva-based Bruno Manser Fund is asking Swiss authorities to open criminal proceedings against Swiss and other banks involved in the growing 1Malaysia Development Berhad scandal, charging that the Swiss subsidiary of RBS Coutts in Zurich participated in the looting of as much as US$700 million from the Malaysia-backed investment fund.

Also said to be involved are the Geneva branch of JP Morgan (Suisse) and subsidiaries of Swiss banks BSI and Falcon Private Bank in Singapore. Swiss authorities have not taken the NGO’s earlier requests for prosecutions seriously but they might be spurred into action by the growing political crisis in Malaysia. Prime Minister Najib Razak has been presiding over an ominous purge of critics, with officials involved in investigating irregularities in the fund facing police questioning.

Named after a Swiss naturalist who worked for years with the Penan people of Sarawak before disappearing in 2000, the Bruno Manser Fund promotes rain forest issues. It has long been critical of the Malaysian government.

Getting worse

Concerns over 1MDB’s financial condition and the accompanying scandal has led to a 21 percent decline in the ringgit and the flight of as much as US$10 billion in stock market capitalization in the past year.

Najib has been on a scorched-earth campaign to find out who has been leaking damaging information about corruption involving the fund as he loses at least some support in the United Malays National Organization, where former premier Mahatthir Mohamad has been seeking for months to bring him down.

Last week, Najib ordered a sudden, wholesale housecleaning of his cabinet, sacking the deputy prime minister, attorney general, head of the police special branch and others in an attempt to corral the scandal. The crisis deepened in recent weeks after the Wall Street Journal and the Sarawak Report reported that $680 million from 1MDB ended up in the prime minister’s bank account.

Media in Malaysia have reported that Chief Malaysian Anti-Corruption Commissioner Abu Kassim Mohamed has been put on leave, along with Mohd Shukri Abdull, the second in command of the graft-busting organization. Six senior MACC officers are said to be under questioning by police in a probe of press leaks.

During the last weeks of July, Najib also ordered the suspension of The Edge Financial Daily and its sister paper after they printed that the equivalent of U$1.83 billion was allegedly stolen by company officers and others from the state-backed fund; the passports of some journalists and opposition figures have also been suspended.

In the meantime, an army of pro-government bloggers has been attacking whistle-blowers and “conspirators against the Democratically Elected Government.” They include most of the top officials of Bank Negara, the country’s central bank; MACC figures; the head of the special task force secretariat on administration and finance; the editor and publisher of The Edge; and Sufi Yusoff, Mahathir’s personal secretary. Najib himself has told “white people” to stay out of the country’s affairs.

Swiss outrage

“Given the current political crisis in Malaysia, the Bruno Manser Fund requires the immediate opening by the Public Prosecutor of the Confederation of criminal proceedings against Swiss banks and other actors involved in the 1MDB case,” the Swiss-based fund said. The fund has already filed a criminal complaint against the Swiss subsidiary of RBS Coutts over its handling of funds from PetroSaudi, a Middle East oil exploration firm alleged to have been involved in the looting of 1MDB funds and money laundering. However, at that time, the Swiss government rejected the opening of an investigation.

However, the NGO said in a prepared release, the case has been updated on the basis of information provided by a former employee of Swiss PetroSaudi, Xavier Justo. Justo has been imprisoned in Thailand since late June, charged with attempted blackmail of PetroSaudi officials and other offenses. He has been accused of leaking information to Sarawak Report and others.

Justo reportedly downloaded thousands of emails providing extensive details of transactions worth millions of dollars between PetroSaudi, 1MDB and companies related to PetroSaudi. The funds allegedly were directed into accounts held by Jho Taek Low, a young tycoon and friend of the Najib family who helped the government design 1MDB, which is backed by the Malaysian Ministry of Finance. That backing makes the Malaysian government liable for whatever unfunded liabilities 1MDB is unable to pay. There have been concerns that if the fund defaults on its debts, it could threaten the country’s financial system.