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Malaysian PM vows to co-operate with US probe into £2.6bn state fund

Published 21/07/2016

The fund was created in 2009 by Najib Razak shortly after he took office to promote economic development projects
The fund was created in 2009 by Najib Razak shortly after he took office to promote economic development projects

Malaysian prime minister Najib Razak has insisted he is serious about good governance and vowed his administration will "fully co-operate" with a probe by US officials into a state fund.

The fund, known as 1MDB, was created in 2009 by Mr Najib shortly after he took office to promote economic development projects.

US prosecutors say fund officials diverted more than 3.5 billion dollars (£2.6 billion) through a web of shell companies and bank accounts in Singapore, Switzerland, Luxembourg and the US, and the Justice Department has initiated action to seize more than 1 billion US dollars (£750 million) of the cash.

The diverted funds paid for luxury properties in New York and California, a 35 million dollar (£26 million) jet, art by Vincent Van Gogh and Claude Monet, and helped finance Hollywood film The Wolf Of Wall Street, according to federal government complaints that demand the recovery and forfeiture of the assets.

The opposition leader in Malaysia's parliament, Wan Azizah Wan Ismail, said Mr Najib must give a full explanation in parliament and go on leave to ensure a full and transparent probe.

That was echoed by civil society group Bersih, which said Mr Najib and the attorney-general - who cleared the premier of any wrongdoing in January - should immediately resign to allow for independent investigations.

Asked to address the action, Mr Najib said: "I want to say categorically that we are serious about good governance."

He said he views the US initiative seriously and that his government will "fully co-operate".

His press secretary Tengku Sarifuddin said in a statement that 1MDB has faced multiple investigations in Malaysia and the attorney-general found no crimes were committed.

Communications minister Salleh Said Keruak said 1MDB has been the subject of an "unprecedented, politically motivated attack" aimed at unseating the premier.

He said any claims relating to 1MDB must be "treated with caution" and "no-one should rush to judgment before allegations are proven in court".

The US complaints, filed in Los Angeles, allege a complex money-laundering scheme that the Justice Department says was intended to enrich top-level officials of the government-controlled fund.

About 1.3 billion dollars (£980 million) raised through purportedly legitimate bond offerings was swiftly transferred to a Swiss bank account and then distributed to fund officials for their personal benefit.

The complaints identify by name several people close to Mr Najib that the government alleges profited from the scheme.

Among them are his stepson, Riza Shahriz Abdul Aziz, who co-founded movie production studio Red Granite Pictures, and businessman Low Taek Jho who is close to Mr Najib's family.

According to the complaint, 11 wire transfers totalling 64 million dollars (£48 million) were used to fund the studio's operations, including production of 2013 movie The Wolf Of Wall Street, starring Leonardo DiCaprio.

The Justice Department described Mr Riza in the complaint as a relative of an unnamed "Malaysian Official 1" - whose approval was needed for the fund's financial commitments.

Mr Najib heads the fund's advisory board, which was dissolved two months ago.

The US action is a blow to Mr Najib but analysts said he remained politically secure after moving last year to strengthen his grip on power by replacing critics in his government and party with men loyal to him.


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