Swiss Probe of Malaysia Fund Sees $4 Billion Possible Misuse

By Jenn Loro - 31 Jan '16 15:10PM

Swiss criminal investigations into 1Malaysia Development Berhad (1MDB) found convincing traces of a possible misuse of funds from Malaysian state-owned enterprises amounting to US$4 billion.

The revelation from Switzerland's chief prosecutor is bound to escalate the controversies surrounding the alleged illicit transactions tied to the office of the embattled Malaysian Prime Minister Najib Razak.

An official statement from the Swiss Attorney-General's office brought to public light allegations of criminal activities happening between 2009 and 2013. The statement also mentioned about the transfer of funds being diverted to Swiss accounts of former Malaysian government officials. This new development prompted the Swiss Attorney-General's Office to 'mutual assistance' from its counterpart in Malaysia.

"The monies believed to have been misappropriated would have been earmarked for investment in economic and social development...To date...the Malaysian companies concerned have made no comment on the losses they are believed to have incurred. The object of the request for mutual assistance is...finding out whether losses on this scale have been sustained," the Attorney-General's Office said in a statement as quoted by Bloomberg.

Malaysians are used to the patronage-oriented and corruption-laden nature of their democratic system. While 1MDB already triggered a string of anti-government protests last year, the controversy began to heighten when foreign media took a great interest as well.

According to a report by the Wall Street Journal, 1MDB was established by Najib Razak upon ascending to office in a bid to revive Malaysia's slow growing middle-income economy. As the issue started to build up, the state fund has been subjected to countless probes in Malaysia, the United States, and other foreign investigative authorities.

Malaysian politicians from both sides of the political fence are calling for mutual cooperation with external investigating agencies to clear the muddle once and for all.

"Such cooperation will not only go a long way towards identifying the culprits ... but also removing the perception that the Malaysian AG was biased in favor of the Prime Minister," said Tony Pua, a member of the parliament from the Malaysian opposition as mentioned in a report by CNBC.