Malaysia plans civil action to recover $950m from 1MDB unit
Funds were transferred to entities including BSI Bank and Julius Baer, finance minister says
Malaysia is planning civil action to claw back up to $950m allegedly siphoned off from a former subsidiary of 1MDB, the state investment fund at the heart of a multibillion-dollar embezzlement scandal.
Lim Guan Eng, Malaysia’s finance minister, on Wednesday said in a statement that state pension fund Kwap had issued a RM4bn ($950m) loan to SRC International, a former 1MDB subsidiary set up to invest in energy and renewable resources.
Of that original RM4bn loan, RM3.6bn had been transferred from SRC to several offshore entities, including BSI Bank in Switzerland, Julius Baer in Hong Kong and a coal exploration company in Mongolia.
“Considering a large portion of the funds had been used across the world, the government is taking the necessary steps to repatriate as much [as possible] of the 4 billion ringgit,” Mr Lim said in the statement.
The move comes as Najib Razak — former Malaysian prime minister and founder of 1MDB — is facing four trials linked to 1MDB and state entities such as SRC as part of a probe launched by his successor Mahathir Mohamad into the scandal-ridden state fund. Mr Najib has pleaded not guilty to more than 40 charges involving abuse of power and money laundering.
Malaysia’s government was working with “relevant authorities” to track the allegedly embezzled money and with legal counsel to determine the civil action that could be pursued to recover SRC’s assets, Mr Lim said.
The finance minister said any SRC funds returned to Malaysia would be used to help repay the RM4bn loan issued by the state pension fund to the former 1MDB subsidiary, whose “burden . . . is fully borne by the federal government”.
The announcement on Wednesday was the latest step in Malaysia’s attempt to recoup as much as it could of the $4.5bn that the US Department of Justice alleges went missing from 1MDB.
Malaysia’s government has said it faces up to RM43.9bn ($10.5bn) in debt repayments linked to 1MDB. It is also grappling with a weak fiscal position, having revised the 2018 fiscal deficit from 2.8 per cent to 3.7 per cent in the latest budget issued in November.
The charges against Mr Najib that are linked to SRC revolve around an alleged transfer of RM42m from SRC to his personal accounts at AmIslamic Bank, since renamed AmBank Islamic. Mr Lim said Wednesday’s announcement was not linked to the charges involving the RM42m transfers.