March 11, 2015 – The balance of the US$1.103 billion (S$1.53 billion) that 1Malaysia Development Berhad (1MDB) had invested in a Cayman Islands fund has been redeemed but is currently being kept in a Singaporean bank, said the Malaysian government.
The controversial state investment fund has been under intense scrutiny after revelations of its growing debt – currently at 42 billion ringgit (S$15.7 billion).
In a written answer to Democratic Action Party MP Tony Pua, who had asked what had happened to the money invested by 1MDB in the Caymans, Malaysia’s Finance Ministry said that the money is being parked in US dollars at BSI Bank (Singapore). The bank is a wholly-owned subsidiary of Swiss bank BSI.
The decision to use a bank in Singapore was done to ease the process of withdrawal in light of regulations from central bank Bank Negara which state that transactions above RM50 million need its approval, said the ministry.
The US$1.103 billion is the second tranche of funds in 1MDB’s Cayman Islands funds. A total of US$2.32 billion was reportedly invested in the Caymans.
The government’s explanation sparked more questions from the opposition. “There is something very fishy about the money in BSI Bank,” said Mr Pua. “Is it encumbered? Tied down? Got cash, but cannot take?
“From the written answer, it is also clear that 1MDB is trying to avoid Bank Negara rules. They are intentionally trying to avoid Bank Negara regulations. That’s why they kept it offshore. I cannot understand how a government company, where the advisers are from the Finance Ministry itself, have problems getting approval from Bank Negara.”
On Mar 4, the Malaysian cabinet concluded that 1MDB had committed “no wrongdoing” after meeting with the fund managers and its auditors over allegations of financial mismanagement.
Still, the chairman of 1MDB’s advisory board, Prime Minister Najib Razak, ordered the nation’s Auditor-General to carry out an independent audit of the fund. A special taskforce comprising the Attorney-General, police and the anti-corruption commission has also been formed to probe 1MDB.
However, the inspector-general of police said official police investigations will only be launched if the auditor general finds anything suspicious.
There have been concerns about the independence of any investigation given the fund’s direct links to people in power. However the Home Ministry, which oversees the police force, said such fears are unwarranted.
“I think the PM has already given the indication that just like the auditor-general, no one is exempt from any kind of admonishment or blame for anything that goes wrong in the ministry,” said Deputy Home Minister Wan Junaidi Tuanku Jaafar. “The government will decide what to do once the findings are released.”