Swiss expand probe of suspected Malaysia fund embezzlement

AP News
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Posted: Apr 12, 2016 8:08 AM

GENEVA (AP) — The Swiss attorney general's office says it has expanded a probe into suspected embezzlement of a Malaysian state investment fund to investigate two former Emirati officials.

Investigations into the fund, 1MDB, have indicated that $4 billion earmarked for investment in development projects in Malaysia may have been misappropriated from state-owned companies.

Switzerland, which says part of the money was transferred to accounts there, last year opened an investigation of two former fund officials and persons unknown on suspicion of bribery and money laundering, among other offenses.

The office of Attorney General Michael Lauber said Tuesday the two Emiratis now under investigation were in charge of Abu Dhabi sovereign funds. The probe centers on how 1MDB subsidiaries obtained a guarantee from Abu Dhabi to repay bonds issued to finance investments in power plants.

"The Swiss authorities have elements in hand allowing them to suspect that the amounts paid in connection with this guarantee were not returned to the Abu Dhabi sovereign fund that supported the commercial risk," said Lauber's office in a statement. "To the contrary, these funds would have benefited others, particularly two public officials concerned as well as a company related to the motion picture industry."

It did not identify the Emiratis further, but said they were under investigation for suspected fraud, criminal mismanagement, misconduct in public office, forgery, bribery of foreign public officials, and money laundering. Lauber's office said it was seeking help from Luxembourg and Singapore.

1MDB has been embroiled in a complex web of deals that saw its debts balloon to 50 billion ringgit ($12.9 billion) in just six years. A Malaysian parliamentary inquiry last week found a massive unexplained payment of at least $3.5 billion and called for a police probe of the fund's former head.

The report, however, did not mention Malaysian Prime Minister Najib Razak, who was behind the creation of 1MBD in 2009 and has been battling allegations that hundreds of millions of dollars was channeled from the fund into his personal bank accounts.

Najib became embroiled in the scandal after documents leaked last year suggested some $700 million deposited into his accounts may have come from entities linked to 1MDB.

Lauber sought Malaysia's help in January after an investigation into 1MDB indicated that $4 billion may have been misappropriated from Malaysian state-owned companies. Some of the money was transferred to accounts held in Switzerland by various former and current public officials from UAE and Malaysia.