The dimension of the 1MDB fraud case
Published: Wednesday, Aug 28th 2024, 04:50
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The affair surrounding the Malaysian sovereign wealth fund 1MDB has spread around the world. There have been criminal investigations and convictions in numerous countries.
WHAT IS IT ABOUT?
The sovereign wealth fund 1Malaysia Development Berhad (1MDB) was originally founded in 2009 to boost the Malaysian economy. However, high-ranking fund employees and their partners embezzled an estimated 4.5 billion dollars. The money was allegedly used to bribe government officials, finance former Prime Minister Najib Razak's black coffers and buy jewelry, paintings and real estate for hundreds of millions of dollars. In Malaysia, Razak was sentenced to twelve years in prison in 2020, which was reduced by half in February 2024.
HOW DID THE SCANDAL COME TO LIGHT?
In 2015, British journalist Clare Rewcastle Brown was leaked documents revealing fraud in connection with the state fund 1MDB. She reported on this on the Sarawak Report investigative platform. This triggered the first investigations by the Malaysian authorities.
WHICH SWISS BANKS WERE INVOLVED?
Various Swiss banks were involved in the 1MDB scandal. The Swiss Financial Market Supervisory Authority (FINMA) conducted several proceedings. These resulted in the dissolution of the private bank Banca Svizzera Italiana (BSI) and Falcon Private Bank, among others, and Rothschild AG and its subsidiaries were reprimanded for serious violations of money laundering regulations.
Finma also imposed several bans on bankers and fines on bank employees. Credit Suisse and UBS were also part of the scandal: the big banks were reprimanded by FINMA and both had to pay a fine in Malaysia.
WHAT CRIMINAL INVESTIGATIONS HAVE BEEN CARRIED OUT IN SWITZERLAND?
The Office of the Attorney General of Switzerland (OAG) charged the former CEO of Falcon Private Bank, among others, for allegedly laundering around 210 million euros for a businessman from the United Arab Emirates between 2012 and 2016. According to the OAG, the funds were stolen from the sovereign wealth fund 1MDB. Last year, the appeals chamber of the Federal Criminal Court acquitted the ex-banker of the charge of money laundering, as well as the bank itself.
The Appeals Chamber was of the opinion that the unlawfulness of a money transaction that was illegal according to the Office of the Attorney General of Switzerland had not been proven. Therefore, both the qualified money laundering charged against the ex-CEO and the criminal liability of the bank's company lacked the necessary predicate offense.
The proceedings against the director of the Petrosaudi company and his right-hand man have an even greater dimension, partly due to the alleged damages of around 1.8 billion US dollars.
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