1MDB could be a victim of fraud: CEO


(The Malaysian Times) – The CEO of scandal-plagued 1Malaysia Development Berhad (1MDB) on Wednesday (Apr 13) said latest revelations on the Malaysia state investment fund indicate it could be a victim of fraud.

“1MDB is exploring all avenues open to us,” said its CEO and president Arul Kanda Kandasamy.

The latest development came after the Abu Dhabi sovereign fund and the International Petroleum Investment Company (IPIC) denied receiving payment from 1MDB.

1MDB reportedly paid US$3.5 billion to IPIC subsidiary Aabar BVI between 2012 to 2014. However on Monday, IPIC, in its filing to London Stock Exchange, denied ownership of a British Virgin Islands company which had a similar name as its subsidiary – Aabar PJS Limited – and said no money was received from 1MDB for its bond guarantee.

On Tuesday, the Swiss Attorney-General’s office said it had reason to believe the payments were diverted to two former Emirati officials and a company involved in the motion picture industry.

The Wall Street Journal has reported that part of payments transferred to Aabar BVI went to finance Red Granite Pictures – a company co-owned by the stepson of Malaysian Prime Minister Najib Razak. It also alleged that the funds were used to produce the Hollywood movie The Wolf of Wall Street. 1MDB has denied involvement, saying it is not in the business of making movies.


Prime Minster Najib’s lawyer Mohd Hafarizam Harun on Wednesday sought to distance his embattled client from 1MDB, saying Mr Najib’s signature on company documents was merely part of corporate governance requirements, and that it does not mean that the Prime Minister has knowledge of the dealings of 1MDB.

He said Mr Najib was compelled by Article 117 of 1MDB’s Memorandum and Articles of Association to sign off on any deals made by the state fund.

“Article 117 is what I call an operative article where it states that a financial implication or undertaking must have the Prime Minister’s signature,” said Mr Hafarizam, adding that directors of all public-listed companies have to sign circular resolutions to make any company decisions legal in line with corporate governance.

The lawyer said that scrutiny should fall on 1MDB’s board of directors.

“The question is who made the decision. Signing a resolution is what we call the end of the process. The one that you should be looking at is how was the process – meaning the decision – made.

“It is not the Prime Minister who made the decision. It is the board of directors of 1MDB.”

Mr Hafarizam expressed concern that foreign prosecutors are fed “one-sided documents”. He questioned whether they had read the Public Accounts Committee’s report and the Attorney-General’s findings that cleared the Prime Minister of wrongdoing, asking if overseas investigators have sought mutual legal assistance (MLA) for these reports and information.

Switzerland’s Office of the Attorney General (OAG) been issuing MLA requests to Malaysia through diplomatic channels since last year.

Malaysia Law Minister Nancy Shukri has told parliament that Kuala Lumpur has responded by seeking further clarification and is now awaiting the Swiss AG’s reply.