How Swiss Flip-Flopped Over 1MDB

• 11 Dec 2019
• BM 翻译

The matter of SRC funds frozen in Switzerland was raised in the course of Najib’s trial today, as the ex-PM apparently sought to deny they were held on grounds of suspected money laundering.

Meanwhile, documents have emerged indicating the conspirators might nearly have got away with retrieving all that cash, as the Swiss authorities originally decided not to investigate the fund when the scandal was first brought to their attention back in 2015.

An order sighted by Sarawak Report shows that on 14th July the Swiss Attorney General’s office issued a decision not to proceed with any investigation pending further ‘more sufficient’ evidence.  The Swiss authority performed a u-turn one month later by re-opening proceedings on August 14th.

Timing and sources suggest that the likely reason the Swiss Attorney General’s Office decided to re-open the case owed to a mutual assistance request from the United States Department of Justice’s Kleptocary Unit, suggesting the matter could no longer be ignored. They did so in time to freeze the cash.

Order Not To Proceed

According to a translation of the ‘order not to proceed’ issued by the Attorney General’s Office on July 14th 2015, the Federal Ministry of Public Affairs had opened an enquiry after being forwarded no less than five separate notices from the Money Laundering Reporting Office, all received since April 2015 from financial intermediaries drawing attention to public concerns about 1MDB.

The order, which was issued by Stefano Herold of the Lugano-office of the AG, explains:

According to media reports provided by financial intermediaries, a publicly owned company belonging to the Government of Malaysia has suffered significant financial loss as a result of unlawful financial transactions in 2009 and 2010 [translated]

There had in fact been copious evidence about the money had been lost from 1MDB by this date, which as Sarawak Report, The Edge and others detailed, was funnelled through Good Star Limited and PetroSaudi accounts in Coutts Zurich and JP Morgan Suisse.

Moreover, the case had already blown up in Singapore since March, where investigations had begun into the Swiss BSI bank’s involvement with 1MDB, the numerous accounts belonging to Jho Low and the notorious Brazen Sky account which was supposed to house billions from a bogus Cayman Island fund in which the stolen money was allegedly invested. BSI bank was headquartered in Lugano.

By June, Swiss national Xavier Justo had also been framed in Thailand thanks to trumped up charges orchetrated by PetroSaudi against this whistleblower, a story which drew national attention to the concerns about 1MDB in Switzerland.

Then July 2nd Sarawak Report and the Wall Street Journal released explosive information about Najib’s billion dollar Ambank account uncovered by Malaysia’s own task force investigations into 1MDB.

Yet, despite these indicators, the order issued by the Swiss AG’s office on 14th July 2015 came to the conclusion there was “insufficient evidence” to raise concerns about 1MDB:

According to the information in the possession of the MPC [Ministry of Public Affairs], there is currently no evidence that the public limited company would have suffered any financial loss as a result of the financial transactions in question carried out in 2009 and 2010;
– as things stand, therefore, there is insufficient evidence of an offence relating to a crime to be related to the aforementioned financial transactions carried out in 2009 and 2010 and, consequently, to any money laundering activity in Switzerland of the relevant proceeds; [translation ‘Order Not To Proceed’ issued by Lugano Office of Swiss Attorney General]

14th August 2015 the Attorney General’s Office officially overturned that order and opened its first proceedings on 1MDB. By that point Sarawak Report understands the United States had approached both Switzerland and Singapore seeking mutual assistance over the matter of 1MDB.

The presently still frozen funds are understood to have been held by BSI and Falcon Bank. However, Sarawak Report has frequently pointed out that millions in 1MDB funds were also held in the PetroSaudi business and directors’ personal accounts at JP Morgan Suisse (which together with then RBS Coutts Zurich was fined by the Swiss financial regulators for negligent practice).

A number of properties and accounts remain in the hands of these PetroSaudi directors and associates in Switzerland, all financed by money stolen from 1MDB. Proceedings against these PetroSaudi directors, including Tarek Obaid and Patrick Mahony, were initiated in Switzeraland last year but appear to have lost momentum.

Malaysians deserve to know when such frozen funds and stolen assets are likely to be returned to the Ministry of Finance in Kuala Lumpur.