The scandal centering 1Malaysia Development Berhad (1MDB)'s state investment fund has reportedly been swirling around Malaysia and its prime minister. The situation has further worsened after international investigators' have expressed suspicion over commitment of serious crimes.
1MDB has been accused of using the state fund as a vehicle to pilfer large sum of money. Swiss authorities have started probe last week into suspicious bribery involving former 1MDB officials and other unknown people that caused misappropriation of $4 billion, reports Financial Times.
The advisory board for state investment fund in 1MDB is chaired by the Prime Minister Nazib Razak. The corruption scandal has triggered investigations in Switzerland, Singapore, the US and Hong Kong, reports CNBC.
Notably mentioning, 1MDB's internal investigations have found no evidence of corruption. 1MDB, the second largest bank in Malaysia, has however, refuted the corruption allegations. Meanwhile, the Office of Attorney General (OAG) in Switzerland has denied conduction of any investigation against Prime Minister Nazib Razak, according to a report published in International Business Times.
The Malaysian prime minister has admitted receiving $680 million in his personal bank account while denying any wrongdoing. Attorney general in the country has revealed that the fund transfer to the prime minister is a donation from the Saudi royal family. Minister for communications in Malaysia, Salleh has accused Switzerland of breaking diplomatic protocol and spreading misinformation over 1MDB scandal. He has described the issue in a separate statement, as a diplomatic rift between these two countries. However, OAG in Switzerland has refuted to comment against political statement. Allegations of corruptions have been first published in a Wall Street Journal report. The report has focused on transferring money from an account at Falcon Private Bank in Singapore to accounts in Malaysia. The accounts are believed to be owned by Najib, founder of 1MDB. The OAG has initiated criminal proceedings against two former 1MDB officials in last August. It has brought allegations for violating Swiss law related to bribery of foreign officials, misconduct in public office and money laundering. Consequently, Malaysian currency and stock market have dropped over the past year. Capital outflows have also in the rise. Moody's has revised the outlook on Malaysia's sovereign rating to stable from positive in earlier this month. But the overall rating has been kept at A3. The revision in economic outlook is due to the deteriorating economic growth, risks from high system- wide leverage. However, the rating agency has expressed skepticism over improvement in the public debt burden at a sooner time. Allegations for embezzlement of funds amounting $4 billion from the state exchequer have been made by the Office of the Attorney General in Switzerland. Though Prime Minister Nazib Razak hasn't been fingered directly by the Swiss authority, but his opponents have called for his resignation. The scandal has increased the economic volatility and investors are seen to wait for an ending.
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