Probe on 1MDB's account in Singapore

Probe on 1MDB's account in Singapore

KUALA LUMPUR - Bank Negara has handed over the investigative findings on 1Malaysia Development Bhd's (1MDB) controversial investment in BSI Bank Ltd in Singapore to the relevant enforcement agencies.

The central bank confirmed yesterday that it had already received the report by the Monetary Authority of Singapore (MAS) on 1MDB's account with BSI Bank in the republic, but it stressed that the report findings were confidential, and hence, could only be shared with relevant authorities in the country.

"They (MAS) announced that they sent it to us, so yes, we did receive it," Bank Negara governor Tan Sri Dr Zeti Akhtar Aziz said when asked whether the central bank had received the report from its Singapore counterpart.

"This information will be extended to enforcement agencies within the Malaysian jurisdiction," she said at a press conference in conjunction with release of The Labuan Financial Services Authority Annual Report 2014 here yesterday.

Zeti, however, declined to reveal which enforcement agencies that would be involved, citing confidentiality.

"The international community would not co-operate with us (in the future) if we release the information that was extended to us," Zeti explained.

"Therefore, disclosure will stop all investigations if we talk about it," she added.

Last week, Prime Minister Datuk Seri Najib Tun Razak revealed that 1MDB's US$1.1bil (RM3.97bil) investment redeemed from its offshore account in the Cayman Islands and parked in BSI Bank, a Swiss-based private bank, in Singapore was not in cash but in the form of "assets".

Second Finance Minister Datuk Seri Ahmad Husni Mohd Hanadzlah later clarified that the deposit was in the form of "units".

The answers were in contrast to the Government's earlier written reply in March 10, where Najib, also the Finance Minister, stated that the balance of 1MDB's investment from Cayman Islands had been redeemed in cash and placed in BSI Bank in Singapore.

The episode led to 1MDB and Najib coming under fire from critics including former prime minister Tun Dr Mahathir Mohamed.

Dr Mahathir contended that something was not right as BSI Bank has filed a report with MAS stating that no 1MDB money was kept with them.

The former premier added that normally MAS would report such information to Bank Negara. He contended that it was clear from the admission that the report was governed by principles of international secrecy and the wish for secrecy under the Anti Money-Laundering Act.

In March, MAS told Reuters that it had been in touch with the Malaysian authorities over its investigations into the heavily indebted 1MDB. "We are committed to assist within the full ambit of our laws," MAS said in a statement then, adding that it could not provide more details as investigations in Malaysia were ongoing.

"As authorities that operate in the international environmental, we will from time to time receive information from other jurisdiction; similarly, from time to time, we will extend information to other jurisdiction as well," Zeti said.

"If any irregular practices or transactions occur, these information will be extended to the bank. That's as far as we can comment because from time to time it will involve follow-up investigations.

"This sharing of information can only take place if we can ensure our counterparts that confidentiality will be maintained. If we release information that has been extended to us on a confidential basis, this information will stop being extended to us," she explained.

When asked if MAS had notified Bank Negara that there was no cash being held by 1MDB in BSI Bank Singapore as alleged, Zeti said: "We can't comment on an individual organisation."

Meanwhile, Zeti reiterated that 1MDB's loan default would not have a systemic implication on the domestic banking system. She said her references, however, did not include the issuance of bonds or borrowing from banks outside Malaysia by 1MDB.

She pointed out that the stress tests that are conducted regularly had proven that Malaysian banks would remain financially sound and well capitalised in the event of 1MDB defaulting on its loan.

"When any entity takes a loan exceeding RM2bil from banks here, it will be monitored very closely... we will put the company on the watch list, and from there, we will make an assessment on whether the organisation will have any systemic implication on the banking system," Zeti explained.

1MDB, a wholly-owned unit of the Finance Ministry, has come under heavy criticism for accumulating debts of RM42bil and is now facing cash-flow problems.

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