1MDB made billions of unexplained overseas payments: parliamentary report

PM Najib Razak chairs 1MDB board.
PHOTO: Reuters

Kuala Lumpur - A Malaysian parliamentary report released Thursday said a state-owned fund linked to Prime Minister Najib Razak made more than US$3 billion in unexplained overseas payments and called for the fund's former CEO to be investigated.

The report presented to parliament by its Public Accounts Committee (PAC), which has examined the affair, marked the first time an official Malaysian probe has clearly suggested misconduct and recommended action in a scandal that has deeply tainted Najib.

Najib, who founded 1Malaysia Development Berhad (1MDB) in 2009, has for months battled allegations that billions were looted from the investment vehicle in a vast campaign of fraud and embezzlement stretching from the Middle East to the Caymans.

The PAC said more than US$3 billion in unapproved overseas payments were made from 1MDB funds.

It chastised the now debt-stricken company for "weaknesses" in management under the 2009-2013 tenure of former CEO Shahrol Azral Ibrahim Halmi.

"As such, enforcement agencies are asked to investigate Shahrol Azral Ibrahim Halmi and anyone else related," the 106-page report said.

It made no further specific recommendations on investigations and did not mention Najib, who still chairs 1MDB's advisory board.

Najib, 62, and 1MDB have consistently denied wrongdoing.

In a statement, Najib vowed to "act on the report's recommendations".

"We must ensure that lessons are learned, and action will be taken if any evidence of wrongdoing is found," he said.

He did not address the questionable payments.

Read also: Wrongdoers will be probed: DPM

The report comes as the Panama Papers, a vast trove of leaked documents related to a Panama law firm allegedly helping the rich hide assets offshore, has dramatically put financial probity under the spotlight, although Najib has not been implicated in the scandal.

1MDB's board of directors - which does not include Najib - released a statement repeating its assertion that all 1MDB funds "have been fully accounted for" but adding that the entire board would resign, which the committee recommended.

The report did not go nearly as far as many who have alleged blatant graft, but 1MDB opponents nonetheless seized on it.

Tony Pua, an opposition PAC member, released a statement saying 1MDB critics have been "vindicated".

It remains unclear whether the committee's recommendations will hurt Najib.

The premier has faced a cascade of corruption allegations stemming from 1MDB's troubles and his own admitted acceptance of a mysterious $681 million overseas payment into his own bank accounts.

But since the twin scandals erupted last year, he has weathered them by curbing scrutiny by authorities, purging officials demanding accountability, and stifling media reporting.

Read also: Former CEO Shahrol among culprits named

The parliamentary committee cited a range of questionable money movements, particularly more than $3 billion it said went to Aabar Investments PJS Ltd.

A Wall Street Journal expose last year said Aabar was likely a shell company created to resemble an Abu Dhabi wealth fund with a similar name.

Authorities in Switzerland, the United States, Singapore, Hong Kong and elsewhere are investigating globe-spanning money transfers linked to 1MDB, with the Swiss saying $4 billion may have been stolen.

The $681 million payment made to Najib's bank accounts in 2013 was revealed last year by the Journal. Subsequent reports by the newspaper have said Najib may have received more than $1 billion.

Najib initially hotly denied the $681 million payment, but his government now calls it a "donation" from the Saudi royal family, most of which was returned. Saudi Arabia is yet to confirm that.

The Journal has also reported that some of the money used to make Hollywood hit "The Wolf of Wall Street", a movie about financial corruption starring Leonardo DiCaprio, was laundered from 1MDB.