(Bloomberg) -- Malaysian Prime Minister Mahathir Mohamad said more wrongdoing occurred at state fund 1MDB than was publicly known, as he accelerates efforts to reopen a probe into the scandal-plagued company and the actions of his predecessor.
The government will reach out to authorities in Switzerland, the U.S., Singapore and other jurisdictions as it attempts to recover funds that were diverted from 1MDB, Mahathir told reporters on Wednesday.
A declassified Auditor General report on Tuesday did not bring massive surprises, and did not mention former premier Najib Razak by name. But it showed investigators expressed widespread concern about anomalies in 1MDB’s accounts, and said officers acted on investments against or without full knowledge of the board of directors on several occasions.
"The main issue is of corruption, particularly 1MDB as well as the money that was embezzled by the previous government," Mahathir said. "I have been briefed by the police and the auditor general and it is very clear that there were more wrongdoings committed than what was known by the public and me."
1MDB, set up in 2009 to fund domestic infrastructure projects and whose advisory board Najib once chaired, didn’t submit management accounts for the year ended March 2015 and bank statements from foreign financial institutions. The audit team said it couldn’t access computers, notebooks and servers at 1MDB for the purpose of crosschecking and analyzing its findings.
"Overall, corporate governance and internal controls in 1MDB were less than satisfactory,” the summary said. “Some actions by 1MDB’s management and decisions by the board of directors were carried out in a manner that wasn’t proper."
The audit report on 1MDB had been protected since 2016 by the Official Secrets Act. Mahathir’s move to release it comes as he seeks to tighten the net around Najib, whom he defeated in an election last week, and other officials over the multi-billion dollar scandal surrounding the fund’s actions dating back some years. Mahathir has barred Najib from leaving Malaysia in the meantime.
“There is an aggressive push by the new administration to reopen criminal investigations on 1MDB against the former PM as well as other individuals,” said Nizam Ismail, head of regulatory practice at RHTLaw Taylor Wessing LLP in Singapore. “If there are new transaction trails being uncovered in Malaysia, this could impact financial institutions which had been involved in the money flows, in Singapore, Switzerland and beyond.”
Mahathir, who was once Najib’s mentor and ally and who is back in power after a prior stint as premier from 1981 to 2003, accused him repeatedly on the campaign trail of being a "thief" over alleged graft at 1MDB. Najib has denied any wrongdoing and was cleared by the attorney general at the time, while the fund has repeatedly denied any misconduct.
The 1MDB scandal spawned global probes as investigators tracked a money trail stretching from Switzerland to Singapore and the U.S. The Department of Justice alleges that $3.5 billion from the fund went missing.
Malaysian financier Low Taek Jho has been ordered by a U.S. court to turn over his $250 million yacht "Equanimity" to the U.S. authorities who plan to sail it from Indonesia and sell it in the U.S. The yacht is among more than $1.5 billion in assets that the U.S. claims Low and his accomplices acquired with money they siphoned from 1MDB.
The declassified report found, among others things, that 1MDB used 288 million ringgit ($73 million) of government funds to pay interest on its debt, which went against the monies’ original purpose. 1MDB raised 3.98 billion ringgit from domestic debt and sukuk issuance, of which only 246 million ringgit was invested in two property projects, while 2.16 billion ringgit was advanced to the company. 1MDB said in March all its funds are fully accounted for.
Swiss prosecutors said Tuesday they wanted to start talks with investigators in Malaysia as soon as possible to better coordinate various criminal probes into the sprawling case.
The Office of the Attorney General of Switzerland “is very much interested in renewing dialogue with the competent authorities in Malaysia” and “favors an exchange between partnering authorities at their earliest convenience,” it said in an email.
Singapore authorities also weighed in. The city-state has cooperated extensively with their Malaysian counterparts on past requests on the matter and is ready to extend further assistance, the Monetary Authority of Singapore and the Commercial Affairs Department said in an email early Wednesday.
Swiss Attorney General Michael Lauber has been publicly critical of the lack of cooperation his team of prosecutors got from Najib’s government. Singapore has punished banks over lapses related to 1MDB, seized assets and jailed bankers over the scandal.
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