SOME US$800 million appears to have been embezzled from investments in natural resources by a former subsidiary of scandal-ridden 1Malaysia Development Berhad (1MDB), said Swiss prosecutors investigating the sovereign state fund.
The Swiss attorney general’s office (OAG) also said on Wednesday that a Ponzi scheme was used to hide the embezzlement from both the 1MDB fund and its former SRC unit.
Switzerland’s attorney general opened an investigation last year into two former 1MDB officials and persons unknown on suspicion of bribery and money laundering, among other offenses.
The Swiss office said it has made a new request for legal assistance from Malaysia, aimed at obtaining further evidence to corroborate its findings, as well as securing the help it initially requested in January. However, the office said the request is “still pending.”
“On analysing the evidence obtained, the OAG identified further suspect transactions involving the Swiss financial sector,” the OAG said in a statement on Wednesday, as quoted by Reuters.
“Firstly, the sum of US$800 million appears to have been misappropriated from investments in natural resources made by the SRC sovereign fund. Secondly, it is suspected that a ‘Ponzi’ scheme fraud… was committed to conceal the misappropriations from both the SRC fund and from 1MDB.”
The OAG said four people and a bank were under investigation at the current stage of its criminal proceedings in connection to 1MDB and the former subsidiary SRC international.
1MDB, an investment company fully-owned by the Malaysian government, was created in 2009 by Prime Minister Najib Razak to promote economic development projects.
But following numerous exposés by foreign media and local opposition lawmakers, it was revealed that billions of dollars from the firm had been misappropriated.
According to U.S. prosecutors, fund officials have diverted more than US$3.5 billion through a web of shell companies and bank accounts abroad.
Despite the allegations, Najib and his administration have vehemently denied any wrongdoing in their handling of 1MDB, from which hundreds of millions of dollars were found deposited in the prime minister’s personal bank accounts.
Anti-government dissidents in Malaysia have been campaigning long and hard against Najib, who they believe is corruptly involved in the scandal. One of them is pro-democracy group Bersih 2.0, also known as the Coalition for Free and Fair Elections, which is planning to hold a mass rally in Kuala Lumpur on Nov 19 to demand Najib’s resignation.
Late last month, Najib said his government will provide U.S. and international authorities its fullest cooperation in their probe on 1MDB.
Additional reporting from the Associated Press