BANK Negara Malaysia’s (BNM) statement issued in response to court transcripts of a trial in the United States, where the star prosecution witness testified that there was bribery involved in BNM’s “unprecedented” approval in 2009 for the transfer of US$1bil (RM4.18bil) in funds, was disappointing to say the least.

In the statement, BNM said all investments abroad by resident entities are subject to the requirements under the Exchange Control Act 1953, in force prior to 2013 but since replaced by the Financial Services Act 2013, and the requirements and criteria governing such investments abroad are transparent and published on BNM’s website.

BNM further said all submissions made by 1Malaysia Development Bhd (1MDB), including said application, are subject to the same approval criteria and internal governance process that apply to any submission by other entities to BNM.

Interestingly, this statement was a summarised version of a statement on 1MDB issued earlier by BNM on June 3, 2015, where it states, among others, the following:

Widespread news reports and commentaries regarding 1MDB have raised questions on whether the central bank has continued to uphold the trust that has been placed on the bank.

The purpose of this statement is to provide clarity on the role of the central bank with respect to any resident entity, including 1MDB, that makes investments abroad or obtains offshore borrowings under Section 214 of the Financial Services Act 2013 and under the Exchange Control Act 1953 that was in force prior to 2013.

All investments that exceed RM50 million per calendar year and any offshore borrowings that exceed RM100 million by resident entities require the central bank’s approval. In relation to this, all submissions that were made by 1MDB have had to comply with the same approval criteria that is applied to submissions by other business entities. If the criteria are not met, the submission will be rejected. No leniency or special exceptions were accorded to 1MDB.

In accordance with the legislation administered by the bank, the following developments will trigger formal investigations:

1. When monies for which approvals are given are not used for the purpose indicated in the submission;
2. When incorrect or false information are provided in the submission; and
3. Failure to comply with the conditions in the approval.

As part of an investigation process, the bank will issue a legal directive requiring information pursuant to the relevant acts that the central bank administers. This will require the board and management of the entity to provide the information within a specified time frame. Under the Financial Services Act 2013, the penalty for failure to meet this request can result in a fine of up to RM50 million, up to 10 years in prison, or both.

According to the transcripts, when asked by the prosecutor who had to approve US$1bil leaving Malaysia when it was remitted in 2009, the star witness replied: “Bank Negara would have to approve the money leaving the country. And what Roger (Ng, the accused and subordinate to the star witness in their previous employment) reported back to me was that he heard the money had left overnight. A billion dollars was wired overnight from Malaysia to the joint venture. No approval was obtained that quickly from Bank Negara.”

His response seems to infer that an application to remit the US$1 billion was made to BNM in accordance with the requirements, but the speed for which it was approved – overnight – surprised him.

This inference can be easily challenged if the prosecution in the US were to provide details of the dates the application was submitted by 1MDB to BNM for approval to remit said sum, and when it was approved. Was it submitted and approved overnight as claimed by the star witness?

Based on publicly available records, during the trial of the sixth Malaysian prime minister (Najib Razak) for abuse of power and money laundering in August last year, a former CEO of 1MDB was cross examined and asked by the defendant’s lead counsel whether the company had obtained permission from BNM to transfer huge amounts of money to various entities overseas.

The former CEO was reported to have said he was not sure, and when asked again whether he knows it is an offence not to get permission from BNM, the response was: “I don’t know but likely yes.”

Based on the testimony of the former CEO, the timeline remains a mystery.

Instead of waiting for the dates to be revealed in later hearings, if it does happen, BNM can clear the doubt and provide a timeline of when an application was submitted by 1MDB, as well as when it was approved. This can dispel any doubt and simultaneously challenge the veracity of the claim by the star witness, while BNM can continue to uphold its credibility.

It is unlikely that disclosure of the dates an application was submitted, processed and approved would undermine the outcome of the various trials and investigation ongoing in Malaysia.

Though the details revealed were intended for the judge and jury in the ongoing trial in the US, Malaysians who were aggrieved and feeling betrayed by the scale and breath of the 1MDB scandal took notice and saw these details as one of the few opportunities to get to know the inner workings of all those who walk Malaysia’s corridors of power.

Or, these dates would only be revealed in a book a former Governor of BNM said she might write, which would include untold stories, as she mentioned when asked about her plans for after her time at the central bank by CNBC anchor Martin Soong in a four-minute interview on March 23, 2015. – February 25, 2022.

* FLK reads The Malaysian Insight.

* This is the opinion of the writer or publication and does not necessarily represent the views of The Malaysian Insight. Article may be edited for brevity and clarity.