MALAYSIANS’ best hope to knowing if their country is a kleptocracy lies in the findings of civil and criminal courts elsewhere due to Putrajaya’s inaction over the 1MDB scandal, says the Wall Street Journal today.

On Sunday, Defence Minister Hishammuddin Hussein, which the WSJ editorial noted was Prime Minister Najib Razak’s cousin, urged the US to press criminal charges so that the accused “can clear their name”.

Hishammuddin’s presumption that Malaysian leaders are innocent echoes the statements issued by Malaysian ministers and government officials in the wake of revelations provided by the US Department of Justice on Thursday as it filed suit to seize US$540 million (RM2.3 billion) in assets said to have been bought with money stolen from the debt-ridden state investor.

WSJ, which broke the 1MDB story in July 2015, said it had reported that US investigators were preparing to charge at least one of Najib’s associates. 

On Thursday, the DoJ filed a civil assets forfeiture suit to seize more assets belonging to relatives and associates of Najib, including a US$165 million yacht owned by financier Jho Low, and a US$27.3 million necklace worth featuring a 22-carat pink diamond allegedly bought with stolen funds for the wife of Malaysian Official No. 1. 

US officials have told WSJ that “Malaysian Official No. 1” is Najib, said the editorial. 

The suit follows a similar suit filed by the DoJ last July, where it sought to seize US$1 billion in financial assets, real estate, artworks, film rights and a private jet in a record-setting kleptocracy asset recovery initiative.

“The 1MDB fund denies that money is missing, Mr. Najib denies any wrongdoing, and Attorney-General Mohamed Apandi Ali cleared Najib in January 2016. 

“Apandi Ali said in a statement Friday, ‘We also note that there has been no evidence from any investigation conducted by any law enforcement agencies in various jurisdictions that shows that money has been misappropriated from 1MDB’.

“Yet the US Justice Department has provided considerable evidence that US$3.5 billion went missing, while the Swiss attorney-general puts the figure at US$4 billion. Singapore and Switzerland have already punished financial institutions for breaking money-laundering rules in moving 1MDB funds,” said WSJ.

WSJ said the DoJ last week provided new information allegedly showing that about US$850 million that Deutsche Bank loaned to 1MDB was diverted to accounts controlled by Najib and his associates. One lawsuit alleges that proceeds from a US$3 billion 1MDB bond offering in 2013 were diverted to help purchase Coastal Energy, a Houston-based oil firm, it said.

Abu Dhabi sovereign-wealth fund International Petroleum Investment Co says that 1MDB owes it about US$6.5 billion for defaulted debt that IPIC guaranteed, said WSJ.

“Since Malaysian authorities have concluded that there’s nothing worth investigating in the 1MDB matter, civil and criminal cases in other jurisdictions are the best hope Malaysians have of finding out whether their country has become a kleptocracy,” said WSJ. – June 20, 2017.