By Khairul Khalid
Bank Negara Malaysia has started a formal enquiry on controversial 1MDB (1Malaysia Development Bhd), according to an official statement by the central bank.
“With respect to 1MDB, a formal enquiry has commenced to examine any contravention of the Central Bank’s rules and legislation. This has involved the issuance of a legal directive requiring information from the entity,” said Bank Negara.
Bank Negara explains that as part of the investigation process, it 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 (1MDB) 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 or up to 10 years in prison or both,” said Bank Negara.
Bank Negara explains that any resident entity that makes investments abroad or obtains offshore borrowings falls 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 is not met, the submission will be rejected. No leniency or special exceptions were accorded to 1MDB,” said Bank Negara.
Bank Negara also confirms that it is taking statements from individuals involved in the governance process and obtaining information from other relevant domestic and foreign parties.
It has also forwarded information received from foreign authorities to the relevant investigation agencies after obtaining the permission from the foreign authorities.
“The Central Bank wishes to emphasise that further disclosure of details of the investigation may undermine the outcome of the investigation. The Central Bank is doing everything within the powers provided under its legislation, including collaborating with other agencies, to contribute towards a swift resolution of the matter,” said Bank Negara in the statement.
Earlier today, 1MDB released a statement explaining how it used its RM42 billion debt,including its purchase of IPPs (independent power plants), land, investment cost and financial expenditure.
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