Malaysia has been rocked for more than a year by a financial scandal involving Prime Minister Najib Razak, a state investment firm, and an alleged frenzy of embezzlement. Authorities in a half-dozen countries have launched investigations into suspicions that several billion dollars was looted from complicated financial transactions involving 1MDB and parked around the world. Over the past year, Najib has purged 1MDB critics from his cabinet, curbed domestic investigations, and moved to prevent further discussion of the scandal. Najib has dramatically strengthened his control of the country. A state-level election and two parliamentary by-elections were won handily by Najib's ruling coalition, further bolstering his position.
Authorities in #Switzerland and #Singapore took action against Swiss private bank BSI for failing to prevent money laundering and bribery related to its dealings with Malaysian development fund 1MDB. Switzerland's Attorney General opened criminal proceedings against the bank. The country's Financial Market Supervisory Authority ordered BSI to pay back 95 mn Swiss franks Swiss Bank Is Charged Over ($96 mn). Singapore’s central bank revoked BSI’s banking license there and fined it 13.3 mn Singapore dollars ($9.7 mn). The cross-border investigation related to 1MDB involves at least seven countries.
The fates of 1MDB bonds are diverging this month: those guaranteed by Abu Dhabi’s sovereign wealth fund have rallied, while notes with support from Malaysia’s own government have dropped. 1MDB's 4.4% 2023 notes, backed by the government, slumped 6.4% in May, set for the worst slide in 16 months. The fund’s 5.99% 2022 bonds, backed by Abu Dhabi’s International Petroleum Investment gained 1.9%. The contrast reflects growing investor concern about the Malaysian government backing as Najib grapples with an economy forecast to expand at the slowest pace in seven years amid a collapse in oil prices.
Nazir Razak, the brother of Malaysian Prime Minister, Najib Razak, has been cleared of any wrongdoing by an independent investigation undertaken by CIMB Group. Nazir voluntarily took a leave of absence to allow an independent review to be carried out after it was revealed that he had transferred cash to the ruling coalition's politicians in the run-up to the Malaysian general elections in 2013. Although he admitted to transferring the money, Nazir insisted he did nothing illegal. Nazir has now resumed his role as CIMB Group chairman and CIMB Bank director.
Hong Kong bank accounts belonging to several unnamed individuals have been frozen amid global investigations into the finances of the Malaysian state fund 1MDB. Owners are being probed by authorities in countries outside of Malaysia. Authorities in Singapore charged two men following investigations into their dealings with the fund. A Malaysian parliamentary committee had identified at least US$4.2 billion of irregular transactions by the fund.
Malaysian government investment fund 1Malaysia Development defaulted on a series of bonds on Tuesday, weighing on the country’s stock and currency markets and raising concerns that the government may eventually have to spend billions to bail out the fund. The cross default triggered by non-payment, the continuing stand-off with IPIC and a widening investigation across at least six countries into possible corruption and money-laundering connected to the fund are starting to affect the markets.
1MDB issued a statement Monday saying Abu Dhabi state-run fund International Petroleum Investment Corp. has failed to pay interest on $1.7 billion on the Malaysian fund's 2022 bonds. The Malaysian government was cautioned about risks associated with the debt-ridden fund in 2014. The state investment fund set up by Prime Minister Najib Razak, has been burdened with debt of over $12 million over the years and has been accused of mismanagement while facing corruption allegations. Apart from Malaysia, the 1MDB investigation is also underway in the United States, Luxembourg, Singapore, Switzerland, Hong Kong and Abu Dhabi.
Western media should apologise for misleading the Malaysian public after a US$681 million deposit was found to be a “genuine donation”, Mr Najib’s press secretary said on Friday, April 15. Saudi Foreign Minister Adel Al-Jubier had earlier confirmed that the millions found in PM Najib’s bank account was a donation originating from Saudi Arabia. In a statement, Tengku Sariffuddin accused former Prime Minister Mahathir Mohamad of carrying out a smear campaign against Mr Najib which is being motivated by "personal interest". Najib has been facing allegations of graft after reports claimed that the funds found in his personal bank account originated from troubled state fund 1Malaysia Development Berhad (1MDB).
Malaysian Prime Minister Najib Razak spent about $15 million on luxury goods from his personal bank accounts. On Christmas Eve 2014, Malaysian Prime Minister Najib Razak stepped onto Hawaii’s 18-hole Kaneohe Klipper course for a round of golf diplomacy with U.S. President Barack Obama. Off the fairways, another side of Mr. Najib’s time in office was on display. Two days earlier, the prime minister’s credit card was charged $130,625 to Chanel in Honolulu. The credit card was paid from one of several private bank accounts owned by Mr. Najib that global investigators believe received hundreds of millions of dollars diverted from the indebted state-run fund 1Malaysia Development Bhd.
Prime Minister Najib Razak’s plan to revive Malaysia’s faltering economy is getting no help from the country’s Islamic bond market.
Yields on government 10-year sukuk, used by companies to gauge the cost of Shariah-compliant financing, are at their highest level in 18 months relative to two-year securities, according to data compiled by Bloomberg. And with the slide in Brent crude prices sapping Malaysia’s oil-export revenue against a backdrop of looming U.S. interest-rate increases, investors say longer-term borrowing won’t be getting cheaper anytime soon.
“With the U.S. expected to raise interest rates soon, Malaysia’s yield curve will remain steep next year,” said Elsie Tham, a senior fund manager at Kuala Lumpur-based Manulife Asset Management Services Bhd who oversees more than US$1 billion. “Companies will find it challenging to raise funds because of slower economic growth.”
Malaysia's $160 billion state pension fund will offer an Islamic investment option to its members by 2017 which would create the world's largest sharia-compliant fund of its kind, Prime Minister Najib Razak said. The move could funnel billions of dollars into sharia-compliant asset managers in Malaysia in a boon for the country's Islamic finance sector. Najib did not specify how big he thought the sharia-compliant standalone fund could be. The Employees Provident Fund (EPF) already invests about a third of its portfolio in stocks and bonds that comply with Islamic principles. Najib said the Securities Commission is also developing a blueprint for the country's Islamic fund and wealth management industry to help chart its strategic direction.
Malaysia's Prime Minister Najib Razak said that he backed the idea of creating a large stand-alone Islamic bank, in order to develop a global footprint for Islamic finance and position it as an alternative to conventional banking. A proposed merger between Malaysia's CIMB Group Holdings Bhd and two smaller peers would create a sharia-compliant bank with the financial clout and regional scope that has so far been absent in the industry. Such consolidation would be positive for Malaysia's banking sector, although the government will not press for a deal and will leave the decision entirely up to the shareholders, Razak said.
Malaysian Prime Minister Najib Razak states that the passing of the law to give tax advantages to Korean companies issuing Islamic sukuk bonds doesn't make it easier for terorists to take money away.
The 26 percent slowdown in Malaysia’s local-currency Islamic bond sales this year may get a boost in 2011 from the country’s 10-year development plan.
Pengurusan Aset Air Bhd., a government-owned agency that oversees the water services industry, may sell bonds next year to finance acquisitions, while the eastern state of Sarawak will need to fund the takeover of hydroelectric plants, according to RAM Rating Services Bhd. in Kuala Lumpur.
Prime Minister Najib Razak is seeking to increase spending in the next decade to bolster growth in Southeast Asia’s third- largest economy.