A big test for America

No, this is not about the current dilemma of choice between Donald Trump and Hillary Clinton. That's the US' domestic politics, albeit its impact elsewhere. 

The bigger test for the US, particularly in Asia and specifically Southeast Asia, is one of trustworthiness. 

The US' resolve in fighting kleptocracy and corrupt politicians globally is being put to test in Malaysia but many are unsure if the so-called 'fight' is for real or just another game of geopolitics.

US Attorney General Loretta Lynch' announcement of investigations by the Kleptocracy Asset Recovery Initiative was indeed light at the end of the tunnel for many Malaysians, including graft busters who were stonewalled by the top prosecutor. 

United States Seeks to Recover More Than $1 Billion Obtained from Corruption Involving Malaysian Sovereign Wealth Fund 

Attorney General Loretta E. Lynch announced today the filing of civil forfeiture complaints seeking the forfeiture and recovery of more than $1 billion in assets associated with an international conspiracy to launder funds misappropriated from a Malaysian sovereign wealth fund.  Today’s complaints represent the largest single action ever brought under the Kleptocracy Asset Recovery Initiative.

Attorney General Lynch was joined in the announcement by Assistant Attorney General Leslie R. Caldwell of the Justice Department’s Criminal Division, U.S. Attorney Eileen M. Decker of the Central District of California, FBI Deputy Director Andrew G. McCabe and Chief Richard Weber of the Internal Revenue Service-Criminal Investigation (IRS-CI). - US Department of Justice 

Coming amidst attempts of an unprecedented cover up of almost anything and everything about 1MDB,  the US Attorney General's announcement was certainly bigger than a mere flicker of hope. 

Enforcement authorities from both Switzerland and Singapore have taken action against banks involved in money laundering and related crimes around the siphoning of funds from 1MDB. They say more actions are forthcoming. 

Naturally the high powered kleptocracy investigations by renowned US agencies under the DoJ, like the FBI and IRS, should be in high gear.  

A news article below points that a criminal investigation is indeed in progress in the US following DoJ civil suits to recover approximately USD 1billion of assets acquired from funds stolen from 1MDB.    

- Gilman says seizing assets from a foreign leader — and Razak is still in power — can create a diplomatic nightmare. But he says that can't impact the case.

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"The prime minister is not going to live forever. And when he's out of office and all this money is discovered in the U.S., are we better off having been pro-active or basically wait until the prime minister dies and apologize?" he says.

It's one thing to seize the stolen assets, another to retain them. The accused in all these cases employs a raft of lawyers, and it's often difficult to find witnesses and gather evidence overseas. For that reason, the Justice Department focus is on civil forfeitures, or trying to get the assets back, rather than prosecutions.

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Any money from the seized assets is sent back to the country to which it belongs.

No one has been prosecuted so far, but Caldwell says there is a criminal investigation in the 1MDB case that could lead to a prosecution.

So far the Kleptocracy Initiative has recovered about 10 percent of the assets it's gone after. And that white Michael Jackson glove? It's back in Equatorial Guinea.

Still, Caldwell says the unit has been successful, for a relatively new initiative.

PARALLELS 

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"I don't think the success of the Kleptocracy Initiative should necessarily be measured by the dollar amounts that we recover. I think it should be measured by the fact that we're doing it at all," she says.

The 1MDB case will be the big test, says lawyer Blum.

"It's a big challenge, because the money is so big and the consequences are so huge, they can't simply walk away and say it didn't happen," he says HERE

Listen HERE

Does criminal investigation by the US' Department of Justice give any hope to folks in Malaysia ?   

"How sure are you that the US won't use the DOJ probe to threaten him (Malaysian Official 1). The US knows he is pandering to China and they would want to win him over, by hook or crook. Don't you think so? a retired military officer opined when the DOJ probe popped up during our brief exchange recently. 

His first question when we bumped into each other at the Tropicana Mall was -"Ah! What happened to the 1MDB investigations by the US ? The query was accompanied by a snide smile.

Guess its only natural for a society to be suspicious after being continuously let down by their own enforcement agencies, elected leaders and the once trusted system of governance. 

Malaysia is now famous for all the wrong reasons.  

As a nation Malaysia is undergoing tough tests, the toughest since her Independence from the British in 1957 but it is certainly a much  significant test for the United States of America. 

It is almost THREE MONTHS since the July 20, 2016 bombshell by the US Attorney General. What next ?  

Investigators and prosecutors, no matter who and where they are, cannot be dragging their feet when a nation is sliding into dungeon due to massive fraud, corruption and outright treachery by those elected to lead.  

"It is unlikely for MO1 or his henchmen to strike a deal with the FBI or the Department of Justice because the FBI doesn't do 'deals' with kleptocrats. 

"If they (FBI) had wanted to keep it under wrap then we wouldn't have heard anything from the US Attorney General about their extensive international probe.

"It's just a matter of time," states a former intelligence officer.  

The cop turned lawyer says Malaysians should trust the US enforcement agencies to do their job without fear or favour, especially when a crime is committed on their soil. 

It is a test in many ways. We can't do much but to just wait and see the results. 

p/s

Below is a latest example of what the Malaysian Government is capable of doing, if it wanted to. This is apart from threats of bloody riots and ethnic clashes by unruly ruling party leaders. 

"The Government could have easily erased Tun Dr Mahathir Mohamad’s legacy by demolishing the iconic Petronas Twin Towers if it wanted to, said Datuk Seri Dr Salleh Said Keruak - Malaysian Communications and Multimedia Minister.  

WALL STREET JOURNAL - 1MDB money in Najib's pocket?

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Investigators Believe Money Flowed to Malaysian Leader’s Accounts

Prime Minister Najib’s bank accounts are scrutinized in probe of investment fund 1MDB

By

TOM WRIGHT And

SIMON CLARK

July 2, 2015 4:42 p.m. ET

0 COMMENTS

KUALA LUMPUR, Malaysia—Malaysian investigators scrutinizing a controversial government investment fund have traced nearly $700 million of deposits into what investigators believe are the personal bank accounts of Malaysia’s prime minister, Najib Razak, according to documents from a government probe.

The investigation documents mark the first time Mr. Najib has been directly connected to the probes into state investment fund 1Malaysia Development Bhd., or 1MDB.

Mr. Najib, who founded 1MDB and heads its board of advisors, has been under growing political pressure over the fund, which amassed $11 billion in debt it is struggling to repay.

The government probe documents what investigators believe to be the movement of cash among government agencies, banks and companies linked to 1MDB before it ended up in Mr. Najib’s personal accounts. Documents reviewed by The Wall Street Journal include bank transfer forms and flow charts put together by government investigators that reflect their understanding of the path of the cash.

The original source of the money is unclear and the government investigation doesn’t detail what happened to the money that went into Mr. Najib’s personal accounts.

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“The prime minister has not taken any funds for personal use,” said a Malaysian government spokesman. “The prime minister’s political opponents, unwilling to accept his record or the facts, continue to try to undermine him with baseless smears and rumours for pure political gain.”

Mr. Najib has previously denied wrongdoing in relation to 1MDB and has urged critics to wait for the conclusion of four official investigations that are ongoing into 1MDB’s activities.

Investigators have identified five separate deposits into Mr. Najib’s accounts that came from two sources, according to the documents viewed by the Journal.

By far the largest transactions were two deposits of $620 million and $61 million in March 2013, during a heated election campaign in Malaysia, the documents show. The cash came from a company registered in the British Virgin Islands via a Swiss bank owned by an Abu Dhabi state fund. The fund, International Petroleum Investment Co., or IPIC, has guaranteed billions of dollars of 1MDB’s bonds and in May injected $1 billion in capital into the fund to help meet looming debt repayments. A spokeswoman for IPIC couldn’t be reached for comment. The British Virgin Islands company, Tanore Finance Corp., couldn’t be reached.

ENLARGE

Another set of transfers, totaling 42 million ringgit ($11.1 million), originated within the Malaysian government, according to the investigation. Investigators believe the money came from an entity known as SRC International Sdn. Bhd., an energy company that originally was controlled by 1MDB but was transferred to the Finance Ministry in 2012. Mr. Najib is also the finance minister.

The money moved through another company owned by SRC International and then to a company that works exclusively for 1MDB, and finally to Mr. Najib’s personal accounts in three separate deposits, the government documents show.

Nik Faisal Ariff Kamil, a director of SRC International, declined to comment. Mr. Kamil had power of attorney over Mr. Najib’s accounts, according to documents that were part of the government investigation.

A 1MDB spokesman said, referring to the transfers into Mr. Najib’s account: “1MDB is not aware of any such transactions, nor has it seen any documents to this effect.” The spokesman cautioned that doctored documents have been used in the past to discredit 1MDB and the government.

For months, concerns about 1MDB’s debt and lack of transparency have dominated political discussion in Malaysia, a close ally of the U.S. and a counterweight to China in Southeast Asia.

When he founded 1MDB in 2009, Mr. Najib promised it would kick-start new industries and turn Kuala Lumpur into a global financial center. Instead, the fund bought power plants overseas and invested in energy joint ventures that failed to get off the ground. The fund this year has rescheduled debt payments.

The Journal last month detailed how 1MDB had been used to indirectly help Mr. Najib’s election campaign in 2013. The fund appeared to overpay for a power plant from a Malaysian company. The company then donated money to a Najib-linked charity that made donations, including to local schools, which Mr. Najib was able to tout as he campaigned.

“We only acquire assets when we are convinced that they represent long-term value, and to suggest that any of our acquisitions were driven by political considerations is simply false,” 1MDB said last month.

The four probes into 1MDB are being conducted by the nation’s central bank, a parliamentary committee, the auditor general and police. A spokeswoman for Bank Negara Malaysia, the central bank, declined to comment. Malaysia’s police chief and a member of the parliamentary committee also had no comment. The auditor general said this week it had completed an interim report on 1MDB’s accounts and would hand it to the parliament on July 9.

The prime minister is facing increasing pressure over 1MDB. The country’s longest-serving prime minister, Mahathir Mohamad, who left office in 2003, publicly has urged Mr. Najib to resign.

This week, Malaysia’s home minister threatened to withdraw publishing licenses from a local media group, citing what he said were inaccurate reports on 1MDB.

The $11.1 million of transfers to Mr. Najib’s bank account occurred at the end of 2014 and the beginning of 2015, according to the government investigation. Among the companies that investigators say it passed through was Ihsan Perdana Sdn. Bhd., which provides corporate social responsibility programs for 1MDB’s charitable foundation, according to company registration documents. Attempts to reach the managing director of Ihsan Perdana weren’t successful.

Documents tied to the transfer said its purpose was for “CSR,” or corporate social responsibility, programs. The Wall Street Journal examination of the use of funds tied to 1MDB for Mr. Najib’s election campaign showed that the money was slated to be used for corporate social responsibility programs as well.

The government probe documents detail how investigators believe SRC International transferred 40 million ringgit on Dec. 24 last year to a wholly owned subsidiary. This company on the same day wired the money to Ihsan Perdana, according to the documents. Two days after receiving the money, Ihsan Perdana wired 27 million ringgit and five million ringgit in two separate transfers to two different bank accounts owned by Mr. Najib, the government documents show.

In February, 10 million ringgit entered the prime minister’s account, also from SRC International via Ihsan Perdana, the documents show.

The remittance documents don’t name Mr. Najib as the beneficiary but detail account numbers at a branch of AmIslamic Bank Bhd. in Kuala Lumpur. Two flow charts from the government investigation name the owner of these accounts as “Dato’ Sri Mohd Najib Bin Hj Abd Razak,” the prime minister’s official name. A spokesman for AmIslamic Bank declined to comment.

In another transaction, Tanore Finance, the British Virgin Islands-based company, transferred $681 million in two tranches to a different account at another Kuala Lumpur branch of AmIslamic Bank. The government probe said the account was owned by Mr. Najib, according to the documents.

The transfers came from an account held by Tanore Finance at a Singapore branch of Falcon Private Bank, a Swiss bank which is owned by IPIC, the Abu Dhabi fund, according to the documents. A spokesman for Falcon Private Bank declined to comment.

The $681 million was transferred to Mr. Najib’s accounts on March 21 and March 25, 2013, the government documents show.

Write to Tom Wright at tom.wright@wsj.com and Simon Clark at simon.clark@wsj.com

WSJ