by Pascal Najadi
Money laundering is defined as having assets far in excess of what one could legitimately accumulate over a lifetime while a kleptocrat is a head of government who treats the Public Treasury as his piggy bank. The immediate issue that arises from the US Attorney General (AG) and the Department of Justice (DoJ) filing a civil action lawsuit in a court in California, and where 1MDB figures prominently, is whether the Rule of Law prevails in Malaysia. If not, the issue of legitimacy arises.
If legitimacy becomes an issue, the cost of doing business will go up as insurance risks are seen as that much greater, the sovereign debt rating becomes less than favourable, the country will be seen as a poor credit risk, and accordingly interest rates will rise. Ultimately, it would no longer be economical or cost-efficient to do business in Malaysia or invest in the country.
This is not the first time that the legitimacy issue has risen. Already, the Federal Government has been in non-compliance on the Malaysia Agreement 1963 (MA63). The jury is no longer out on Malaysia having no legitimacy in Borneo.
The Federal Government should pay serious attention to the DoJ lawsuit. It does not pay to snigger at the Americans and say that Malaysia was in fact the first country in the world to probe alleged wrongdoing at 1MDB and has even completed an audit report – locked up as a government secret – and a parliamentary report on the trouble-stricken company.
There are differences between the probes in Malaysia, on 1MDB, and the action being taken in the US, and other countries.
In Malaysia, the Attorney General (AG) and the Malaysian Anti-Corruption Commission (MACC) apparently did not follow the money trail as the authorities in the US have done.
The Americans traced back the funds that certain people had received, not from just an immediate source, but further to the origin of the funds. It was possible to do this through the SWIFT and IBAN international banking codes enforced to prevent money laundering, discourage kleptocrats, and eliminate financing of terrorism and terrorism-related activities. This is actually a non-brainer.
The system can probe the money trail from the beginning to the end at the click of a button on the computer. Nothing can be hidden anymore in the Information and Computer Technology (ICT) era which is driving globalization and the emergence of the digital economy turning the world into a global village.
The US civil action arises from criminal activities. It’s not about prosecution at this stage but moving to seize and forfeit ill-gotten gains which have compromised the integrity of the US and international financial system. Money laundering is defined as having assets far in excess of what one could legitimately accumulate over a lifetime. A kleptocrat is a head of government who treats the Public Treasury as his piggy bank.
The authorities in Malaysia clearly did not keep their eyes on the money. Again, they did not follow the money trail. This is evident as much from the AG’s statement which disclosed that there was no wrong doing on the part of Prime Minister Najib Abdul Razak on a USD681 million political donation from an Arab Santa Claus. The AG only saw as far as the Arab and no further.
Even the RM42 million from the Ministry of Finance-owned SRC International, found in Najib’s accounts, was explained away based on what the Prime Minister told the MACC. He thought that the RM42 million was part of the USD681 million and did not hesitate to spend it; including using RM3 million to settle two credit card bills.
The catch in this story is that USD620 million of the USD681 million was returned to the Arab, based on what Najib told the MACC, before the RM42 million came in.
The DoJ found that the USD681 million originated from 1MDB and went through various channels before ending up in the personal accounts of “Malaysian Official 1” (MO1).
There’s no indication that Najib repaid the RM42 million.