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Bank Negara closes its case against 1MDB after firm pays fine for non-compliance

But central bank governor says it's ready to assist other enforcement agencies in their probes
Friday, May 27, 2016 - 05:50
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Bank Negara Malaysia considers its investigation into state-owned 1MDB to be concluded following the latter's payment of an administrative compound, levied because of its non-compliance with the central bank's directives.

Kuala Lumpur

BANK Negara Malaysia considers its investigation into state-owned 1MDB to be concluded following the latter's payment of an administrative compound, levied because of its non-compliance with the central bank's directives.

However, BNM governor Muhammad Ibrahim assured that the central bank stands ready to assist other enforcement agencies in their investigations into the controversial strategic development company.

While expected, Bank Negara's closing of this chapter dismayed many who had hoped that one of the country's more independent institutions would help shed more light on 1MDB's controversial dealings and bring the culprits to book.

This was especially so given that attempts to unblock the Auditor-General's report into 1MDB - currently classified under the Official Secrets Act - continue to be unsuccessful, seemingly stone-walled in Parliament.

The auditor-general, Ambrin Buang, had told Channel NewsAsia that his report contained the basis for further investigation, but noted that it was up to other enforcement agencies including the police and the attorney-general to do so. He had also expressed his readiness to assist.

Mr Ambrin's report on 1MDB was referenced by a parliamentary select committee probe into the company. But even though its report was tabled last month in Parliament, the Speaker has not allowed Mr Ambrin's report to be made public.

"What do you expect?" a 1MDB cynic said, noting that the central bank also appears resigned to "a more secondary role" in any probes into 1MDB even though its counterparts in Singapore and Switzerland have initiated criminal proceedings against Swiss Bank BSI and at least one banker in relation to 1MDB.

Newly appointed this month, Mr Muhammad told reporters on the sidelines of a banking summit on Thursday that as 1MDB had paid the compound, "that concludes the investigation within Bank Negara Malaysia's rules and regulations and the law we administer".

The finance ministry-owned entity announced that it had fully paid the compound on Wednesday.

Although BNM had not disclosed the amount, The Edge Financial Daily said that the fine amounted to some RM16 million (S$5.4 million).

A government official said that 1MDB was quick to pay the fine as Prime Minister Najib Razak wants the company - established under his watch and now a huge embarrassment and liability to himself and to the country - shut down as soon as possible.

As recommended by the parliamentary select committee, 1MDB's assets are to be transferred to the finance ministry.

Deputy Finance Minister Johari Abdul Ghani said that he expects the transfer to be completed by the middle of next month at the latest, after which 1MDB would be in "run-off," and later dissolved after its debts are repaid.

Run-off is an insurance policy provision that provides liability coverage against claims made against companies that have been acquired, merged, or have ceased operations.

While he was vague about whether the finance ministry intended to assume 1MDB's debts, he indicated that Putrajaya would have to honour its bond guarantees, hopefully by matching repayments to future revenue generated by its assets.

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