Swiss parliament shoots down call to return 1MDB profits to Malaysia

Zurich

SWITZERLAND'S parliament on Thursday rejected a bid to amend the law handling ill-gotten bank profits seized by authorities that had aimed to return more than US$100 million linked to scandal-hit sovereign fund 1MDB to the Malaysian people.

Champions of the campaign had acknowledged they faced an uphill struggle to get the idea through parliament, whose lower house shot the plan down at the request of the government.

Foreign Minister Ignazio Cassis told lawmakers that the measure was too broad and violated the separation of powers between the government and the courts. He said current law allowed repatriation of assets seized from toppled regimes.

He cited an accord signed with the World Bank in December under which Switzerland would return to Nigeria about US$321 million in assets seized from the family of former military ruler Sani Abacha.

Confiscated bank profits from dubious deals are a different story. Normally they flow into the general Swiss budget.

The Swiss campaign led by centre-left politician Carlo Sommaruga and non-governmental organisations wanted to hand back more than US$100 million money forfeited by Swiss banks in the 1MDB case.

A total of US$4.5 billion was misappropriated by high-level officials of the fund and their associates, according to civil lawsuits filed by the US Department of Justice.

The scandal has triggered money-laundering probes in at least six countries, including Switzerland, the US and Singapore.

Malaysian Prime Minister Najib Razak set up 1MDB in 2009 and previously served as chairman of its advisory board. He and the fund have denied any wrongdoing.

Financial watchdog Finma has confiscated 104 million Swiss francs (S$144 million) in illicit profits from 1MDB-related deals by banks BSI, Falcon Private Bank and Coutts & Co since mid-2016.

The BSI and Falcon cases are still under appeal.

1MDB said on Wednesday the 104 million francs is being claimed by banks that Finma targeted for alleged breach of Swiss laws. "It cannot be claimed by 1MDB or the government of Malaysia as the money does not belong to 1MDB," it said.

Activists had said Switzerland could set an international precedent on how to handle confiscated assets from the 1MDB scandal, such as a luxury yacht seized in Bali last month that Indonesia is handing over to US authorities. REUTERS