KUALA LUMPUR: Bank Negara has opened up a formal enquiry to examine if there are any contravention of financial rules and regulations with respect to issues surrounding 1Malaysia Development Bhd (1MDB).
According to a press statement issued on Wednesday, the investigation will also entail taking statements from individuals involved in the governance process and obtaining information from other relevant domestic and foreign parties.
The investigation so far had also seen Bank Negara forwarding information received from foreign authorities to the relevant investigation agencies after obtaining the permission from the relevant authorities abroad.
It, however, noted that “further disclosure of details of the investigation may undermine the outcome of the investigation.”
“Bank Negara is doing everything within the powers provided under its legislation, including collaborating with other agencies, to contribute towards a swift resolution of the matter,” the statement said.
Bank Negara also highlighted that while it might investigate the matter, the scope provided under its legislation did not provide powers for it to investigate in the areas of fraud, tax evasion, corruption, cheating and criminal breach of trust.
It said that these would “need to be pursued by other law enforcement agencies.”
Coincidentally, 1MDB’s president and group executive director Arul Kanda in a statement on Wednesday also gave a summary of what its RM42bil debt had been used for.
He said that the information was fully disclosed in 1MDB’s audited and publicly available accounts from March 31, 2010 to March 31, 2014.
Commenting on 1MDB’s borrowings, Bank Negara also clarified further its role with respect to any company or entity including 1MDB that makes investments that exceed RM50mil per year and any offshore borrowings that exceed RM100mil by companies requires its approval.
This was consistent under the Financial Services Act 2013 and the Exchange Control Act 1953 that was in force prior to 2013, Bank Negara said.
“In relation to this, all submissions that were made by 1MDB have had to comply with the same approval criteria that are applied to submissions by other business entities. If the criteria are not met, the submission will be rejected,” it said.
“No leniency or special exceptions were accorded to 1MDB,” Bank Negara added.
Meanwhile, Bank Negara also said that it could compel 1MDB’s board or management to provide it with information within a specified timeframe.
“As part of an investigation process, the Bank Negara will issue a legal directive requiring information pursuant to the relevant Acts that (is) administered,” it said.
“Under the Financial Services Act 2013, the penalty for failure to meet this request can result in a fine of up to RM50mil or up to 10 years in prison or both.”
Meanwhile, in a brief statement issued late on Wednesday (after 10pm), 1MDB president and group executive director Arul Kanda said the company would extend full cooperation to Bank Negara.
“We confirm that Bank Negara has commenced an enquiry on 1MDB, requiring information and statements from individuals involved in the company’s governance process. 1MDB will extend its full cooperation to Bank Negara and we look forward to this matter reaching a swift conclusion,” he said.