Malaysia’s 1MDB Fund Spawns Worldwide Probes: QuickTake

3. Who is investigating?

There are probes related to 1MDB in at least 10 countries, focused on possible embezzlement or money laundering. At home, investigations have been less pointed. The U.S. Justice Department is seeking to seize about $1.7 billion in assets that it says were illegally acquired through money diverted from 1MDB, including real estate, art, a luxury yacht and proceeds from the film “The Wolf of Wall Street.” (It has reached a $60 million settlement with the producer of that movie.) Singapore and Switzerland have imposed financial penalties on several banks for lapses in anti-money laundering controls related to funds allegedly from 1MDB. According to the Federal Bureau of Investigation, possible witnesses are too scared to talk to U.S. investigators because they fear retaliation.

4. Who is involved?

Though not all have been accused of doing anything wrong, financiers and financial companies have found themselves part of the 1MDB saga:

• Low Taek Jho, a bon vivant who did consulting work for 1MDB, is portrayed by U.S. prosecutors as a central figure who set up shell companies to collect proceeds from the fund and arranged the withdrawal of tens of millions of dollars to pay Malaysian government officials and for his own lavish spending. He is a “key person of interest” in Singapore investigations and the Wall Street Journal says U.S. authorities could file criminal charges against him. Low said in July that attempts to link him to recent guilty pleas in 1MDB-related probes in Singapore are based on “unfounded assumptions.” He had previously denied wrongdoing.
• Riza Aziz, Najib’s stepson and a friend of Low Taek Jho, co-founded the movie production company that paid $60 million to settle U.S. Justice Department claims it financed the “Wolf of Wall Street” with money siphoned from 1MDB.
• Falcon Private Bank Ltd., a Zurich-based bank linked to $3.8 billion of 1MDB fund flows, was ordered to cease operations in Singapore while Switzerland threatened to withdraw its license if there were any further breaches of money-laundering regulations.
• BSI SA, a 143-year-old Swiss bank that worked with 1MDB, lost its license to do business in Singapore for breaches of money laundering rules.
• Goldman Sachs made $593 million working on three bond sales that raised $6.5 billion for 1MDB in 2012 and 2013, dwarfing what banks typically make from government deals. It said in 2015 that fees and commissions “reflected the underwriting risks” it had assumed. New York’s bank regulator has asked the firm for a summary of its 1MDB work. Singapore’s prosecutors and police have interviewed current and former Goldman Sachs executives who worked on the bond offerings. They are also looking into the firm’s links with Low.
• Tim Leissner, the former Southeast Asia chairman for Goldman Sachs, wrote an unauthorized reference letter for Low on the bank’s letterhead. He resigned in February 2016. Singapore banned him from the securities industry for 10 years. The U.S. securities regulator barred him indefinitely.
• UBS Group AG, DBS Group Holdings Ltd., Credit Suisse Group AG, United Overseas Bank Ltd. and Standard Chartered Plc are among those who have also drawn penalties from the Singapore central bank for anti-money laundering lapses. They said they will strengthen controls in their businesses.
• Switzerland’s financial regulator will conduct a detailed review of JPMorgan Chase & Co.’s anti-money laundering controls after finding the bank seriously breachedregulations in its dealings with 1MDB.
• In all, Singapore has banned eight financial professionals in connection with 1MDB.
• Malaysia’s finance ministry reached a $1.2 billion settlement with Abu Dhabi’s sovereign wealth fund over a debt dispute and was said to plan on making the final $603 million payment by the end of 2017.