Malaysia's central bank said on Wednesday it
has launched a formal enquiry into loss-making state investment fund 1MDB, and
issued a legal directive for information, to examine whether there had been any
violation of its rules.
1MDB,
which owns property and energy assets and whose advisory board is chaired by
Malaysian Prime Minister Najib Razak, has been dogged with controversy over
nearly 42 billion ringgit ($11.5 billion) in debt and alleged financial
mismanagement.
Its
financial problems have been a burden on state finances and have weighed on the
ringgit currency and Malaysia's credit rating.
Najib
ordered an audit of 1MDB's accounts by the country's Auditor General earlier
this year.
"With
respect to 1MDB, a formal enquiry has commenced to examine any contravention of
the central bank's rules and legislation," Bank Negara Malaysia said in a
statement.
"This
has involved the issuance of a legal directive requiring information from the
entity," it said.
The
central bank said it has also taken statements from individuals involved in the
governance of 1MDB, but did not elaborate.
Malaysia's
finance ministry said it was within the central bank's jurisdiction to request
the information on 1MDB's transactions.
"If
it involves banks overseas, based on international protocols, they (central
bank) can ask for information," deputy finance minister Ahmad Husni
Mohamad Hanadzlah said in a televised interview late on Wednesday. "We are
open enough."
The
central bank's move comes just weeks after the Monetary Authority of Singapore
(MAS) said it was in touch with Malaysia's regulators over an investigation
into the fund.
Bank
Negara said it had forwarded information from foreign authorities to the
relevant investigation agencies.
Failure
to meet its request for information from the board and the management could
result in a fine of up to 50 million ringgit or up to 10 years in prison or
both, it said.
The bank
said it launches a formal investigation when money approved by the bank was not
used for the purpose indicated or when false information is provided, or if
there was a failure to comply with the conditions of approval.
1MDB
President and Group Executive Director, Arul Kanda, said the fund would fully
cooperate with Bank Negara.
"1MDB
will extend its full cooperation to Bank Negara Malaysia and we look forward to
this matter reaching a swift conclusion," Arul said in a statement.
Earlier
on Wednesday, 1MDB released details of its 42 billion ringgit debt, to counter
allegations that some of the funds were missing.
In a
statement breaking out the expenditure, 1MDB said that about 18 billion ringgit
was spent on the purchase of independent power plants (IPP) and about 15.4
billion ringgit went into investment funds. It spent about 1.7 billion ringgit
to purchase land assets and 5.8 billion ringgit was listed as financial
expenditure.
The
company said it holds about 900 million ringgit in surplus cash.
1MDB
completed a strategic review of its operations earlier this year and said it
planned to sell assets and development rights in prime property projects to cut
debt. It is said to be planning an initial public offering for its energy unit.
By Praveen
Menon and Anuradha Raghu
Reporting
by Anuradha Raghu and Praveen Menon; Editing by Susan Fenton
Business & Investment Opportunities
Saigon Business Corporation Pte Ltd (SBC) is incorporated
in Singapore since 1994.
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