By Trinna Leong and Yantoultra Ngui
Malaysian police raided the office of troubled state investment fund 1MDB on Wednesday, following a report that claimed investigators looking into the firm found nearly $700 million had been transferred to Prime Minister Najib Razak’s bank account.
Najib has denied taking any money and said the corruption allegations are part of a malicious campaign to force him out of office.
The Wall Street Journal (WSJ) reported last week that investigators probing 1MDB had traced funds flowing into Najib’s personal account when he was campaigning for a general election over two years ago.
“We can confirm that a number of officials from the task force, conducting an enquiry into 1MDB, visited our offices today,” 1MDB said in a statement.
“They were provided with a number of documents and materials to aid with the investigations currently taking place.”
A police spokeswoman confirmed the raid, but did not give any further details.
1MDB, a property-to-energy group whose advisory board is chaired by Najib, has debts of around $11 billion.
Even before the WSJ report it was the subject of separate investigations by the central bank, auditor general, police and the parliament’s Public Accounts Committee.
The Wall Street Journal report, citing documents from a government investigation, said there were five deposits into Najib’s account.
The two largest transactions, worth $620 million and $61 million, were made in March 2013 during the election campaign, the paper said. It said they came from a company registered in the British Virgin Islands via the Singapore branch of Falcon Private Bank.
Reuters has not independently verified the WSJ report.
Singapore’s central bank said on Wednesday that it would provide assistance to Malaysia and share information where it was legally able to.
Falcon Private Bank, a Swiss private bank owned by Abu Dhabi sovereign wealth fund International Petroleum Investment Company, said it was already in contact with the Monetary Authority of Singapore and would be fully transparent with the authorities.
On Tuesday, the Journal released what it said were government documents from the probe of the prime minister, detailing a money trail that it said led to his personal bank account.
The Attorney-General Abdul Gani Patail, who is part of a special task force probing 1MDB, said the documents were already the subject matter of an investigation.
A task force investigating 1MDB said it had frozen half a dozen bank accounts this week in relation to the allegations. But Abdul Gani said that the freeze order did not involve any bank accounts allegedly held by Najib.
The furore surrounding 1MDB and the ensuing political crisis have spooked financial markets.
The ringgit is trading at a 16-year low against the dollar and has weakened past the old currency peg of 3.80 per dollar, fixed in September 1998 during the Asian financial crisis and scrapped in 2005.
The benchmark stock index dropped to its lowest in a week. 1MDB bonds also took a hit following the raid. The 4.4 per cent 2023 bonds are trading down 2 points at 82 cents on the dollar.
In a statement on his Facebook page after the raids, Najib said that he has instructed his lawyers to send a letter to the Journal.
“Accusations by the Wall Street Journal are malicious and supported by certain quarters in the country with the purpose of forcing me to quit as prime minister and president of UMNO,” said Najib, referring to his party the United Malays National Organisation.
Najib’s law firm, Hafarizam Wan & Aisha Mubarak said in a statement it had been instructed to consider action against the Journal.
A spokeswoman for Dow Jones & Co., which publishes the Journal, said: “We stand behind our fair and accurate coverage of this evolving story.”
Opposition lawmakers have pressed cabinet ministers for a full explanation into the allegations, and asked him to go on leave until a probe is completed.
Members of Najib’s UMNO party have closed ranks behind the prime minister, who had already been on the back foot over alleged mismanagement of 1MDB and his handling of the economy.
“I think the cabinet was very united in that we have to allow for due process to take its course,” Khairy Jamaluddin, the youth and sports minister, told reporters after a cabinet meeting in Malaysia’s administrative capital Putrajaya.
1MDB has described the allegations as “unsubstantiated”, saying it never provided funds to the prime minister.