More people have been swept up in the corruption investigations linked to 1MDB, the Malaysian state-run fund.

Swiss authorities have widened a probe into financial dealings linked to Malaysia’s embattled state-run fund, 1MDB, it was announced today. Already, Swiss bank accounts have been probed and frozen in connection with the affair, while authorities in Singapore have also launched investigations. (See stories here and here.)

Allegations around 1MDB include that politicians, such as Malaysia’s prime minister, Najib Razak, have siphoned off money from the organisation for personal use. 1MDB has repeatedly denied wrongdoing, as has the prime minister.

Following publication of a recent Malaysian parliamentary report on the fund, the 1MDB board said it has collectively tendered its resignation to Malaysia’s Ministry of Finance.

In the Swiss case, OAG said: “As part of the criminal proceedings on suspicion of embezzlement committed against the Malaysian sovereign fund 1MDB (1Malaysia Development Berhad), the Office of the Attorney General of Switzerland (OAG) has extended its proceedings to two former Emirati officials, in charge of Abu Dhabi sovereign funds. The OAG also sent two requests for mutual legal assistance to Luxembourg and Singapore.”

The OAG said the two former Emirati officials are being investigated for fraud, criminal mismanagement, misconduct in public office, forgery of a document, bribery of foreign public officials and money laundering.

In the latest development, the Berne-based OAG said that its extension of criminal proceedings took place within the Genting/Tanjong chapter, one of the four main chapter of the Swiss investigation opened on 14 August, 2015. Explaining the background, the Swiss body said 1MDB subsidiaries issued two series of bonds to finance investments in electric power plants. This chapter of the proceedings covers the circumstances in which these subsidiaries obtained the guarantee to repay these bonds from an Abu Dhabi sovereign fund.

“The Swiss authorities have elements in hand allowing them to suspect that the amounts paid in connection with this guarantee were not returned to the Abu Dhabi sovereign fund that supported the commercial risk. To the contrary, these funds would have benefited others, particularly two public officials concerned as well as a company related to the motion picture industry. A former 1MDB body, already accused in the Swiss proceedings has also benefited from these amount,” it continued.

“As part of the Swiss criminal proceedings, and in particular the extension thereof, the OAG issued two new requests for mutual legal assistance, to Luxembourg and Singapore. Given the International cooperation, the OAG is thus working to establish the facts. As for any defendant, the two Emirati public officials as the other defendants, are presumed innocent,” it added.

Report, resignation offer
Among recent developments, 1MDB said recently it noted a report by Malaysian lawmakers, which the fund claimed showed that a number of allegations against it had been “dispelled”.

“The PAC [Public Accounts Committee] Report has identified a number of weaknesses in the governance and decision-making of 1MDB. With the benefit of hindsight, we can understand how the National Audit Department and the PAC could find such lapses and shortcomings,” it said.

“However, it is important to understand that the decisions were made in the context of specific transactions at that point in time. Furthermore, 1MDB is a complex company, with multiple roles of undertaking large strategic projects, establishing collaboration with foreign government entities and attracting foreign direct investment (FDI) to Malaysia,” it said.

It is now well known that 1MDB only had RM 1 million cash equity, which necessitated a heavy dependence on borrowings to fund investments. Notwithstanding this challenge, the Board has done its best to manage the company in a way that would not be a financial burden to the Government,” it continued.

“In particular, the moment a cash-flow mismatch was identified in November 2014, the Board acted immediately to appoint a professional restructuring specialist to lead 1MDB. This led to a strategic review being conducted, which resulted in the success of the on-going rationalisation plan that has resolved 1MDB's debt burden. The company has paid and will continue to pay off all its short term debt and all its bank debt with the proceeds from the successful sale of Edra, and currently has a cash surplus of approx. RM2.3 billion to meet future interest payment and infrastructure finance requirements,” it said.

“The Board believes it has carried out its role and responsibility to the best of its ability, including the implementation of various corporate governance measures such as establishing standard operating procedures for the company and setting up a Board audit and risk management committee. In addition, the Board has ensured full cooperation with all the lawful authorities investigating the company. All supporting documents that were available have been duly submitted,” it said.

1MDB said the funds have been “fully accounted for” and there is no case of "RM 42 billion missing", as has been alleged. The fund said it was confirmed that 1MDB did not transfer RM 2.6 billion to the personal accounts of the Prime Minister as had been alleged.