1Malaysia Development Bhd, the state-owned fund linked to multiple probes, disputed comments by the central bank that it hadn’t properly explained its failure to repatriate $1.8bn.
1MDB hasn’t received any official correspondence or confirmation from the central bank on the “specific matters” mentioned by Bank Negara Malaysia governor Zeti Akhtar Aziz and can’t comment further, it said in a statement late Wednesday.
After presenting her annual report, Zeti said on Wednesday the central bank is pursuing “appropriate administrative enforcement action” because the company didn’t show proof why it couldn’t meet the order to bring the funds back.
Bank Negara said in October its probe of 1MDB found inaccurate disclosures by the company when it sought approvals for investments abroad, prompting the regulator to revoke the permissions given and instructing the repatriation of more than $1.8bn related to multiple deals. It also proposed criminal proceedings against 1MDB, something the attorney general dismissed as it concluded there was no wrongdoing.
“We will take the necessary action because the main reason why we want to do this is to uphold the integrity of the functioning of our financial system,” Zeti said Wednesday. “The rules and regulations have been put in place to be compliant with, and all companies regardless of who the shareholders are have to comply with these rules and regulations and that is where BNM is coming from.” Debt-ridden 1MDB, which has consistently denied wrongdoing, has been the subject of investigations by local agencies including the central bank, as well as countries such as Switzerland and Singapore amid allegations of financial irregularities. Financial woes at the company, which included almost defaulting on a loan, led it last year to announce plans to wind down much of its business.
1MDB, whose advisory board is chaired by Prime Minister Najib Razak, said in October that it was seeking a “viable resolution” with the central bank, even as the attorney general said the company didn’t commit any offense. The company said it is committed to helping the central bank with its probe.
“We highlight that 1MDB has in the course of the past 12 months, fully cooperated to the extent possible with BNM investigations, including providing documentary evidence where available,” the company said in the statement. “1MDB is committed to continued cooperation with BNM and will provide any further information that may be required by BNM, to the extent that 1MDB has in its possession or is possible under the law.”
Zeti said the central bank plans to submit the plan for enforcement after 1MDB missed a stipulated timeline to provide documentary evidence. It will be done before her term ends in April, she said. The government hasn’t announced who will replace her.
“Bank Negara doesn’t have the powers to enforce this and therefore other authorities will have to look at our recommended administrative enforcement and make their enforcement,” she said.