Swiss parliament rejects call to return 1MDB profits to Malaysia
18 Mar 2018

Switzerland’s parliament rejected on Thursday a bid to amend the law handling ill-gotten bank profits seized by authorities that had aimed to return more than $100 million linked to scandal-hit sovereign fund 1MDB to the Malaysian people.

Champions of the campaign had acknowledged they faced an uphill struggle to get the idea through parliament, whose lower house shot the plan down at the request of the government.

Foreign Minister Ignazio Cassis told lawmakers the measure was too broad and violated the separation of powers between the government and the courts.

He said current law allowed repatriation of assets seized from toppled regimes.

He cited an accord signed with the World Bank in December under which Switzerland would return to Nigeria about $321 million in assets seized from the family of former military ruler Sani Abacha.

Confiscated bank profits from dubious deals are a different story. Normally they flow into the general Swiss budget.

The Swiss campaign led by center-left politician Carlo Sommaruga and non-governmental organizations wanted to hand back more than $100 million money forfeited by Swiss banks in the 1Malaysia Development Berhad (1MDB) case.

A total of $4.5 billion was misappropriated by high-level officials of the fund and their associates, according to civil lawsuits filed by the U.S. Department of Justice.

The scandal has triggered money-laundering probes in at least six countries, including Switzerland, the United States and Singapore.

Malaysian Prime Minister Najib Razak set up 1MDB in 2009 and previously served as chairman of its advisory board. He and the fund have denied any wrongdoing.

Financial watchdog FINMA has confiscated 104 million Swiss francs ($110 million) in illicit profits from 1MDB-related deals by banks BSI, Falcon Private Bank and Coutts & Co since mid-2016. The BSI and Falcon cases are still under appeal.

1MDB said on Wednesday the 104 million francs is being claimed by banks whom FINMA targeted for alleged breach of Swiss laws. “It cannot be claimed by 1MDB or the government of Malaysia as the money does not belong to 1MDB,” it said.

Activists had said Switzerland could set an international precedent on how to handle confiscated assets from the 1MDB scandal, such as a luxury yacht seized in Bali last month that Indonesia is handing over to U.S. authorities.

– By Michael Shields, Reuters, 15 March 2018

Link to Reuters article.

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