KUALA LUMPUR: The man leading Switzerland's investigation into 1Malaysia Development Berhad (1MDB) said on Tuesday (Jul 10) that the state fund has been used as a Ponzi scheme.
The attorney-general's office in Switzerland began probing suspicious fund flows originating from 1MDB back in August 2015 after several transactions linked to a Middle Eastern wealth fund were flagged by Swiss authorities.
"There were no scruples, money just flew out of the country," Switzerland's Attorney-General Michael Lauber told Channel NewsAsia.
"We had to do something. In our view, it was a Ponzi scheme. The development of Malaysia, which was the goal of 1MDB, was just a pretext."
Lauber also revealed that in the course of Swiss investigations, US$7 billion could be traced from 1MDB, although their uses and whereabouts are still being ascertained.
“I can't say all were misappropriated, some were used (in a) Ponzi scheme ... fraud - away from 1MDB's original purpose, which is for (the) development of Malaysia - to bribe officials, to pay interests to keep the Ponzi scheme running."
He did not name the officials he was referring to.
Lauber was speaking to Channel NewsAsia after a meeting with his Malaysian counterpart Tommy Thomas.
Swiss regulators are no stranger to money laundering schemes, said Lauber, adding that they have had many years of experience in such cases. However, he described the 1MDB case the Swiss were investigating as the most complex, involving shell companies and individuals' accounts across continents.
Lauber said he has sought mutual legal assistance from the United States, Luxembourg, Singapore, United Arab Emirates and Malaysia.
SWITZERLAND INVESTIGATING 6 PEOPLE, NAJIB NOT AMONG THEM
Swiss authorities have coordinated action with Singapore counterparts and closed down two banks - BSI and Falcon - and are now investigating six people for possible criminal indictment, said Lauber.
Former Malaysian prime minister Najib Razak is not one of them, he said. Neither is businessman Jho Low, who is wanted by both Malaysian and Singapore authorities as a key figure in the 1MDB probe.
"The Swiss have no interest in them, there is so far nothing to link the ex-prime minister to (the) investigation in Switzerland," he said.
Najib was engulfed in controversy following revelations that about US$700 million was deposited into his personal bank accounts ahead of the 2013 general elections. However, he has maintained his innocence, insisting that the money was a donation from the Saudi Arabian royal family.
The former prime minister was arrested and charged last week with criminal breach of trust and abuse of power, charges that he claimed were trumped up by the current Malaysian administration out of political vengeance.
"PLEASE DON'T EXPECT ... THE MONEY WILL COME BACK TOMORROW"
Lauber, who was on a two-day visit to Malaysia to meet Thomas in Putrajaya, has had two meetings with his Malaysian counterpart to establish the scope for mutual legal assistance in a criminal probe that includes bribery, fraud, money laundering and a host of other offences.
He also hopes to temper expectations on when any monies recovered by the Swiss authorities could be returned to Malaysia.
"It's a complex and huge international case," he said. "We are not talking about weeks or months, we are talking about years ... we started about three years ago, we are quite early - we always calculate between five and seven years for high-profile cases - we are now in the middle.
“Please don’t expect from Switzerland that because I am here, the money will come back tomorrow."
About 400 million Swiss francs (US$403 million) was frozen by Swiss authorities in relation to 1MDB - mainly bankable assets retrieved from the two closed banks, said Lauber.
On the challenges facing his counterpart in Malaysia, the Swiss Attorney-General said he was positive that the attorney-general's chambers in Malaysia was off to a good start.
“What we need is good governance, the right people who can resist greed," he said. "When I met my counterpart, I saw his will - he is also very down to earth, it's a very, very good start."
Lauber, who is determined to protect his country's financial system against money laundering and other vices, also offered his advice to fellow prosecutors operating in challenging environments in the region.
“When you are a prosecutor, your activities are guided by the rule of law," he said. "Even in the worst situation, you need to uphold the rule of law. Only then you are credible to your people, to the politicians, to the media and to the international community.
"Don't take the job unless you are up for it."
After seven years, Lauber said he was still full of energy.
“You cannot bribe me, I have a small apartment in Zurich where I live, I have no car, no bicycle, not even a boat. All I have is what you see on me, that's it."