Attempts by Najib Razak, Malaysia's embattled prime minister, to contain a financial scandal have taken a knock after Swiss authorities said they had opened criminal proceedings related to the state development fund at the center of the affair.
Switzerland's Office of the Attorney-general said its case involved "suspected corruption of public foreign officials, dishonest management of public interests and money laundering".
Its confirmation of proceedings involving 1Malaysia Development Berhad, or 1MDB, which has $11 billion in debt, marks the potential internationalization of a case that has so far received mainly domestic scrutiny. The fund, established in 2009 by Malaysia's finance ministry, is supervised by an advisory board chaired by the prime minister.
The domestic investigation into allegations of mismanagement and corruption at 1MDB has slowed since Mr Najib removed Malaysia's attorney-general on health grounds and promoted members of a task force that had been coordinating the investigation, ending their involvement in the probe. The task force has suspended its work while new members are appointed.
"Effectively all investigations have been stopped," said Tony Pua, an opposition legislator. "It's got too close for comfort so Najib has ended the pretense of an independent inquiry and cut everything off." The prime minister's office denies any attempt to block the investigation.
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Last month Mr Najib also fired Muhyiddin Yassin, the deputy prime minister, who had said the prime minister needed to provide an explanation about how nearly $700 million found its way into his personal bank account.
In July, the Sarawak Report, a UK-based blog, and the Wall Street Journal published a report alleging that money in Mr Najib's account had been moved by agencies, banks and companies linked to 1MDB. Mr Najib vigorously denies any 1MDB link to the money, saying it was a donation from an unnamed Middle Eastern benefactor. That claim was endorsed by Malaysia's anti-corruption commission.
The Swiss attorney-general said it was investigating "two entities of 1MDB" and an "unknown person". Two deposits into Mr Najib's account, amounting to $681 million, allegedly came via a Swiss bank from a company registered in the British Virgin Islands, according to documents prepared by Malaysian prosecutors and cited in the Wall Street Journal.
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Finma, the Swiss financial regulator, said it was aware of the corruption allegations and was in contact with several Swiss banks about the issue.
Other critics of Mr Najib in Malaysia said they hoped the Swiss investigation would prompt US regulators to look into the issue.
Last month Singapore froze two bank accounts in connection with investigations into 1MDB, and the Monetary Authority of Singapore said it would share information with Malaysian investigators.
1MDB said it had not been contacted by Swiss authorities but stood "ready to assist in any investigation . . . subject to advice from the appropriate Malaysian authorities".