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Malaysia prosecutor clears 1MDB officials on bank report

Signage for 1Malaysia Development Bhd. (1MDB) is displayed at the site of the Tun Razak Exchange (TRX) project in Kuala Lumpur, Malaysia.
Goh Seng Chong | Bloomberg | Getty Images
Signage for 1Malaysia Development Bhd. (1MDB) is displayed at the site of the Tun Razak Exchange (TRX) project in Kuala Lumpur, Malaysia.

The Malaysian attorney general's office said on Thursday it had reviewed the report of a central bank investigation into troubled state fund 1MDB and decided that fund officials had not committed any offence.

The statement comes in response to rare intervention in public affairs by Malaysia's royal rulers who called for a quick and transparent investigation into 1Malaysia Development Berhad (1MDB), adding pressure on the scandal-hit government of Prime Minister Najib Razak.

1MDB, whose advisory board is chaired by Najib, has amassed debt of more than $11 billion and is at the center of a political storm after allegations of graft.

In July, media reported that investigators looking into 1MDB had identified a payment of nearly $700 million into a bank account under Najib's name. Reuters has not independently verified the report.

Najib has denied taking any money for personal gain and the government has said the deposit was a private donation.

The state prosecutor, in a statement responding to this week's royal call for a quick and clear inquiry, said investigations into 1MDB "were never at any time halted or hindered."

A central bank investigation into the fund was completed and a report on it was handed to the attorney general, the Attorney General's Chambers said in the statement.

After a review, it was decided that no offence had been committed by the 1MDB officials, it said.

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"No further action would be taken in the matter," it said.

The decision had been communicated to the central bank in September and a central bank request for a further review of the decision had been rejected as no new evidence was provided.

In the weeks that followed the July media report on the payment, the government replaced the attorney general, who had led the investigation into the fund, and a parliamentary committee inquiry stalled.

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Investigations into the fund by various organisations have dragged on with no conclusion in sight.

The sultans of nine states said on Tuesday the government's failure to provide convincing answers on 1MDB may have resulted in a "crisis of confidence".

In a separate statement on Thursday, Deputy Prime Minister Ahmad Zahid Hamidi said the government had taken proactive steps to resolve the issues the rulers brought up.

"The legal system in the constitution is clear and if any party is found responsible, legal action will be taken," he said, adding that the probe into 1MDB would be done in a fair and open manner.