In the Wake of Global Asset Recovery Conference, NGOs propose vehicle to return 1MDB Funds

MEDIA RELEASE (23 November 2017) 

In the run-up to the Global Forum on Asset Recovery (GFAR) hosted by the WORLD BANK in Washington DC, happening early December, 112 civil society organisations (CSOs) in Malaysia are urging the Swiss government to return 104 million CHF (433 million MYR) associated with 1MDB investments funds confiscated from Swiss Banks through an independent foundation to channel the money back to ordinary Malaysians.

“The recovery of stolen assets is a major focus of the UN Convention Against Corruption, and leading countries and institutions are now building their efforts through the Global Forum on Asset Recovery happening next month in Washington DC. The 1MDB case has been touted as the largest case of by many experts in the field, but the refusal of the Malaysian government to acknowledge this process and account for the missing funds, has been deeply disappointing.” – Cynthia Gabriel, C4 Center

C4 Center and Bersih 2.0 are leading the charge to ensure that asset recovery—a technical term that means “any effort by governments to repatriate the proceeds of corruption hidden in foreign jurisdictions”—can happen with confiscated illegal gains from money laundered from 1MDB funds in Switzerland.

C4 Center, BERSIH 2.0 and endorsing Malaysian NGOs are in partnership with the Bruno Manser Fund and Global Bersih, both who are based in Switzerland and are assisting through Swiss-based lobbying, in the pursuit of returning illicit gains to Malaysians who are the rightful beneficiaries.

The Global Forum on Asset Recovery is the first worldwide conference that focusses on returning stolen and laundered money to their countries of origin. It brings together financial investigators, police, prosecutors, judges and civil society representatives to discuss the technical aspects and best practices of enabling asset recovery, focusing on four priority countries.

GFAR was initiated as a result of the London 2016 Anti-Corruption Summit, with the participation of 40 nations and the support of the Stolen Asset Recovery Initiative of the World Bank.

Despite Malaysia’s lack of participation in GFAR because of the complicity of current authorities, C4 Center and Bersih 2.0 will be paying close attention to GFAR and will engage stakeholders to explore the possibilities for a more concrete proposal.

“We know that the management of 1MDB is complicit in the money laundering of its funds overseas, so we cannot unconscionably allow the Swiss to return it to the regime that stole public monies; it is neither right that the Swiss government take the money simply because the money was so happened to be laundered through banks there.” – Maria Chin, Bersih 2.0

Such complicity was demonstrated when the Swiss Attorney General announced that they were investigating over 4 billion USD of embezzled funds linked to 1MDB investments early last year. After twice requesting for ‘mutual legal assistance’ from their Malaysian counterparts, they failed to receive a positive reply from the Malaysian government.

Nevertheless, the Swiss Attorney General's office has pushed ahead with investigations and is currently gathering sufficient evidence to take appropriate actions. In the meantime, the Swiss financial regulatory body, FINMA, has already punished three Swiss banks for serious breaches of money laundering regulations and has confiscated a total of 104 million Swiss Francs in illicit gains from money laundering. The three banks are appealing the decision.

OUR PROPOSAL: AN INTERIM TRUST FUND

The 14th General Elections is an important milestone to forward this process, as in the event of a regime change, the restitution process could possibly be fast tracked by the new government in place.

However if regime change is unlikely, C4 Center and Bersih 2.0 urges the Swiss government to consider a setting up of an interim trust fund, assisted by the World Bank or other institutions, to help return the stolen money and return it to the rightful people of Malaysia.

A precedent set by the BOTA Foundation in Kazakhstan, makes a good example.

“We believe that a fraction of the embezzled 1MDB money can come back to benefit Malaysians because precedent has been set through the BOTA Foundation. It was the first of its kind, a vehicle to return illicit funds back to the public of the country of its origin.” (http://www.fcpablog.com/blog/2015/4/15/the-bota-foundation-explained-part-six-how-was-bota-set-up.html) – Cynthia Gabriel, C4 Center

The 112 Malaysian CSOs are advocating the model of the BOTA Foundation, which was set up in 2007 to return 84 million USD to Kazakhstan’s publics. It disbursed its money through three programmes: a direct cash transfer programme which gave money upon fulfilling conditions such as sending children to pre-school; a social service programme which gives medium-sized grants to local NGOs; and, a tuition assistance programme which gave scholarships to Kazakhstani youth.

Like 1MDB, the money that became its funds were allegedly payment in bribes to Kazakhstani elites. They were also the target of a civil forfeiture lawsuit by the US Department of Justice and laundered through Swiss bank accounts, which the Swiss government froze in the late 90s.

This submission to the Swiss government is to persuade them to use frozen gains from 1MDB funds in a similar fashion to the BOTA Foundation, to prevent the funds from returning to a kleptocratic government.

Under Swiss law, such confiscated assets either are appropriated by the Swiss government or paid to the parties suffering the loss. Either outcome would undermine the spirit of anti-corruption it has demonstrated before in the BOTA Foundation.

The CSO grouping believes that the Swiss government needs to continue to live up to its reputation of uncompromisingly stamping out money laundering by considering at the earliest outset, that the funds be used to benefit the Malaysian public, in line with developing global practices in asset recovery against kleptocracies. We urge that they take the necessary steps, legal and otherwise, to set an example to all states, and ensure a wrong is put right.

We call on the international community to support this call to restore what is rightfully the money of every Malaysian citizen.

Released by:

Cynthia Gabriel, Executive Director, C4 Center
Maria Chin Abdullah, Chairperson, BERSIH 2.0