The corruption allegations affecting Malaysia's state-run 1MDB fund continue, with claims about luxury spending payments made by the country's prime minister. Luxembourg has started to probe bank transactions.

The saga surrounding Malaysia’s state-run fund 1MDB, which has already seen authorities in Singapore and Switzerland probe bank accounts and payments because of corruption allegations, has taken another turn with a report that the country’s prime minister, Najib Razak, spent as much as $15 million on luxury items. Separately, the affair has spread to Luxembourg, as state prosecutors initiated a payments probe.

The information about the prime minister's payments comes from bank-transfer information from a Malaysian investigation, the Wall Street Journal reported.

Last July, the newspaper reported allegations that nearly $700 million had flowed from 1Malaysia Development Berhad, or 1MDB, to Najib's personal bank account in 2013. Najib has denied wrongdoing. The fund has also attacked the WSJ.

In a statement emailed to the media yesterday, 1MDB said: “‪1MDB has consistently maintained that it has not paid any funds to the personal accounts of the Prime Minister. ‪Following extensive investigations, this has been corroborated by multiple lawful authorities, who have confirmed that these funds came from Saudi Arabia.

“‪Despite this, the Wall Street Journal continues to repeat the same allegations, without providing any concrete evidence to justify these claims. ‪We question the timing of this new round of attacks, coming as it does just days after 1MDB announced it had successfully completed the share sale and purchase agreement for Edra Global Energy Berhad,” it added. 

The fund continued: “‪Furthermore, we have confirmed our intention to repay RM6 billion of our debt in the coming weeks, which will result in all short-term debt being removed from the company’s balance sheet. ‪These actions reflect the significant success 1MDB has made with its rationalisation plan, and we remain committed to ensuring the conclusion of this process, despite the repeated attacks against the company.”

Responding to queries about investigations into payments allegedly linked to 1MDB, the Monetary Authority of Singapore told WealthBriefingAsia: “MAS is able to confirm that as part of its investigations into possible money-laundering and other offences in Singapore, it has been conducting a thorough review of various transactions as well as fund flows through our banking system. MAS has requested a number of financial institutions to furnish information relating to the review.

“Given the cross-border nature of these fund flows, MAS is also working closely with and seeking clarifications from relevant authorities in other financial centres. Besides any enforcement actions by the relevant authorities in Singapore for possible violations of our laws, MAS will not hesitate to take regulatory actions against financial institutions should they be found to have breached our banking rules. MAS will provide more details when we have completed our review,” it added.

Luxembourg

In a separate development, Luxembourg's state prosecutor has launched a judicial inquiry into allegations of money laundering against 1MDB, reports said.

According to a statement reported by Reuters, the prosecutor said: "The investigation aims to trace the origin of four transfers in 2012 and one at the start of 2013 for a total of several hundreds of millions of dollars."

1MDB told WealthBriefingAsia: "1MDB has not been contacted by any foreign legal authorities on any matters related to the company. However, we remain committed to fully cooperating with any lawful authority and investigation, subject to advice from the relevant domestic lawful authorities, and in accordance with international protocols governing such matters."