Malaysia fines 80 people, companies in 1MDB case: anti-graft chief

Above, documents pertaining to the trial of former Malaysian Prime Minister Najib Razak over the 1MDB corruption allegations are brought to the High Court in Kuala Lumpur on August 28, 2019. (AFP)
Updated 07 October 2019

Malaysia fines 80 people, companies in 1MDB case: anti-graft chief

  • 1Malaysia Development Berhad (1MDB) was set up in 2009 by former Prime Minister Najib Razak
  • Najib, who lost a general election last year, faces dozens of graft and money laundering charges

KUALA LUMPUR: Malaysia has fined 80 individuals and entities for allegedly receiving money from state fund 1MDB, the country’s anti-graft chief said on Monday.
Malaysian and US investigators say about $4.5 billion was misappropriated from 1Malaysia Development Berhad (1MDB), set up in 2009 by former Prime Minister Najib Razak.
Najib, who lost a general election last year, is now facing dozens of graft and money laundering charges over allegations that he received about $1 billion in 1MDB funds. He has pleaded not guilty.
Latheefa Koya, the head of Malaysia’s Anti-Corruption Commission (MACC), told reporters the agency was aiming to recover 420 million ringgits ($100 million) from individuals and entities who had allegedly received funds laundered through accounts linked to Najib.
“We have issued compound notices against all of these people and entities for the purpose of them to pay up the fine,” Latheefa said, adding that they could be fined up to 2.5 times the amount received.
The individuals include Najib’s brother Nazir Razak, the former chairman of Malaysia’s second-largest bank, CIMB, and Shahrir Abdul Samad, former chairman of state palm oil agency Felda.
Funds were also distributed to companies, political parties and organizations linked to Najib’s coalition, a list provided by the MACC showed.
A spokeswoman for Nazir did not immediately respond to a request for comment. Shahrir declined to comment.
In 2015, Nazir went on a leave of absence after the Wall Street Journal reported that he received around $7 million from Najib and disbursed the funds to other politicians before elections in 2013.
An independent review into the money transfer concluded that Nazir did not misuse his position and there was no inappropriate use of the CIMB’s resources, following which Nazir resumed his duties as chairman. He resigned last year after three decades at the bank.
Nazir had received about 25.7 million ringgits in cheques, Latheefa said. She declined to confirm whether these were the same funds that Nazir had allegedly received in 2013.
After winning last year’s election, Prime Minister Mahathir Mohamad’s administration has reopened 1MDB probes, charged dozens of high-ranked officials, and filed civil forfeiture actions in a bid to recover money linked to 1MDB.
Since 2016, the US Department of Justice has filed forfeiture lawsuits on about $1.7 billion in assets allegedly bought with stolen 1MDB funds, including a private jet, luxury real estate and jewelry.
In May, the United States began returning to Malaysia some $200 million recovered from the sale of seized assets.


A female entrepreneur brings crowdlending to Saudi Arabia

(Photo/Shutterstock)
Updated 25 January 2020

A female entrepreneur brings crowdlending to Saudi Arabia

  • Shariah-compliant peer-to-peer lending platform called Forus to be launched this year
  • Founder Nosaibah Alrajhi aims to help businesses and small investors in the Kingdom

RIYADH: It is no secret that small businesses struggle with obtaining funds to expand, with one avenue being particularly tricky in the region: Trying to rely on a national bank for help.
While things are improving, they are not doing so quickly enough. These longstanding problems have inspired Nosaibah Alrajhi, a former investment banker, to launch Forus, a Shariah-compliant peer-to-peer lending platform that she hopes can help bolster Saudi Arabia’s economic growth and enrich both business owners and small investors.
“It’s very straightforward: We bring together investors and SMEs (small and medium enterprises). Crowdlending will provide a steadier and safer return than say, investing in stocks or investment funds,” said Alrajhi, who serves as co-founder and chief executive.
“If you compare it to real estate, for example, you need a lot of cash upfront to invest in property, but with P2P (peer-to-peer) lending it provides almost everyone with the opportunity to invest and get a return.”
Having received a special license in July 2019, Forus will launch its platform in early 2020. For investors, it is quick and easy to register: You just need to complete a standard know-your-customer (KYC) process, and you will then be able to lend SR500 ($133) to SR10,000 to whichever companies you choose.
For would-be borrowers, Forus will undertake a credit and risk analysis that usually takes about 10 days.
“We do all the due diligence, and once companies meet our benchmarks, they’re listed on the platform, giving investors — individual and institutional — the opportunity to lend them money,” said Alrajhi. “We call it income investments — investors get their money back, plus fees.”
Companies listed on the online platform are rated according to risk — the bigger the risk, the larger the return for lenders. Companies can borrow up to a maximum of SR2 million.
“Investors can look at the companies’ financial reports, their strategy, their team, their products, as well as specific financial ratios that will help them make their decision,” said Alrajhi.
A company will request to borrow a certain amount, and once this is fully pledged by investors, it will receive the loan. Forus, in turn, earns a small commission. Loans are for six to 48 months.
“Our marketplace is providing investors with diversified alternative options (for) investing, while businesses are empowered with an opportunity to grow and scale,” said Alrajhi.
“We achieve this by minimizing friction, streamlining the customer experience and providing a seamless, secure and transparent platform.”
Alrajhi holds an MBA from Madrid’s IE Business School, where her research led her to spot a gap in the market for a fintech-based, P2P lender in Saudi Arabia.
“If you look at the market today, there’s only a few banks who are willing to lend to SMEs, which banks see as quite high risk,” said Alrajhi. “In Saudi, there are roughly 16,000 SMEs looking for loans.”
Forus uses a murabaha — cost plus financing — structure for its loans, which are not interest-bearing and so are Shariah-compliant.
In English, Shariah-compliant lending will refer to a profit rate rather than an interest rate, although in Arabic there is no such linguistic distinction.
Nevertheless, Forus’s loans are Islamic. “In Saudi, the biggest market is for Shariah-compliant financial services,” said Alrajhi.
She hopes her platform will provide a win-win for investors and SMEs — investors can earn a bigger return on their money, while SMEs can obtain the funds needed to expand their operations and increase profits.
In the longer term, Forus plans to expand to Egypt and Pakistan, but for now Alrajhi’s focus is firmly on her native Saudi Arabia.
“One of the main impacts we aim to have is transparency, which will then enable financial inclusion and help increase GDP (gross domestic product),” she said.
“We’ve talked to so many SMEs, and we found that almost all are facing challenges when it comes to borrowing.”
She leads a team of 10 staff at Forus, and is a female trailblazer in the Kingdom’s male-dominated financial services sector and more broadly in Saudi Arabia, where women constitute less than 25 percent of the workforce.
“Within the next five years, Saudi’s financial sector will look completely different,” said Alrajhi.


This report is being published by Arab News as a partner of the Middle East Exchange, which was launched by the Mohammed bin Rashid Al Maktoum Global Initiatives and the Bill and Melinda Gates Foundation to reflect the vision of the UAE prime minister and ruler of Dubai to explore the possibility of changing the status of the Arab region.