Bank Negara Powerless to Prosecute 1MDB, Says Former Governor

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Admitting that the 1MDB case was one of her toughest moments in office, former Bank Negara governor said the central bank did not have the power to prosecute 1MDB for breaching regulations.

Former Bank Negara Malaysia (BNM) governor Tan Sri Zeti Akhtar Aziz told Sin Chew Daily recently that Malaysia’s central bank was powerless to take further action than imposing fines on “relevant bodies and financial institutions” for not abiding by regulations in relation to the 1MDB case.

She added that handling the 1MDB case was one of her toughest moments during her 16-year tenure as governor.

“Although outsiders had very high expectations from Bank Negara, nevertheless, it did not have the power to prosecute,” Zeti said.

Sin Chew Daily

“Bank Negara has the most comprehensive laws, including the Central Bank of Malaysia Act 2009 and Financial Services Act 2013 to preserve the integrity, stability and healthy functioning of the financial system.

“So, we could issue letters of administrative compound to relevant bodies and financial institutions breaching Bank Negara’s regulations in the 1MDB case. I would say the fines were probably the highest in history,” she said, explaining how the whole matter was settled with the fine being paid.

She added that the main objective of BNM in dealing with the 1MDB case was to ensure the integrity of the country’s financial system.

In March 2016, BNM said it would initiate “appropriate action” against 1MDB for failing to produce evidence it had used the allocated US$1.83 billion for debt management and restructuring exercises overseas. 1MDB had initially cited these two reasons when questioned why the money had not been repatriated to Malaysia.

On Apr 28, BNM fined 1MDB, giving it the deadline of May 30 to pay the fine, which it did on May 25. The fine was one of the last actions by Zeti before she retired on Apr 30, with Datuk Muhammad Ibrahim taking over the next day.

About two weeks later, the new governor said under the existing laws, BNM had completed all its investigation on 1MDB.

When asked whether she felt defeated by the outcome of the 1MDB case, Zeti said she was not allowed to have her personal feelings, as this would distract her attention.

“Unlike other people, we must learn to focus, because the outcome of our work was for the people and the business sector, not personal feelings.

“Of course, I was also a human being and I had my feelings too, but I must put that aside. I was aware of my responsibilities.

“We knew Bank Negara was very important to the country. We didn’t want to see it destroyed. And that was one of my considerations,” Zeti said.

Zeti has since moved to Iclif, an organisation created and funded by BNM since 2003, and is its chairman. Iclif is an Asia-based international centre dedicated to executive education, research, coaching and consulting services in the areas of leadership development, organisational effectiveness and corporate governance.