ALL EYES ON ZETI: Bank Negara holds the key in Najib probe

IN an unprecedented move, a task force comprising the heads of the central bank, the Attorney-General’s Chambers, Malaysian Anti-Corruption Commission and the police has been set up to probe a sum of US$700mil ((RM2.66bil) being allegedly credited into the accounts supposedly belonging to Prime Minister Datuk Seri Najib Tun Razak in AmBank Islamic.

Never before has Malaysia seen investigations involving such high-profile entities.

But it is not surprising. Never before has there been allegations against the Prime Minister for being a recipient of US$700mil by a reputable foreign newspaper, Wall Street Journal (WSJ), that continues to stand by its report.

It took an explosive report by WSJ for Malaysians to wake up last Friday morning to read that the money had been credited into accounts supposedly belonging Najib .

On the same day, whistle-blower website Sarawak Report had a similar report with more details to the point of that account numbers were disclosed.

The news on funds flowing into the three accounts of a local bank will continue to be the talk of the town for the next few months. So far, the high-level task force has established several things.

Among them are the six bank accounts in two banks have been frozen. But it has clearly stated none of the six belonged to the prime minister. The task force said that Najib had bank accounts in Ambank Islamic but they were closed and it had all the documents in relation to the accounts.

Documents in relation to 17 accounts in two banks had also been seized. Also in the possession of the task force are various documents from 1Malaysia Development Bhd (1MDB), ranging from minutes of board meetings to agreements of business and investment dealings and the fund’s corporate social responsibility (CSR) activities.

Based on documents that WSJ had made public, Wells Fargo Bank in the United States had sent the funds to AmIslamic Bank in Malaysia in March 2013. The sender is a financial institution based in the British Virgin Islands, with the beneficiary being three accounts in AmIslamic Bank.

Apart from the money from Wells Fargo Bank, the accounts in AmIslamic have also received RM42mil – sent from Ihsan Perdana Sdn Bhd – for CSR activities in three tranches in December 2014 and February this year.

So far, no person or entity of authority in Malaysia has disclosed the identity of the person or parties behind the three accounts in AmIslamic Bank.

Neither has anyone denied that the funds from Wells Fargo Bank had made their way into AmIslamic Bank.

Only Ihsan Perdana, the company that undertakes CSR programmes for 1MDB, has denied depositing money into the Prime Minister’s personal accounts.

Until the investigations are over, this news will continue to hog the limelight.

But what’s perplexing is that this case portrays the normally proactive Bank Negara as being reactive. The establishment of the task force with the central bank being roped in comes only after the report by WSJ and Sarawak Report.

Since the ringgit is no longer an international tender since 1998, Bank Negara has established a robust system to check flows of foreign funds in and out of the country.

It is highly unlikely that US$681mil could have been transacted into the local banking system without catching the attention of Bank Negara.

Here is why it could not have been undetected.

In the workings of the central bank, there is a system called the Ringgit Operations Monitoring System (ROMS) that detects all in-coming and out-going foreign currencies.

Under ROMS, all foreign transactions of US$1mil and above are captured. Every day, the foreign exchange dealers from all financial institutions update their transactions at 5pm. Particulars such as the sender of the foreign currency, the foreign bank, the counter party in Malaysia, the recipient and the reasons for the movement of the funds are updated.

ROMS is something that is under the purview of Bank Negara.

Surely, when a sum of US$681mil comes into the country in two transactions over two days in March 2013, the central bank would have known about it at that point in time.

It would have been flagged when the Malaysian bank updates the trades under ROMS.

So, it should not be too difficult for the high-level task force to determine the flow of funds from Wells Fargo Bank, where it went to and who the recipients were. The details should be within Bank Negara’s ambit.

The nature of such large transactions itself would have got more than one bank involved in undertaking the deal because there is no offshore market for the ringgit.

When Wells Fargo Bank sends the money in US dollars, the local counter party, which is AmIslamic Bank in this case, has to source the equivalent value of the ringgit.

Assuming the exchange rate is RM3.20 to the US dollar, the amount would have come up to some RM2.18bil.

The huge amount of ringgit required would not have made the task easy. There should have been at least one other bank or several more involved to raise that amount in ringgit.

It would have gotten some people curious. More so because the recipient was a single customer and not a large organisation, based on the documents revealed by WSJ.

According to the fund transmission notes from Wells Fargo Bank to AmIslamic Bank, the instruction describes the transaction as a “Single Customer Credit Transfer” – meaning the account belongs to an individual.

How often does an individual receive a credit of US$681mil?

The high-profile investigations may take some time before they are done . But the answer to the flow of funds largely lies with Bank Negara, the custodian of the country’s foreign exchange system.

The faster the task force completes its probe and comes up with the findings, the earlier the uncertainties will end and faster the ringgit will find its real level.

The key to the US$700mil funds flow lies with Bank Negara. - ANN