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1MDB allegations reach White House

Tom Burroughes, Editor, London, 18 October 2016

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The scandal surrounding the Malaysian state-run fund continues to spread worldwide and, according to a news report, has even touched the White House.

The Malaysia-based money laundering scandal that has already seen two banks banned from Singapore, fines, legal action in Switzerland and investigations elsewhere threatens to cause heartburn in US politics at the highest level.

Federal officials are investigating to see whether money allegedly misappropriated from Malaysian state fund 1Malaysia Development Berhad, or 1MDB, was sent to a US businessman who scheduled a visit to the Oval Office for relatives of Malaysia's prime minister, Najib Razak, the Wall Street Journal reported late last week. The WSJ quoted a number of sources.

Frank White Jr, the founder and CEO of an investment firm called DuSable Capital Management, escorted Najib’s son and stepson to the Oval Office where they met President Barack Obama in December 2013. Federal agencies are investigating property transactions carried out by the stepson, Riza Aziz, in the US.

White made a business deal in which about $10 million embezzled from 1MDB could have gone indirectly to him, the WSJ reported. Last November, the report said, 1MDB paid $69 million to purchase a DuSable unit out of a deal they signed to build solar-power plants.

The 1MDB saga has seen two Switzerland-headquartered banks, BSI and Falcon Private Bank, banned from Singapore; Swiss authorities have initiated legal proceedings against Falcon. The authorities in Luxembourg have also opened a probe. The United Kingdom does not seem to have become involved yet, which has surprised some commentators. The UK's Financial Conduct Authority is either confirming nor denying that any investigation is taking place.

As has been previously reported, the US Justice Department is seeking to confiscate over $1 billion of assets linked to 1MDB, including 11 luxury properties in the US.

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