Malaysian PM Razak and the $4.2B Missing From 1MDB

80,000 protesters and Razak is still there: can the international financial community oust him, though?

A few months ago, I wrote about the goings-on in Malaysia with Prime Minister Najib Razak's controversial 1MDB fund, which styles itself as a "strategic development company"  instead of a sovereign wealth fund. Razak's critics, including former PM Mahathir, would instead classify it as a personal slush fund for Razak. Earlier this year, Malaysian courts cleared 1MDB and, by extension, Razak of wrongdoing in supposedly diverting $681 million into his personal coffers.

If only authorities in other countries would play along. Unfortunately for Razak, Switzerland's authorities have alerted their counterparts in other financial centers about 1MDB. So, while the ruckus may have silenced somewhat at home, it's full throttle abroad still:

Swiss prosecutors widened their criminal probe into allegations of bribery and corruption at 1Malaysia Development Bhd., and have asked Luxembourg and Singapore authorities for help with an investigation into the government fund.

The Swiss Attorney General is investigating two former public officials from the United Arab Emirates on charges of fraud, criminal mismanagement, bribery and money laundering, according to a statement Tuesday from the Bern-based prosecutor’s office. The pair handled Abu Dhabi sovereign wealth funds that guaranteed bonds issued to finance 1MDB’s investment in power plants, Swiss authorities said.

The dragnet has gone global, and there's little Malaysian officialdom can do to, ah, massage the situation abroad like it does at home:

The allegations include that “the amounts paid in connection with this guarantee were not returned to the Abu Dhabi sovereign fund that supported the commercial risk,” the statement reads. “To the contrary, these funds would have benefited others, particularly two public officials concerned as well as a company related to the motion picture industry.”

1MDB is at the heart of a growing number of investigations both at home as well as in Switzerland, the U.S., Singapore, Hong Kong and Luxembourg over allegations the development fund was used to funnel money to individuals including Malaysian Prime Minister Najib Razak, who heads the fund’s advisory board. The Swiss estimate that about $4 billion may have been misappropriated while a Malaysian parliamentary committee identified at least $4.2 billion of irregular transactions, according to a report published last week.

Also see the Bloomberg explainer of what is happening with the global dragnet on 1MDB. The real question is if the rest of the world can force Razak from power given Malaysian leaders' customary insulation--see Mahathir before him, for instance.