KUALA LUMPUR (Aug 22): JPMorganChase will pay RM1.4 billion to Malaysia to resolve existing and potential claims related to the 1Malaysia Development Bhd (1MDB) scandal.
The settlement will bind the American bank and the government from any future claims or litigations related to the troubled state-owned company, according to a statement. Each party will withdraw all appeals connected with the lawsuit filed by 1MDB against JPMorgan in the Kuala Lumpur High Court.
“The Malaysian government and JPMorganChase are pleased to announce that they have resolved all matters relating to 1MDB,” the statement read.
The settlement follows the conviction of JPMorgan’s unit in Switzerland, announced earlier on Friday over the bank’s failures to prevent the embezzlement of assets from 1MDB.
1MDB, created by former prime minister Datuk Seri Najib Razak in 2009, has been embroiled in graft and money-laundering investigations spanning more than a dozen jurisdictions from the US to Australia and from the United Arab Emirates to Singapore.
Suspicious funds
The Office of the Attorney General of Switzerland (OAG) accused JPMorgan Suisse of enabling 43 suspicious fund transfers between October 2014 and July 2015, including 34 outbound transactions totalling 174 million Swiss francs, or about RM913 million.
The funds originated from embezzled assets belonging to 1MDB and were tied to fraudulent schemes involving executives of PetroSaudi International Ltd, according to the OAG.
“Despite derogatory information from various public sources concerning the potential involvement of the two managers and of the PetroSaudi group in the embezzlement scheme defrauding 1MDB, JPMorgan Suisse did not adequately clarify the nature of the business relationships and lacked reasonable and critical judgement,” the OAG said.
PetroSaudi executives Patrick Mahony, a Swiss-British national, and Tarek Obaid, a Swiss-Saudi national, were convicted by the Swiss Federal Criminal Court in August 2024 for embezzling more than US$1.8 billion from 1MDB.
The OAG fined JPMorgan Suisse three million Swiss franc, or RM15.7 million, for failing to take all reasonable and necessary organisational measures to prevent acts of aggravated money laundering.
“The private claimant in the case, 1MDB, stated that it will be compensated in the amount of RM1.4 billion,” according to a statement from the OAG. “For this reason, the OAG has not ordered a compensatory claim.”
Criminal proceedings closed
The conviction closes criminal proceedings initiated in November 2022 against JPMorgan Suisse over aggravated money-laundering offences covering the period 2009 to 2015. Proceedings for transactions predating October 2014 were abandoned.
JPMorgan Suisse has not admitted any liability or pleaded guilty to any charges. For the bank, the joint announcement with the Malaysian government and the withdrawal of appeals related to 1MDB’s dismissed lawsuit in Malaysia will bring all outstanding matters to a close.
“When issues arise, we address them head-on,” JPMorganChase said. “We appreciate the collaboration with the Malaysian government in resolving past matters related to 1MDB, which have been thoroughly reviewed.”