Through two Press Statements (see here and here), Bank Negara had firstly, concluded that 1MDB had essentially acted in breach of some of the relevant exchange control laws. Bank Negara issued a direction to 1MDB to repatriate the USD 1.83 billion to Malaysia and to submit a plan to Bank Negara for this purpose. The Attorney General had declined to initiate criminal prosecution based on Bank Negara’s investigations.
Secondly, but without expressly mentioning 1MDB, Bank Negara emphasised its powers to take administrative actions against parties who acted in breach of the laws. These administrative actions are separate and distinct from any criminal proceedings.
Let us delve deeper into the types of actions that Bank Negara may take under the Financial Services Act 2013 (FSA) against a company such as 1MDB.
To give bite to Bank Negara’s administrative actions, the law allows Bank Negara to file a civil action to ensure compliance of the steps ordered in such administrative actions. In this civil action, the court can make a wide range of orders, for instance for recovery of monies, and to compel compliance with orders made by Bank Negara. The failure to comply with the court order can then result in contempt of court proceedings.
It is also important to emphasise that such court orders need not solely be against a company. The court order can be made against a person who is the director, controller, officer or partner (or who was purporting to act in any such capacity) or anyone who is concerned in the management of the affairs of that company. That widens the net of possible defendants to any such court action.
I will elaborate on these points below.