In the light of the following case, answer all questions that follow. The Scandal of 1Malaysia...

   
 
 

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In the light of the following case, answer all questions that follow. The Scandal of 1Malaysia Development Berhad (1MDB) 1Malaysia Development Berhad (IMDB) is an insolvent Malaysian strategic development company, wholly owned by the Minister of Finance (Incorporated). Since 2015, the company has been under heavy scrutiny for its suspicious money transactions and evidence pointing to money laundering, fraud, and theft. A lawsuit filed by United States Department of Justice (DOJ), alleged that at least US$3.5 billion has been stolen from Malaysia's IMDB state-owned fund. IMDB was established to drive strategic initiatives for long-term economic development for the country by forging global partnerships and promoting foreign direct investment. IMDB focuses on strategic development projects in the areas of energy, real estate, tourism and agribusiness. IMDB was involved in several high-profile projects such as the Tun Razak Exchange, Tun Razak Exchange's sister project Bandar Malaysia, and the acquisition of three independent power producers. I Malaysia Development Berhad (IMDB) started off as Terengganu Investment Authority (TIA) which was initiated by the former Menteri Besar of Terengganu, Ahmad Said in 2008. TIA was a sovereign wealth fund with an initial fund of RMII billion aimed at ensuring the economic development of Terengganu state. The fund's purpose was to ensure a long term sustainable development while safeguarding the economic well-being of Terengganu residents. The TIA fund was derived from outstanding royalty income of RM6 billion and funds from bond issued by local and overseas financial markets. In addition, the Federal Government had proposed to provide a guarantee of RM5 billion based on Terengganu's future oil revenues. On 27 May 2009, Ismee Ismail and Shahrol Azral Ibrahim Halmi signed a deal arranged by Aminvestment Bank Bhd to raise RM5 billion via the issuance of Islamic medium term notes (IMTNs), despite being told not to do so by the Terengganu state government. This exercise was advised by TIA's special advisor, Jho Low. On 29 May 2009, TIA received RM4.385 billion in net proceeds from IMTN from the full value of RM5 billion. On 31 July 2009, Minister of Finance (Incorporated) (MOFI) took over TIA and amended its name to I Malaysia Development Bhd (IMDB). This acquisition by MOFI took place four months after Dato Sri Najib Razak became the Prime Minister of Malaysia. In his announcement on 22 July 2009, Najib said the decision to expand TIA into a federal entity was made to enable its benefits to reach a broader spectrum of Malaysians rather than the residents of only one state. In general, IMDB investments can be summarized as: Investment in PetroSaudi Holdings (Cayman) Ltd Investment in Segregated Portfolio Company (SPC) Investment in SRC Group Investment in real estate sector Investment in the energy sector On 10 March 2015, Auditor General of Malaysia under the mandate of the Cabinet and the Public Accounts Committee (PAC) was assigned to audit the financial statements of the IMDB Group and to evaluate whether the financial performance and activities of the IMDB 3 Group are aligned with the company's original objectives. However, on 4 March 2016, the audit report produced by the Auditor General of Malaysia was classified as Official Secrets Act under the Official Secrets Act 1972 by the National Security Council (Malaysia). After the victory of Pakatan Harapan in the 14th General Election in Malaysia, the audit report was declassified. The declassification was made on 15 May 2018 at the request of the seventh Prime Minister of Malaysia, Tun Dr Mahathir Mohamad. On 23 May 2018, the newly appointed Minister of Finance, Lim Guan Eng, appointed PricewaterhouseCoopers (PwC) to review and perform an audit of IMDB. This followed revelations by directors of IMDB that the company was insolvent and unable to repay its debts. On 28 June 2018, the president and chief executive officer, Arul Kanda was sacked for dereliction of duty. appointed PricewaterhouseCoopers (PwC) to review and perform an audit of IMDB. This followed revelations by directors of IMDB that the company was insolvent and unable to repay its debts. On 28 June 2018, the president and chief executive officer, Arul Kanda was sacked for dereliction of duty. The involvement of IMDB in the multi-billion ringgit Tun Razak Exchange development project barely a year after its establishment has drawn criticisms from the opposition. Opposition leader and Member of Parliament of Permatang Pauh, Anwar Ibrahim, openly questioned the credentials of the company. He told Parliament that according to the records held by the companies commission, IMDB "has no business address and no appointed auditor." He further questioned the former Prime Minister's, Najib Razak who is in the office back then, his interest in the approval given to IMDB on this matter. The RM425 million (US$140m) profit between 25 September 2009 and 31 March 2010 raised many criticisms and controversies on the lack of transparency given to IMDB's accounts. Tony Pua, DAP Member of Parliament for Petaling Jaya Utara questioned former Prime Minister Najib Razak, IMDB advisory board chairman, whether the figures were the result of an asset injection into IMDB by the government such as the transfer of land rights to the company. IMDB said that it had lodged the necessary information, including its registered address, with the Companies Commission of Malaysia (CCM) as required by the law. The business address is also available on the company's website, www.Imdb.com.my. During the October 2010 parliamentary session, IMDB explained that its accounts had been fully audited and signed by KPMG, and closed as of 31 March 2010. Deloitte was involved in the valuation and analysis of the portfolio, while Ernst & Young provided tax advice for IMDB. During 2013, IMDB raised attention again when they asking for a six-month extension on the annual report meant to be filed in with the Companies Commission of Malaysia (CCM) by 30 September 2013. In the meantime, the change of three auditors since its inception in 2009 was considered suspicious. After IMDB accumulated debts totalling RM42 billion (US$12bn), the bonds issued by the fund were downgraded to junk status by ratings agencies such as Standard & Poor's and Fitch Ratings. The Malaysian cabinet rejected a RM3 billion (SUSI billion) cash injection, narrowing IMDB's options to repay its debts on time. In 2015, allegations were made in several newspapers, including The Wall Street Journal, mentioned that the IMDB organisation had been used to steal state funds for transfer into the accounts of former Prime Minister Najib Razak, and people associated with him such as Jho Low. In August 2015, the Malaysian Anti-Corruption Commission (MACC) had confirmed that no IMDB. During 2013, IMDB raised attention again when they asking for a six-month extension on the annual report meant to be filed in with the Companies Commission of Malaysia (CCM) by 30 September 2013. In the meantime, the change of three auditors since its inception in 2009 was considered suspicious. After IMDB accumulated debts totalling RM42 billion (US$12bn), the bonds issued by the fund were downgraded to junk status by ratings agencies such as Standard & Poor's and Fitch Ratings. The Malaysian cabinet rejected a RM3 billion ($US1 billion) cash injection, narrowing IMDB's options to repay its debts on time. In 2015, allegations were made in several newspapers, including The Wall Street Journal, mentioned that the IMDB organisation had been used to steal state funds for transfer into the accounts of former Prime Minister Najib Razak, and people associated with him such as Jho Low. In August 2015, the Malaysian Anti-Corruption Commission (MACC) had confirmed that no funds from IMDB were transferred to the Prime Minister's private accounts as alleged by The Wall Street Journal. Following, IMDB's president and group executive director (CEO), Arul Kanda, appeared in a local TV programme to clarify issues and allegations against IMDB and also appeared in an interviewed with BFM 89.9 with host Ibrahim Sani and mentioned that IMDB has been cleared of any and all wrongdoing by the Malaysian Attorney General. In media interviews in September 2015, IMDB said some media reports concerning the company appear to be politically motivated. Its president and group executive director, Arul Kanda, also clarified that none of the company's accounts in Singapore have been frozen, In media interviews in September 2015, IMDB said some media reports concerning the company appear to be politically motivated. Its president and group executive director, Arul Kanda, also clarified that none of the company's accounts in Singapore have been frozen, rebutting news reports on the matter. The company has also dismissed claims of wrongdoing. In February 2016, Federal Bureau of Investigation (FBI) of the United States began probing the connection between a regional top executive of global investment bank Goldman Sachs with former Prime Minister Najib Razak and the nature of the former's involvement in multibillion-dollar deals with IMDB. Similar probes have also taken place or are currently undergoing in the United Kingdom, Australia, Hong Kong and Singapore into banks that facilitated transactions for IMDB. In May 2016, the Public Accounts Committee (PAC) of the Malaysian Parliament; consisting of several members of the parliament from both the ruling party and the opposition laid the blame for the troubles of IMDB on the board of the troubled state fund and its former chief, saying that the board had failed to carry out its responsibilities. In May 2018, after the formation of the new Cabinet following Pakatan Harapan's victory in the General Elections, Finance Minister Lim Guan Eng has ordered the appointment of PricewaterhouseCoopers (PwC) to conduct a special position audit and review of IMDB. (https://en.wikipedia.org/wiki/1Malaysia Development Berhad) QUESTION BI (4 MARKS) Describe how you understand the relationship between politics and the IMDB scandal. QUESTION B2 (5 MARKS) What are the roles religions in general can play in battling corruption and fraud? Referring to at least three hadiths of the Prophet (pbuh), explain the Islamic position on corruption and fraud. QUESTION B3 (4 MARKS) Will introducing and implementing new more rigorous international laws and standards curb the international corruption hazard? Deliberate the nature and scope of cooperation between governments, multinational corporations and international organizations in restraining international corruption. In the light of the following case, answer all questions that follow. The Scandal of 1Malaysia Development Berhad (1MDB) 1Malaysia Development Berhad (IMDB) is an insolvent Malaysian strategic development company, wholly owned by the Minister of Finance (Incorporated). Since 2015, the company has been under heavy scrutiny for its suspicious money transactions and evidence pointing to money laundering, fraud, and theft. A lawsuit filed by United States Department of Justice (DOJ), alleged that at least US$3.5 billion has been stolen from Malaysia's IMDB state-owned fund. IMDB was established to drive strategic initiatives for long-term economic development for the country by forging global partnerships and promoting foreign direct investment. IMDB focuses on strategic development projects in the areas of energy, real estate, tourism and agribusiness. IMDB was involved in several high-profile projects such as the Tun Razak Exchange, Tun Razak Exchange's sister project Bandar Malaysia, and the acquisition of three independent power producers. I Malaysia Development Berhad (IMDB) started off as Terengganu Investment Authority (TIA) which was initiated by the former Menteri Besar of Terengganu, Ahmad Said in 2008. TIA was a sovereign wealth fund with an initial fund of RMII billion aimed at ensuring the economic development of Terengganu state. The fund's purpose was to ensure a long term sustainable development while safeguarding the economic well-being of Terengganu residents. The TIA fund was derived from outstanding royalty income of RM6 billion and funds from bond issued by local and overseas financial markets. In addition, the Federal Government had proposed to provide a guarantee of RM5 billion based on Terengganu's future oil revenues. On 27 May 2009, Ismee Ismail and Shahrol Azral Ibrahim Halmi signed a deal arranged by Aminvestment Bank Bhd to raise RM5 billion via the issuance of Islamic medium term notes (IMTNs), despite being told not to do so by the Terengganu state government. This exercise was advised by TIA's special advisor, Jho Low. On 29 May 2009, TIA received RM4.385 billion in net proceeds from IMTN from the full value of RM5 billion. On 31 July 2009, Minister of Finance (Incorporated) (MOFI) took over TIA and amended its name to I Malaysia Development Bhd (IMDB). This acquisition by MOFI took place four months after Dato Sri Najib Razak became the Prime Minister of Malaysia. In his announcement on 22 July 2009, Najib said the decision to expand TIA into a federal entity was made to enable its benefits to reach a broader spectrum of Malaysians rather than the residents of only one state. In general, IMDB investments can be summarized as: Investment in PetroSaudi Holdings (Cayman) Ltd Investment in Segregated Portfolio Company (SPC) Investment in SRC Group Investment in real estate sector Investment in the energy sector On 10 March 2015, Auditor General of Malaysia under the mandate of the Cabinet and the Public Accounts Committee (PAC) was assigned to audit the financial statements of the IMDB Group and to evaluate whether the financial performance and activities of the IMDB 3 Group are aligned with the company's original objectives. However, on 4 March 2016, the audit report produced by the Auditor General of Malaysia was classified as Official Secrets Act under the Official Secrets Act 1972 by the National Security Council (Malaysia). After the victory of Pakatan Harapan in the 14th General Election in Malaysia, the audit report was declassified. The declassification was made on 15 May 2018 at the request of the seventh Prime Minister of Malaysia, Tun Dr Mahathir Mohamad. On 23 May 2018, the newly appointed Minister of Finance, Lim Guan Eng, appointed PricewaterhouseCoopers (PwC) to review and perform an audit of IMDB. This followed revelations by directors of IMDB that the company was insolvent and unable to repay its debts. On 28 June 2018, the president and chief executive officer, Arul Kanda was sacked for dereliction of duty. appointed PricewaterhouseCoopers (PwC) to review and perform an audit of IMDB. This followed revelations by directors of IMDB that the company was insolvent and unable to repay its debts. On 28 June 2018, the president and chief executive officer, Arul Kanda was sacked for dereliction of duty. The involvement of IMDB in the multi-billion ringgit Tun Razak Exchange development project barely a year after its establishment has drawn criticisms from the opposition. Opposition leader and Member of Parliament of Permatang Pauh, Anwar Ibrahim, openly questioned the credentials of the company. He told Parliament that according to the records held by the companies commission, IMDB "has no business address and no appointed auditor." He further questioned the former Prime Minister's, Najib Razak who is in the office back then, his interest in the approval given to IMDB on this matter. The RM425 million (US$140m) profit between 25 September 2009 and 31 March 2010 raised many criticisms and controversies on the lack of transparency given to IMDB's accounts. Tony Pua, DAP Member of Parliament for Petaling Jaya Utara questioned former Prime Minister Najib Razak, IMDB advisory board chairman, whether the figures were the result of an asset injection into IMDB by the government such as the transfer of land rights to the company. IMDB said that it had lodged the necessary information, including its registered address, with the Companies Commission of Malaysia (CCM) as required by the law. The business address is also available on the company's website, www.Imdb.com.my. During the October 2010 parliamentary session, IMDB explained that its accounts had been fully audited and signed by KPMG, and closed as of 31 March 2010. Deloitte was involved in the valuation and analysis of the portfolio, while Ernst & Young provided tax advice for IMDB. During 2013, IMDB raised attention again when they asking for a six-month extension on the annual report meant to be filed in with the Companies Commission of Malaysia (CCM) by 30 September 2013. In the meantime, the change of three auditors since its inception in 2009 was considered suspicious. After IMDB accumulated debts totalling RM42 billion (US$12bn), the bonds issued by the fund were downgraded to junk status by ratings agencies such as Standard & Poor's and Fitch Ratings. The Malaysian cabinet rejected a RM3 billion (SUSI billion) cash injection, narrowing IMDB's options to repay its debts on time. In 2015, allegations were made in several newspapers, including The Wall Street Journal, mentioned that the IMDB organisation had been used to steal state funds for transfer into the accounts of former Prime Minister Najib Razak, and people associated with him such as Jho Low. In August 2015, the Malaysian Anti-Corruption Commission (MACC) had confirmed that no IMDB. During 2013, IMDB raised attention again when they asking for a six-month extension on the annual report meant to be filed in with the Companies Commission of Malaysia (CCM) by 30 September 2013. In the meantime, the change of three auditors since its inception in 2009 was considered suspicious. After IMDB accumulated debts totalling RM42 billion (US$12bn), the bonds issued by the fund were downgraded to junk status by ratings agencies such as Standard & Poor's and Fitch Ratings. The Malaysian cabinet rejected a RM3 billion ($US1 billion) cash injection, narrowing IMDB's options to repay its debts on time. In 2015, allegations were made in several newspapers, including The Wall Street Journal, mentioned that the IMDB organisation had been used to steal state funds for transfer into the accounts of former Prime Minister Najib Razak, and people associated with him such as Jho Low. In August 2015, the Malaysian Anti-Corruption Commission (MACC) had confirmed that no funds from IMDB were transferred to the Prime Minister's private accounts as alleged by The Wall Street Journal. Following, IMDB's president and group executive director (CEO), Arul Kanda, appeared in a local TV programme to clarify issues and allegations against IMDB and also appeared in an interviewed with BFM 89.9 with host Ibrahim Sani and mentioned that IMDB has been cleared of any and all wrongdoing by the Malaysian Attorney General. In media interviews in September 2015, IMDB said some media reports concerning the company appear to be politically motivated. Its president and group executive director, Arul Kanda, also clarified that none of the company's accounts in Singapore have been frozen, In media interviews in September 2015, IMDB said some media reports concerning the company appear to be politically motivated. Its president and group executive director, Arul Kanda, also clarified that none of the company's accounts in Singapore have been frozen, rebutting news reports on the matter. The company has also dismissed claims of wrongdoing. In February 2016, Federal Bureau of Investigation (FBI) of the United States began probing the connection between a regional top executive of global investment bank Goldman Sachs with former Prime Minister Najib Razak and the nature of the former's involvement in multibillion-dollar deals with IMDB. Similar probes have also taken place or are currently undergoing in the United Kingdom, Australia, Hong Kong and Singapore into banks that facilitated transactions for IMDB. In May 2016, the Public Accounts Committee (PAC) of the Malaysian Parliament; consisting of several members of the parliament from both the ruling party and the opposition laid the blame for the troubles of IMDB on the board of the troubled state fund and its former chief, saying that the board had failed to carry out its responsibilities. In May 2018, after the formation of the new Cabinet following Pakatan Harapan's victory in the General Elections, Finance Minister Lim Guan Eng has ordered the appointment of PricewaterhouseCoopers (PwC) to conduct a special position audit and review of IMDB. (https://en.wikipedia.org/wiki/1Malaysia Development Berhad) QUESTION BI (4 MARKS) Describe how you understand the relationship between politics and the IMDB scandal. QUESTION B2 (5 MARKS) What are the roles religions in general can play in battling corruption and fraud? Referring to at least three hadiths of the Prophet (pbuh), explain the Islamic position on corruption and fraud. QUESTION B3 (4 MARKS) Will introducing and implementing new more rigorous international laws and standards curb the international corruption hazard? Deliberate the nature and scope of cooperation between governments, multinational corporations and international organizations in restraining international corruption.

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Answers and Explanation QB1 The IMDB scandal revealed the political influence on the film industry s... View the full answer