1MDB, Bank Negara Malaysia, and the silence that still demands answers

Malaysia cannot claim to have truly reckoned with 1MDB while questions about its central bank remain unanswered.

From Kua Kia Soong

The 1MDB scandal was not a minor accounting failure. It was a multi-billion-ringgit crime that moved money across borders, corrupted institutions, and made Malaysia a global byword for kleptocracy.

In such a scandal, political culpability is only one part of the story. The other – and still largely unexamined – question is this: where were the regulators?

At the centre of that question stands Bank Negara Malaysia (BNM).

BNM is not a passive observer of financial misconduct. It regulates banks, enforces anti-money-laundering laws, receives suspicious transaction reports, and is tasked with monitoring transactions involving politically exposed persons. Even parents transferring a few thousand ringgit to their children studying abroad have to account to BNM.

The extraordinary debt, opaque guarantees, and vast cross-border fund movements associated with 1MDB were precisely the kind of activity that should have set off alarm bells. Yet for years, those bells appeared muted.

An inconvenient fact

What makes this silence noteworthy is that international investigative filings related to the 1MDB case referenced entities connected to individuals in positions of influence.

These filings, part of the US Department of Justice’s(DoJ) civil forfeiture efforts to recover assets allegedly misappropriated from 1MDB, outlined financial flows involving accounts linked to Najib Razak and investments associated with parties close to him. While these documents were sworn legal filings, they did not constitute criminal charges.

In any functioning regulatory system, such disclosures would immediately raise red flags – not only about possible wrongdoing, but about conflicts of interest at the very top of the financial oversight hierarchy.

In Malaysia, the matter was reportedly examined by enforcement authorities, including the MACC. No charges were ultimately brought. The case appeared to be closed.

What was never provided was a convincing public explanation.

What exactly was investigated? What evidence was examined? On what grounds was the matter closed? Were any conflicts of interest formally declared or managed?

The public was simply expected to move on. But silence is not exoneration. In a scandal of this magnitude, quiet closure without transparent accounting is itself a failure of accountability.

Two standards of scrutiny

Throughout the 1MDB saga, smaller players were hauled up, charged, named, and shamed. Bankers were prosecuted. Intermediaries were convicted. Politicians fell. Yet when questions reached the summit of regulatory power – BNM itself – they dissipated.

If the central bank knew what was happening at 1MDB, why was decisive action not taken sooner? If it did not know, how did such colossal transactions escape detection under its watch?

These are not personal attacks. They are institutional questions. And institutions cannot be rebuilt on reverence or silence.

An MACC investigation – or a parliamentary inquiry – would not presume guilt. It would establish facts. It would clarify what BNM knew, when it knew it, and how potential conflicts of interest were handled. It would finally explain why a case that loomed so large in international filings vanished so quietly at home.

The shadow that remains

Malaysia cannot claim to have truly reckoned with 1MDB while questions about its central bank remain unanswered. Political change alone is not reform. Real reform demands that no office, no regulator, and no elite circle is beyond scrutiny.

Until that happens, the shadow of 1MDB will continue to hang not just over politicians but over the very institutions meant to protect the public interest – and failed to do so when it mattered most. - FMT

Kua Kia Soong is a former MP and a former director of Suaram.

The views expressed are those of the writer and do not necessarily reflect those of MMKtT.