Malaysia’s shock election result is poised to blow open a long dormant money-laundering probe at UBS. This is unwelcome news for the Swiss bank, as it muddles through another regulatory probe in Asia.

Musa Aman is one of the main losers of Malaysia’s election upset in May: the long-standing state politician was eventually ousted after Prime Minister Najib Razak was defeated by former, and now again, PM Mahathir Mohamad.

Musa, the former governor of Sabah, a mountainous state on the northern tip of Borneo rich in oil, timber and palm oil, is in hot water in Malaysia. He has been summoned to give evidence to an anti-corruption body, reportedly over allegedly buying support in an earlier election.

Dormant Complaint Woken Up

He is also in trouble in Switzerland: the Bruno Manser Foundation, a Swiss non-profit organization, lodged a criminal complaint against Zurich-based UBS in 2012. The NGO claims that the Swiss bank had helped Musa launder millions in ill-gotten funds.

The probe has long lain dormant, with Bern’s prosecutors cooling their heels because Malaysia wouldn’t offer legal assistance. But the May election upset shuffled the deck: on Tuesday, Malaysia appointed veteran lawyer Tommy Thomas as attorney general.

Hopes for a More Cooperative Malaysian Justice

The four-decade veteran of corporate and commercial law follows Mohamad Apandi Ali, the now-suspended attorney general who stands accused of squelching evidence in the 1MDB probe.

In Switzerland, hopes are running high among prosecutors for a more cooperative Malaysian justice machinery as a result. «After the recent developments in Malaysia, the attorney general remains very interested in working with the responsible Malaysian authorities,» a spokeswoman for the Bern-based prosecutor told finews.com. 

Most Surprising Development

It remains to be seen whether Thomas, an ethnic Indian who prevailed against lobbying for a Muslim Malay in the job, represents an about-face in the Musa probe.

It wouldn’t be the most surprising development since May 9: Najib has been prevented from traveling abroad, his homes have been searched, and he and his wife, Rosmah Mansor, have given evidence to the Malaysian Anti-Corruption Commission, or MACC.

An Unwelcome Distraction

Mansor was reportedly a big beneficiary of 1MDB’s largesse, including luxury handbags and jewelry, while Najib is said to have pocketed election funding.

For UBS, the Malaysian developments represent an unwelcome distraction. The bank has put behind it a reprimand by Singapore 17 months ago over its involvement in the 1MDB probe. UBS is currently fighting to salvage its ability to sponsor initial public offerings in Hong Kong, as finews.com revealed in March. But a revival of the Musa probe in Switzerland could far eclipse the IPO sponsoring ban – and UBS knows it.

A Swift Conclusion?

The bank has fought deeper scrutiny by prosecutors to Switzerland’s highest court – unsuccessfully so, after a 2016 verdict. The case is emblematic of how Switzerland’s various agencies – namely public prosecutor and banking regulator – pursued different aims with varying degrees of rigor. Switzerland's banking regulator, Finma, told finews.com it wrapped up its probe into UBS and Malaysia, without disclosing details.

Meanwhile, the Swiss criminal investigation could end very quickly, according to Lukas Straumann, head of the Bruno Manser Foundation, which lodged the 2012 criminal complaint.

«UBS has to reckon with a criminal penalty,» Straumann told finews.com. A spokesman for the Swiss bank didn’t comment.

As for Musa himself, the former dropped out of sight, after initially assuring that he would cooperate with an anti-corruption body. Amid reports that he had fled to London, Musa’s lawyer said he is merely seeking medical treatment, and would return to face investigators. His lawyer didn’t disclose his whereabouts.