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Sheikh Sabah, arrested for money laundering, sought to buy land in Malaysia which was the same size as Kuwait City and then attract middle class Kuwaiti investors. Image Credit: File photo

Abu Dhabi: Arrested on charges of money laundering, influence peddling and squandering public funds, Sheikh Sabah Jaber Al Mubarak Al Sabah - the son of the former prime minister - had sought to buy land the size of Kuwait City in Malaysia for 200 million dinars ($654 million). The aim was to attract middle class investors in Malaysia, Kuwaiti media reported.

Sheikh Sabah and his business partner Hamad Al Wazzan, were arrested on July 8.

The money was transferred to Malaysia, but it was frozen after Mahathir Muhammad’s party won the elections and was appointed Prime Minister, and the subsequent investigation into corruption known as the ‘Malaysian Sovereign Fund’ case, and the arrest of former Prime Minister Najib Abdul Razzaq, sources told Al Qabas.

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The sources pointed out that the foreign bank in Kuwait that transferred the funds to Malaysia remained silent about this huge money transfer, and did not report it in a timely manner, justifying that by saying, “We have confidence in our customers.”

The prosecution came to the decision after reviewing all bank documents and financial transactions, linking him to the 1MBD case.

“Nobody is above the law in Kuwait and the country’s international reputation is a red line,” a source told Al Qabas. A travel ban has also been issued against Sheikh Sabah.

Sources said during interrogation, Sheikh Sabah had always asked that Al Wazan attend saying, “He was my financial advisor.”

In 2018, the Financial Intelligence Unit sent a letter to the security services, described by the sources as “sleazy” about the transfer of the huge sum of money to Malaysia.

The sources said inaction by the Kuwait’s Financial Intelligence Unit may indicate suspicion of collusion with Sheikh Sabah.

Connection to 1MBD

Last month, the Public Prosecution obtained files of three Kuwaiti companies that were indicted on charges of money laundering in relation to the 1MBD case.

Back in May, the Kuwaiti Cabinet was investigating media reports that presumably linked Kuwait-based companies to a Chinese company and the former Malaysian government.

The 1MBD case began in 2015 when then-Prime Minister Najib Razzak was charged with funnelling money from the 1Malaysian Development Berhad (1MBD), a state-owned investment fund, to his personal account. Fugitive Malaysian financier Jho Low is the prime suspect in the case.

According to a report by the Wall Street Journal (WSJ), Low’s ties to Sheikh Sabah allowed him to gain new business deals and new channels for laundering money. Low and Sheikh Sabah’s relationship began in 2016, as the US authorities were honing in on Low and his activities.

The WSJ said that the Malaysian investigators were able to track money from China to a Chinese bank in Kuwait that was then transferred to an entity partially controlled by Low in the Cayman Islands. That money, approximately $1 billion, was then used to pay for Low-controlled assets in Malaysia to pay for debts related to 1MBD.

Fight against corruption

There have been a series of corruption scandals in Kuwait in the last few months, from the 1MBD scandal to the arrest of a Bangladeshi MP for human trafficking and money laundering.

Last month, the Emir expressed his concerns regarding Kuwait’s image as a ‘hotbed of corruption’.

The Prime Minister also addressed the issue of corruption as he said, “nobody will be protected by their position or name if they have committed a crime that infringes on public money.”