Kuwait City: In recent months, Kuwaiti press reports have been dominated by money laundering scandals. This has prompted the public to ask: What is happening?
Although many of these cases have been going on for a few years, the recent push by the government to conduct investigations into the cases has not gone unnoticed.
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From the massive Malaysian Fund scandal (known as the 1MBD case) to social media influencers, the money laundering cases have involved not only Kuwaitis, but also foreign individuals and entities.
Why now?
Dr Hesham Al Saleh, a Kuwaiti lawyer, told Gulf News: “There are a number of reasons we are hearing about the money laundering cases. First, is the foreign pressure being put on Kuwait to address these issues. Second, is the fact that the money laundering cases are transcending borders. Third, the rise of social media and the accessibility to news and information. Finally, there needs to be additional monitoring and security agencies, like the Anti-Corruption Authority”
“Money laundering and corruption are not a new phenomenon as they have been going on for a long time,” Saleh Al Mulla, former MP told Gulf News. “But we see it coming up now because the international and local media have shed light on the issue, foreign governments were involved and [also due to] some acts of reform within the government.”
The Kuwaiti people knew that there was corruption in the country, but not everybody knew these many cases were happening and exactly who was involved.
Public pressure also raised awareness about the rise in corruption in Kuwait, said Al Mulla. Back in November 2019, an anti-corruption demonstration, organised by Al Mulla, drew thousands of Kuwaitis. A week after the protest, the then-Prime Minister, Sheikh Jaber Mubarak, submitted his resignation to “clear the way for rearranging the Cabinet,” Tareq Al Mezrem, the government’s spokesman, said.
“The Kuwaiti people knew that there was corruption in the country, but not everybody knew these many cases were happening and exactly who was involved,” Al Mulla said.
Government response
Last month, the Emir Sheikh Sabah Al Ahmad Al Jaber Al Sabah, addressed his concerns in portraying Kuwait as a hotbed for corruption. During a meeting with the Kuwait Anti-Corruption Authority and key ministers, the Emir called upon the Kuwait Anti-Corruption Authority to contain the spread of false accusations and unjust campaigns with regards to corruption in Kuwait.
We have seen the spread of information throughout various social media platforms that accuses and offends Kuwait, with no credible evidence, of becoming a breeding ground for corruption.
The Anti-Corruption Authority was established with the enactment of Law number 2 of the year 2016 and was set up in response to the requirements of the United Nations Convention against Corruption (UNCAC) which, in its sixth article, stipulates that “each State Party shall, in accordance with the fundamental principles of its legal system, ensure the existence of a body or bodies, as appropriate, that prevent corruption”.
“We have seen the spread of information throughout various social media platforms that accuses and offends Kuwait, with no credible evidence, of becoming a breeding ground for corruption,” the Emir said.
The Prime Minister, Sheikh Sabah Al Khalid Al Sabah, 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.”
During an interview with Al Qabas, United States Ambassador to Kuwait, Alina Romanowski, revealed that Washington is cooperating with Kuwait to combat money laundering. In addition, Ambassador Romanowski mentioned that the US is ready to provide legal and technical assistance.
“It is in everybody’s best interest to fight corruption, especially when it has an effect on the economy and is being used to fund terrorism,” Al Saleh said.
Law No. 106: Money laundering
Kuwait has a money laundering legislation, Law No. 106 of 2013, which basically states that any money obtained illegally is considered money laundering.
“The term 'money laundering' does not only mean receiving money from the sale of illicit substances, but it also means funds that are obtained in an illegal manner through a briber or personal gains,” Al Saleh pointed out.
For a person to be charged with money laundering, the public prosecutor has to prove that the person being accused had knowledge that the money was obtained illegally.
“The problem with the law is that it has some gaps, so you can accuse somebody of money laundering but they can say that they didn’t know that the money was received illegally,” Al Mulla explained.
Al Mulla added: “It is important to note that the law was established after 9/11, with some pressure from the Americans, to monitor money laundering cases that are connected to terrorism.”
Although there is a law to combat money laundering, many people have suggested the bill be changed in order for there to be greater accountability.
This law is not the first money laundering law. The previous law, established in 2003, also dealt with money laundering. The keys difference between the two is that Law No 106 of 2013 addresses the issue of terrorism, while the old law did not.
“Other than changing the existing law, we also need to restructure the monitoring agencies, increase the number of employees and go about addressing money laundering matters in a sincere and proactive manner,” Al Saleh said.
1MBD: Kuwaiti link to international scandal
The Malaysian fund scandal, otherwise known as 1Malaysian Development Berhad (1MBD) case, was one of the most high-profile money laundering cases in Kuwait. It involved the son of a former prime minister and was connected to international investigation originating in Malaysia.
Sheikh Sabah Jaber Al Mubarak Al Sabah, son of the former prime minister, was arrested on July 8 on money laundering charges relating to the Malaysian fund case, Al Qabas reported.
The 1MBD case began in 2015 when then-Prime Minister of Malaysia, Najib Razak, was charged with funnelling money from the 1Malaysian Development Berhad, 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 zeroing in on Low and his activities.
The WSJ said the Malaysian investigators were able to track the flow of 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 off debts related to 1MBD.
On July 12, Al Mubarak was released on bail set at 50,000 Kuwaiti dinars, local media reported.
“The fact that he was bailed a few days after they were arrested shows that they are not serious about fighting corruption and money laundering,” Al Mulla pointed out.
A new scandal: Case of the Bangladeshi MP
The issue of illegal permit trading has plagued Kuwait for the past decade and has created multiple problems ranging from the demographic imbalance to human rights violations.
In an effort to crackdown on illegal permit trading, the government has launched an investigation into various individuals and companies that are allegedly in the businesses of trading permits that led to corruption in various forms.
One of the big players in the permit trading scheme is Mohammed Shahid Islam, a Bangladeshi MP who has various business dealings in Kuwait.
Back in June 8, Islam was arrested on charges of human trafficking, money laundering and bribery, according to local media.
In terms of human trafficking, Islam is accused of bringing thousands of Bangladeshis to Kuwait in exchange for money, usually ranging around 1,500 to 2,000 Kuwaiti dinars, Al Qabas reported.
As for bribery, Islam is accused of paying bribes to high ranking governmental employees in exchange for them fast tracking his businesses transactions.
One such Kuwaiti official is Major General Mazen Al Jarrah, the Assistant Under-Secretary of Kuwait’s Ministry of Interior, Al Qabas reported. Al Jarrah was detained on July 10 and is charged with accepting bribes from Islam.
According to Al Anba newspaper, Al Jarrah and Islam are still being held in detention.
Two members of parliament are also accused of having ties to Islam. On July 13, the public prosecution requested parliament lift immunity on two MPs, Saadoun Hammad and Salah Khorshid, after Islam confessed that he paid them 570,000 Kuwaiti dinars in exchange for facilitating transactions to recruit Bangladeshi workers from various government agencies, according to Al Jarida newspaper.
Islam is the managing director and CEO of Marafie Kuwaitia Group, a security and labour contracting company. In addition, Islam has three other companies in Kuwait, all of which are cleaning and contracting companies.
Islam has an annual net profit of around two million Kuwaiti dinars after all the bribes and money he spent on gifts in exchange for facilitating transactions and paperwork to bring in workers from Bangladesh.
Social media influencers
In recent weeks, cases involving several social media influencers have been referred to the attorney general’s office for investigation.
On July 25, the Attorney General Dharar Al Asousi ordered the immediate seizure of 10 social media influencers’ assets and issued them with a travel ban, as they are allegedly accused of money laundering.
The public prosecution’s decision was made after it received 10 complaints against five social media influencers, whose financial assets have drastically increased.
In addition to the social media influencers, four perfume companies are under surveillance for allegedly being involved in money laundering schemes, Al Qabas reported. A source revealed to Al Qabas that the perfume brands are involved in suspicious operations with some famous social media influencers.
The source also added that the perfume brands are believed to be using the companies as a cover to launder money obtained from the sale of drugs and alcohol.
