EARLIER this year authorities in Switzerland said they had begun criminal investigations into two former officials at 1MDB—a Malaysian state investment firm from which they believe some $4 billion may have been misappropriated through a series of deals struck between 2009 and 2013. On April 12th the Swiss said the scope of their enquiries was widening, and that they have now also opened files on two former public officials from the United Arab Emirates.
This latest escalation relates to a deal struck in 2012, in which IPIC, an Abu Dhabi state fund, agreed to guarantee bonds raised by 1MDB to purchase two power firms. 1MDB paid billions of dollars in collateral (and other monies linked to the guarantee) to a company registered in the British Virgin Islands, which bore a similar name to one of IPIC’s subsidiaries. But on April 11th IPIC issued a statement to the London Stock Exchange confirming rumours that it did not own the firm.
The Swiss investigators say they have reason to suspect that instead of going to IPIC the sums benefited the two Emirati public officials it is investigating, as well as “a company related to the motion picture industry”. In early April the Wall Street Journal reported that investigators in two countries believe more than $150m originating from 1MDB found its way to Red Granite Pictures, a film-production company co-founded by the stepson of Malaysia’s prime minister, Najib Razak. This firm subsequently financed “The Wolf of Wall Street”, a Hollywood film about a hedonistic crook, starring Leonardo DiCaprio.
Red Granite denies any wrongdoing and says it is co-operating with enquiries. 1MDB says it finds IPIC’s claim not to have benefited from its payments “surprising”, and says it has not given money to Red Granite. Swiss authorities note that the two Emiratis under investigation, like all defendants, are “presumed innocent”.

The Swiss attorney-general’s statement comes days after the release of a long-awaited report into 1MDB’s affairs, produced by MPs on Malaysia’s public-accounts committee. That enquiry was temporarily suspended last summer when Mr Najib promoted several of the committee’s members to the cabinet. The report identifies irregularities in several large transactions, though it stops short of alleging outright fraud. Tony Pua, an opposition lawmaker and one of the report’s authors, regrets that 1MDB was unable to provide the committee with all the documentation it requested.
The report lambasts the firm for borrowing billions, much of it under a Malaysian government guarantee, without securing enough cash flow to service its debt (which in January stood at around $12 billion but which will probably soon fall as 1MDB sells off big land and power holdings). Its authors criticise 1MDB’s board for failing to properly scrutinise its executives, and recommend that police investigate the firm’s former boss, Sharol Halmi, who now works in the prime minister’s office. But they have nothing to say about the $1 billion or so which is said to have entered accounts belonging to Mr Najib, some of which critics allege was siphoned out of the firm. (Mr Najib says that he has never taken public money for personal gain; Malaysia’s attorney-general says the prime minister received a legal personal donation from a Saudi royal, and that much of the cash was returned.)
1MDB’s board immediately offered to step down—perhaps pleased to extricate themselves from what has become one of the biggest controversies in Malaysian political history (it is not clear if their resignations have been accepted). Mr Najib’s camp says the report is further proof that the prime minister has done nothing wrong. But the committee’s hearings have drawn greater attention to a section in the 1MDB’s articles which appears to say that the firm may make no major investment without the prime minister’s approval. Mr Pua has written that Mr Najib’s signatures are “littered all over 1MDB”.
The progress of foreign investigations—under way not just in Switzerland but also in America, Singapore, Hong Kong and the UAE—will be closely watched by banks which helped 1MDB raise money, handled the firm’s cash or took Mr Najib’s deposits. Their ranks include Goldman Sachs, BSI, a Swiss private bank, and AmBank, which is part-owned by Australia’s ANZ. As for Mr Najib, whose party has led Malaysia’s ruling coalitions for six decades, his position looks safe for the moment. The public-accounts committee’s report marks the end of a handful of official enquiries into 1MDB’s dealings which Malaysia launched last year. The text of an earlier report, produced by the auditor-general, has been declared an official secret.