Malaysia: US Files Lawsuits to Recover $1 Billion Taken From 1MDB

U.S. authorities Wednesday filed court papers to “forfeit and recover” more than $1 billion in assets associated with what they called a global conspiracy to launder funds stolen from a Malaysian sovereign wealth fund overseen by Prime Minister Najib Tun Razak.

The dozen civil forfeiture complaints brought by the Department of Justice did not name Najib but linked him to the 1Malaysia Development Berhad, or 1MDB, scandal. U.S. Attorney General Loretta Lynch said it was an “international conspiracy” to launder funds through American institutions.

The bid to seize the assets is the first action by the U.S. government in relation to the 1MDB investigations for money-laundering involving at least five other countries, including Singapore and Switzerland.

Najib had been tied to the scandal for the past year since the Wall Street Journal (WSJ) reported in July 2015 that nearly $700 million ended up in his private bank accounts.

Since then, the newspaper reported that millions of dollars of money linked to 1MDB, a company wholly owned by the Malaysian government, was spent by Najib to fund a lavish lifestyle.

“Today, the Department of Justice filed a civil complaint seeking to forfeit and recover more than $1 billion in assets associated with an international conspiracy to launder funds stolen from” 1MDB, a company wholly owned by the government of Malaysia,” Lynch told a press conference in Washington.

She said that the $1 billion in assets was “just a portion of more than $3 billion that was stolen from 1MDB and laundered through American financial institutions in violation of U.S. law.”

“1MDB was created by the Malaysian government to promote economic development through international partnerships and foreign direct investment, with the ultimate goal of improving the well-being of the Malaysian people,” Lynch said.

“Unfortunately, a number of corrupt 1MDB officials treated this public trust as a personal bank account,” she said.

Malaysia responds

Najib has denied wrongdoing or taking money for personal gain over the 1MDB affair.

Reacting to the American legal action, Najib's spokesman, Tengku Sariffuddin, said the Malaysian government would cooperate with any international investigation into the 1MDB case.

"We note the United States Department of Justice’s civil lawsuits brought against various assets. As previously stated, the Malaysian Government will fully cooperate with any lawful investigation of Malaysian companies or citizens in accordance with international protocols," he said in a statement issued on Thursday (Malaysian time).

"As the Prime Minister has always maintained, if any wrongdoing is proven, the law will be enforced without exception."

Tengku Sariffuddin noted that the Malaysian Attorney General had found that that "no crime was committed" over the 1MDB case. He acknowledged however that it is still the subject of an investigation by the police.

‘Malaysian Official 1’

The U.S. lawsuit made more than 30 references to “Malaysian Official 1” – an obvious reference to Najib, who had been accused of receiving hundreds of millions of dollars in funds siphoned from 1MDB.

A person with direct knowledge of the investigation confirmed to the Wall Street Journal that “Malaysian Official 1” was indeed Najib.

The lawsuit cited a statement made in January by Malaysian Attorney-General Mohamed Apandi Ali over the transfer of nearly $700 million to the account of “Malaysian Official 1.”

Apandi had confirmed that $681 million was transferred into the personal account of Najib.

The top Malaysian government lawyer had said Najib had not committed any crime, and that the money in the prime minister’s bank account was a political donation from the Saudi royal family and that he (Najib) had returned the bulk of it ($620 million) to the Saudi royal family.

The lawsuit traced funds that flowed between the account of “Malaysian Official 1” and "Eric" Tan Kim Loong, a business associate of Malaysian financier Low Taek Jho, better known as Jho Low who is a close associate of Najib.

Also identified in the lawsuit was Najib’s stepson Riza Aziz, the founder of Red Granite Pictures, which produced the Oscar-nominated "The Wolf of Wall Street.”

All those identified were not charged with any crimes.

The defendants in the civil lawsuits are the properties that the U.S. authorities want to seize.

The U.S. government is seeking forfeiture of the Park Lane Hotel as part of a series of lawsuits to recover more than $1 billion taken from Malaysia’s 1MDB. [Courtesy U.S. Department of Justice]

Among the items that the U.S. government is seeking in forfeiture are a bombardier jet, penthouses and condominiums in New York City, properties in Beverly Hills, Calif., including a mansion, artwork by Vincent Van Gogh and paintings by Claude Monet.

The lawsuit said Tan was “the stated beneficial owner of several bank accounts into which misappropriated 1MDB funds were transferred.”

It claimed that U.S. $681 million was transferred from the Tanore account, whose “recorded beneficial owner” was Tan, to Malaysian Official 1 between March 21 and 25, 2013. Out of this, about $620 million was returned to the Tanore account in August 2013.

Kleptocracy initiative

The court case is the largest single action ever brought by the Justice Department’s Kleptocracy Asset Recovery Initiative, which was established in 2010 to forfeit the proceeds of foreign official corruption and, where possible, to use the recovered assets to benefit the people harmed.

“The United States will not be a safe haven for assets stolen by corrupt foreign officials,” FBI Deputy Director Andrew G. McCabe said.

An FBI criminal investigation into money laundering and fraud over the 1MDB case also is ongoing in the U.S., according to a person familiar with the probe, the WSJ reported Wednesday.

“Public corruption, no matter where it occurs, is a threat to a fair and competitive global economy. The FBI is committed to working with our foreign and domestic partners to identify and return these stolen assets to their legitimate owners, the Malaysian people,” McCabe said.

The lawsuit charged that Najib’s step son’s company received $238 million from some of the transaction linked to 1MDB, of which some was used to fund his movie production company, Red Granite Pictures, and to purchase luxury real estate in the U.S. and Britain.

“This is a case where life imitated art,” U.S. Assistant Attorney General Leslie R. Caldwell said in a statement.

“The associates of these corrupt 1MDB officials are alleged to have used some of the illicit proceeds of their fraud scheme to fund the production of ‘The Wolf of Wall Street,’ a movie about a corrupt stockbroker who tried to hide his own illicit profits in a perceived foreign safe haven.

“But whether corrupt officials try to hide stolen assets across international borders – or behind the silver screen – the Department of Justice is committed to ensuring that there is no safe haven.”