U.S. sues to seize $1 billion in assets tied to Malaysian state fund


Email Print

U.S. Attorney General Loretta E. Lynch announces the filing of civil forfeiture complaints seeking the forfeiture and recovery of more than $1 billion in assets associated with an international conspiracy to launder funds misappropriated from a Malaysian sovereign wealth fund 1MDB in Washington July 20, 2016. U.S. Attorney General Loretta E. Lynch announces the filing of civil forfeiture complaints seeking the forfeiture and recovery of more than $1 billion in assets associated with an international conspiracy to launder funds misappropriated from a Malaysian sovereign wealth fund 1MDB in Washington July 20, 2016.


U.S. prosecutors are trying to seize more than $1 billion in assets they said were tied to money stolen from the Malaysian state fund, overseen by the prime minister, and used to finance "The Wolf of Wall Street" film, and to buy property and works of art.
Civil lawsuits filed in federal court on Wednesday did not name Malaysian premier Najib Razak, referring instead to "Malaysian Official 1." Some of the allegations against this official are the same as those in a Malaysian investigation over a $681 million transfer to his personal bank account.
The U.S. Department of Justice said $681 million from a 2013 bond sale by sovereign wealth fund 1MDB was transferred to the account of "Malaysian Official 1." He is described in court papers as "a high-ranking official in the Malaysian government who also held a position of authority with 1MDB."
A source familiar with the investigation confirmed that "Malaysian Official 1" is Najib.
Back in Malaysia, the hashtag #MalaysianOfficial1 was trending on Thursday.
A spokesman for the prime minister said in a statement that 1MDB has been the subject of multiple inquiries in Malaysia and "the Attorney General found that no crime was committed."
The Malaysian government will cooperate fully with any lawful investigations, the statement said. Najib has consistently denied any wrongdoing.
The investigation is the largest set of cases brought by the U.S. Department of Justice's Kleptocracy Asset Recovery Initiative, which seeks the forfeiture of the proceeds of foreign corruption. The previous largest case in February sought to seize $850 million.
1MDB, which Najib founded in 2009 shortly after he came to office, is being investigated for money laundering in at least six countries, including the United States, Singapore and Switzerland.
Singapore's central bank said on Thursday authorities have seized assets worth S$240 million in an investigation of 1MDB-related fund flows for possible money laundering, securities fraud, cheating and other offenses.
About half the seized assets belonged to Malaysian financier Low Taek Jho, known as "Jho Low", and his immediate family.
The Monetary Authority of Singapore said its probe found "deficiencies" at several major banks in the city-state.
1MDB said in a statement "it is not a party to the civil suit, does not have any assets in the United States of America, nor has it benefited from the various transactions described in the civil suit."
The fund said it has not been contacted by the Justice Department or any other foreign agency on the matter.
High-end property, luxury goods
Money stolen from the fund moved through shell companies and hidden in the United States in purchases of high-end property and luxury items, U.S. prosecutors said.
The people and institutions named in the complaint have not been charged with crimes, but the government wants to seize assets, among them luxury properties in New York and California, Monet and Van Gogh paintings and a Bombardier jet.
The Justice Department said it will seek to return recovered funds to Malaysia. "The Malaysian people were defrauded on an enormous scale ..." FBI Deputy Director Andrew McCabe said at the briefing in Washington.
Malaysia's attorney general said in January the money in Najib's bank account was a political donation from the Saudi royal family. Saudi Foreign Minister Adel Al-Jubeir said in April funds wired into Najib's personal bank account were a "genuine" donation originating from Saudi Arabia.
A spokesman for the Saudi embassy in Washington declined to comment on Wednesday.
The leader of Malaysia's opposition People's Justice Party called on Prime Minister Najib Razak to step down on Thursday.
Wan Azizah Wan Ismail, the wife of jailed opposition figure Anwar Ibrahim, said the government should also push for an independent commission to investigate graft claims outlined by the civil suits filed in California on Wednesday.
Former Prime Minister Mahathir Mohamad said on Thursday Malaysians should push for a referendum on Najib's leadership as he launched a new opposition front that Anwar has endorsed.
Goldman Sachs arranged transaction
The U.S. lawsuits seek to seize assets "involved in and traceable to an international conspiracy to launder money misappropriated from 1MDB" over a four-year period.
One transaction targeted by prosecutors was a $3-billion bond offering in early 2013 that was arranged by Goldman Sachs International, said U.S. Attorney Eileen Decker at the briefing. She is the chief prosecutor in central California.
More than a third of that money was misappropriated by corrupt officials, she said.
"Approximately $137 million of the pilfered money was spent to purchase works of art, including a $35 million work by Claude Monet," Decker said. She said funds diverted from one bond offering were also traced to the purchase of an interest in the Park Lane Hotel in New York. Prosecutors want forfeiture of about $250,000 invested in the hotel.
Goldman Sachs has not been accused of any wrongdoing.
"We helped raise money for a sovereign wealth fund that was designed to invest in Malaysia. We had no visibility into whether some of those funds may have been subsequently diverted to other purposes," a Goldman Sachs spokesman said.
The lawsuits name Najib’s stepson Riza Aziz as a “relevant individual." Riza is the founder of Red Granite Pictures, which produced the Oscar-nominated 2013 movie “The Wolf of Wall Street” directed by Martin Scorsese. Tens of millions of dollars diverted from 1MDB were used to produce it, prosecutors said.
The movie made $400 million at the box office worldwide.
Red Granite said on Wednesday that none of the funding it received four years ago was illegitimate and nothing the company or Riza did was wrong.
Paramount Pictures, actor and producer Leonardo DiCaprio and Scorsese could not immediately be reached for comment.
Leslie Caldwell, assistant U.S. attorney general, said money was diverted from 1MDB bond offerings through a Swiss bank account and shell companies around the world to Red Granite.
"Of course, neither 1MDB nor the Malaysian people ever saw a penny of profit from that film," Caldwell told the briefing.
Malaysia's Prime Minister Najib Razak speaks at the opening of a conference in Kuala Lumpur, Malaysia, January 25, 2016.
The lawsuits also named Jho Low and Abu Dhabi government officials Khadem Abdulla Al-Qubaisi and Mohammed Ahmed Badawy Al-Husseiny. Al Qubaisi and Al-Husseiny are former officials at a sovereign fund in Abu Dhabi that participated in deals with 1MDB.
Jho Low did not respond to requests for comment sent to his Hong Kong-based company, Jynwel Capital. Al Qubaisi and Al-Husseiny could not be reached for comment.
Some of the misappropriated 1MDB funds “are directly traceable to a $700 million wire transfer and $330 million wire transfer unlawfully diverted from 1MDB to the Good Star Account,” owned by Jho Low, one of the lawsuits said.
Other misappropriated funds from 1MDB were transferred to the co-founder of PetroSaudi, a company that had a joint venture deal with 1MDB, and thereafter to the high-ranking official identified only as "Malaysian Official 1".
Diplomatic and trade relations between the United States and Malaysia have grown closer during the administration of President Barack Obama, who has visited the southeast Asia country twice in the last two years.
Asked for a response to the allegations, a top White House official distanced Obama from the Justice Department's litigation.
"The simple answer is we do not have any control over Justice Department actions," Ben Rhodes, deputy national security adviser told Reuters during a visit to Myanmar.

More World News