US goes after $1.4 billion in assets linked to Malaysian fund 1MDB
The United States moved on Wednesday to recover more than US$1 billion (NZ$1.43 billion) that federal officials say was stolen from a Malaysian wealth fund by people close to prime minister Najib Razak.
It is alleged the ill-gotten funds paid for luxury properties in New York and Beverly Hills in California, a US$35 million private jet and paintings by Vincent Van Gogh and Claude Monet. It was also used to settle gambling debts in Las Vegas casinos and to produce Hollywood film The Wolf of Wall Street.
The case alleges a complex money-laundering scheme that the US Justice Department says was intended to enrich top-level officials of a government-controlled Malaysian wealth fund, known as 1MDB.
That fund, created in 2009 by Najib, was aimed at promoting economic development projects in the Southeast Asian nation. Instead, officials at the fund are alleged to have diverted more than US$3.5 billion over the next several years through a web of shell companies and bank accounts in Singapore, Switzerland, Luxembourg and the US.
* Malaysia says it did not provide funds to produce Wolf of Wall St
* Pressure mounts on Malaysian Prime Minister to step down
* Malaysian's Najib Razak in clear over $1 billion gift from Saudis
About US$1.3 billon raised through purportedly legitimate bond offerings was swiftly transferred to a Swiss bank account and, from there, distributed to fund officials for their personal benefit.
"In seeking to seize these forfeited items, the Department of Justice is sending a message that we will not allow the United States to become a playground for the corrupt," US attorney Eileen Decker said at a news conference.
"And we will not allow it to be a platform for money laundering or a place to hide and invest in stolen riches," she added.
The money the government wants to recover reflects the amount officials were able to trace through the US financial system.
In a statement, Najib's press secretary said the "Malaysian authorities have led the way in investigations into 1MDB" and that the government would fully cooperate with the US investigation.
"As the Prime Minister has always maintained, if any wrongdoing is proven, the law will be enforced without exception," the statement said.
The US Justice Department says the forfeiture demand is the largest single action it's taken under its Kleptocracy Asset Recovery Initiative, which seeks to recover foreign bribery proceeds and embezzled funds.
"Neither 1MDB nor the Malaysian people ever saw a penny of profit from that film or from any of the other assets that were purchased with funds that were siphoned from 1MDB," said Assistant Attorney-General Leslie Caldwell, head of the US Justice Department's criminal division.
"Instead, that money went to relatives and associates of the corrupt officials of 1MDB and others."
Representatives of 1MDB said in a statement that it would cooperate.
The criminal complaints identify by name multiple Malaysian nationals that the government alleges profited from the scheme.
Among them is Riza Shahriz Bin Abdul Aziz, who co-founded Red Granite Pictures, a movie production studio whose films include The Wolf of Wall Street.
According to the complaint, eleven wire transfers totaling US$64 million were used to fund the studio's operations, including the production of the movie starring Leonardo DiCaprio.
Riza is the stepson of Najib, the prime minister, who is not named in the complaints.
But the Justice Department described Riza as a relative of an unnamed "Malaysian Official 1" – a high-ranking Malaysian government official with authority to approve all appointments and removals from 1MDB's board of directors and whose approval was needed for the fund's financial commitments.
Phone messages left at the movie studio on Wednesday were not immediately returned.
MALAYSIAN OPPOSITION CALLS FOR PM TO STAND DOWN
The leader of a Malaysian opposition party called on PM Najib Razak to step down after US prosecutors filed lawsuits linked to scandal-plagued state-owned fund 1Malaysia Development Berhad (1MDB).
Wan Azizah Wan Ismail, the president of the People's Justice Party (PKR), said the government should also push for an independent commission to investigate graft claims outlined by the civil suits filed in California on Wednesday.
"I believe the Malaysian people want Dato' Sri Najib to go on leave as prime minister so as not to create the perception of abuse of power or process to halt or hinder a full and transparent investigation on this very serious issue," Wan Azizah said in a statement.
SINGAPORE SEIZES $253M IN 1MDB PROBE
Singapore authorities on Thursday seized assets worth S$240 million (NZ$253 million) in an investigation of 1MDB-related fund flows for possible money laundering, in a probe which has found "deficiencies" at several major banks in the city-state.
"The fund flows being investigated include those connected with Good Star Limited (Seychelles), Aabar Investments PJS Limited (BVI), Aabar Investments PJS Limited (Seychelles), and Tanore Finance Corp. (BVI)," said a joint statement by the Monetary Authority of Singapore, the Attorney-General's Chambers and the Commercial Affairs Department.
"However, the MAS' inspections did not reveal pervasive control weaknesses or staff misconduct within these banks, unlike in the case of BSI Bank," the statement said.
In May, the MAS withdrew the status of Swiss BSI Bank as a merchant bank for serious breaches of anti money laundering requirements.
PM NAJIB RAZAK UNDER THE MICROSCOPE: A TIMELINE
January 2009: The Malaysian government launches 1 Malaysia Development Berhad (1MDB), a state-owned company aimed at encouraging foreign direct investment. Its chairman is deputy prime minister Najib Razak.
April 2009: Najib becomes prime minister of Malaysia and continues his role with 1MDB.
September 2009: 1MDB signs its first major deal, a joint venture with Saudi oil firm PetroSaudi. A draft report by Malaysia's auditor-general indicates that of US$1 billion invested from 1MDB, approximately US$700 million instead moves to another company's bank account. That company, Good Star, was set up by a young Malaysian financier called Low Taek Jho, or Jho Low.
May 2010: 1MDB signs deals with sovereign wealth funds in the Gulf emirates of Qatar and Abu Dhabi. Prime land in Kuala Lumpur is sold to 1MDB at below-market rates to develop a financial centre, in a joint venture with Abu Dhabi's state-owned Mubadala Development Company. After spending nearly US$2 million on a launch party, 1MDB ditches the event when Abu Dhabi's crown prince decides not to attend.
May 2014: The Sarawak Report, a whistleblowing website run by British investigative journalist Clare Rewcastle Brown, begins to publish allegations about misappropriation of state funds by 1MDB.
July 2015: Malaysia ignores an Australian request for assistance in a case involving allegations of bribery by two Australian Reserve Bank firms over contracts to print bank notes. People who had worked in the office of Najib are implicated but DFAT obtains a suppression order to prevent his name being linked to the case. The whistleblowing website WikiLeaks publishes the suppression order, forcing Victoria's Supreme Court to revoke it.
Malaysia's deputy prime minister Muhyiddin Yassin publicly calls for Najib to offer an explanation of the 1MDB scandal. He and four other ministers are promptly sacked, and Malaysian attorney-general Abdul Gani Patail is replaced with Mohamed Apandi Ali, a party ally of Najib's.
August 2015: The streets of Kuala Lumpur are filled with protesters demanding Najib's resignation over the scandal. In an address to party faithful Najib warns "white people" to stay out of Malaysia's affairs – widely seen as a reference to Clare Rewcastle Brown. Malaysia applies for an Interpol "red notice" to have her arrested and extradited. Interpol tells police forces to ignore the application.
January 2016: Despite continuing allegations that 1MDB is being used by Mr Najib as a personal and political slush fund, Attorney-General Mohamed Apandi Ali announces that a sum of US$681 million which reportedly flowed to Najib's account through an anonymous British Virgin Islands company and a Swiss private account owned by an Abu Dhabi sovereign wealth fund was a "personal donation" from the Saudi royal family. He says that US$620 million of the sum was returned unspent, there was no criminal offence and the matter is now closed. This prompts the Saudis to announce their own investigation.
February 2016: The New York Times quotes a member of the Saudi royal family and an associate of the royal family as saying that the money came from a Saudi prince – but that it was not a donation. The Swiss attorney-general's office says its investigators have found evidence suggesting that US$4 billion had been misappropriated from Malaysian state-owned companies.
March 2016: Najib tells a political rally in the Malaysian city of Kuantan that people shouldn't "think I am a crook".
April 2016: 1MDB denies that it had provided funds to finance the 2013 Hollywood film The Wolf of Wall Street.
May 2016: Authorities in Switzerland and Singapore open criminal proceedings against Swiss private bank BSI SA for allegedly failing to prevent suspected money laundering and bribery related to its dealings with 1MDB.
July 2016: US prosecutors sue to seize more than US$1 billion in assets they say are tied to an international scheme to launder money stolen from 1MDB, used to finance The Wolf of Wall Street and to buy property and famous works of art. Najib is not named in the suit, which refers instead to "Malaysian Official 1", however his stepson Riza Aziz is named, as are Jho Low and Abu Dhabi government officials Khadem Abdulla al-Qubaisi and Mohammed Ahmed Badawy al-Husseiny. It is the largest set of cases ever brought by the US Justice Department's Kleptocracy Asset Recovery Initiative.
- AP, Reuters, Fairfax Media Australia