1MDB scandal: Key claims in US civil lawsuits

The US Justice Department is seeking to seize more than US$1 billion (S$1.35 billion) worth of assets which it claims were bought with money stolen from 1MDB.
The US Justice Department is seeking to seize more than US$1 billion (S$1.35 billion) worth of assets which it claims were bought with money stolen from 1MDB.PHOTO: REUTERS

The US Justice Department is seeking to seize more than US$1 billion (S$1.35 billion) worth of assets which it claims were bought with money stolen from Malaysia's state investor, 1Malaysia Development Berhad (1MDB).

It has alleged that over US$3.5 billion was misappropriated over several years using sham corporate vehicles and shell companies to divert funds for personal gain.

The civil action and asset seizures represent the largest single action ever brought by the department's Kleptocracy Asset Recovery Initiative, which seeks the forfeiture of proceeds of foreign corruption.

"Unfortunately and tragically, a number of corrupt officials treated this public trust as a personal bank account," Attorney General Loretta Lynch said at a news conference in Washington on Wednesday (July 20).

Here are the key claims in the US complaint:

1. "Malaysian Official 1" received hundreds of millions from 1MDB

The US documents said US$681 million from a 2013 bond sale was transferred to the account of "Malaysian Official 1". It described the person as "a high-ranking official in the Malaysian government who also held a position of authority with 1MDB."

Though the documents did not name the official, the description fits that of Malaysian Prime Minister Najib Razak, who until a few months ago, served as the chairman of 1MDB's advisory board.

Mr Najib has faced allegations that US$681 million was deposited into his personal bank account, but he has denied any wrongdoing. Malaysia's Attorney General Apandi Ali has cleared him of any wrongdoing, saying the money was a political donation from the Saudi royal family.

2. Mr Najib's stepson Riza Aziz spent over US$100 million on Hollywood movie

The US lawsuits named Mr Riza as a "relevant individual". He is the founder of Red Granite Pictures, which produced the Oscar-nominated 2013 movie directed by Martin Scorsese and starring Leonardo Decaprio. The movie made US$400 million at the box office worldwide.

Red Granite said on Wednesday (July 20) that none of the funding it received was illegitimate and nothing the company or Mr Riza did was wrong.

 

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3. Malaysian businessman Jho Low laundered hundreds of millions of dollars

The high-flying businessman, whose full name is Low Taek Jho, is Mr Najib's confidant who provided consultancy to 1MDB. He allegedly laundered the money to the United States and it was used to fund his lavish personal lifestyle.

In an eight-month period between 2009 and 2010, he allegedly transferred US$85 million to casinos in Las Vegas. The complaint said Mr Low gambled with DiCaprio.

4. Part of stolen money spent on high-end property, art collection and jet

Besides the Hollywood movie, part of the funds was spent on nearly 20 assets, including:

  • Property purchases such as a US$30.6 million penthouse at Time Warner Centre in New York; a US$39 million mansion in the Los Angeles hills; a US$17.5 million tear-down in Beverly Hills, and a £23.25 million (S$41.41 million) house in central London's exclusive Belgravia neighbourhood.
  • More than US$200 million was spent on artworks, including a pastel study of water lilies by Claude Monet called "Nympheas Avec Reflets de Hautes Herbes", and a pen-and-ink drawing by Vincent Van Gogh called "La Maison de Vincent a Arles".
  • US$35 million was used to buy a Bombardier Global 5000 business jet.

Each of the purchases was made anonymously, with the source of its financing hidden

5. Money from a US$3-billion bond offering handled by Goldman Sachs was misappropriated

The bond offering in early 2013 was among the deals investigated by the US. More than a third of the money was misappropriated by corrupt officials, said US Attorney Eileen Decker, who is the chief prosecutor in central California.

"Approximately US$137 million of the pilfered money was spent to purchase works of art, including a US$35 million work by Claude Monet," she said.

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.

6. Two men from Abu Dhabi named in US complaint

Besides Mr Riza and Mr Low, US presecutors also named two others: Mr Mohamed Badawy al-Husseiny, a former official at a government fund in Abu Dhabi, United Arab Emirates, that participated in deals with 1MDB, and Mr Khadem Al Qubaisi, a former Abu Dhabi government representative.

SOURCE: BLOOMBERG, NEW YORK TIMES, THE WASHINGTON POST, REUTERS