The luxury yacht, Equanimity, which fugitive businessman Low Taek Jho allegedly bought with funds embezzled from 1Malaysia Development Berhad (1MDB), is now in the custody of Malaysian authorities and on its way to Port Klang.
Indonesian national police, responding to queries from The Straits Times, confirmed that the yacht was released to their Malaysian counterparts in the waters off Batam yesterday.
Malaysian Prime Minister Mahathir Mohamad thanked Indonesia's President Joko Widodo later that same day for facilitating the yacht's handover to Putrajaya.
He said in a Facebook post yesterday that he was grateful to President Joko for cooperating with Malaysia to resolve the issue.
The handover of the US$250 million (S$342 million) Cayman Islands-registered sailboat, comes after a six-month legal tussle between the United States Department of Justice (DOJ) and the yacht's registered owner, Equanimity Cayman, over its custody, which ended last week.
Equanimity Cayman challenged the yacht's seizure by Indonesian police in Bali in late February, on behalf of the DOJ.
It was taken after Mr Low, better known as Jho Low, was ordered to turn over the Equanimity to the US authorities as part of a wide-ranging probe.
The investigations by the Justice Department have led to several civil lawsuits filed since 2016 to seize almost US$2 billion in assets allegedly funded with money stolen from 1MDB, including mansions, a Bombardier jet and royalties from the film, The Wolf Of Wall Street.
Equanimity is the largest single asset in the DOJ list and is allegedly owned by Mr Low, who the DOJ and the current Malaysian government insist was instrumental in the money-laundering scam at 1MDB.
In April, a Jakarta court ruled that the seizure of the yacht was illegal but the Justice Department challenged that decision at a Los Angeles court, which later ordered Equanimity Cayman to hand over the yacht to the US authorities.
Last Thursday, a raiding party of 13 Indonesian and three Malaysian officials reportedly took control of the 91.5m yacht in Bali, and sailed it from the Tanjung Benoa port to Batam, where it was released to Malaysian police yesterday.
"We have discovered that this yacht belongs to the Malaysian government because it was bought with Malaysia's money stolen by certain parties," said Tun Dr Mahathir.
"If any parties wish to claim that the yacht belongs to them, they can show proof... but according to the investigations and reports from the US Department of Justice, they are of (the) view that the yacht was bought with funds stolen from 1MDB."
Responding to news that the Equanimity has been handed over to Malaysia, Mr Low said the move was illegal.
"The Mahathir regime's illegal act today, ignoring court rulings in legal proceedings in the US and Indonesia, proves he has no interest in a fair and just process," the financier said in a statement via his lawyers.
"The yacht's owner, Equanimity Cayman Limited, had already filed a claim on this asset, which Mahathir ignores. Further proceedings have been issued today in response to this illegal act."
The Indonesian government reportedly decided to hand over the yacht to Malaysia following a personal request made by Dr Mahathir, when he met Mr Joko last month at Istana Bogor in West Java.
The Straits Times yesterday tracked the Equanimity to waters off Batam, where it dropped anchor for a few hours before setting sail again, presumably after Malaysian police had taken control of it.
Batam Customs Compliance and Information chief R. Evy Suhartantyio said the yacht received its port clearance and was released to Malaysian police for its journey to Port Klang after his agency processed its paperwork.
A spokesman for Malaysia's Prime Minister's Office confirmed yesterday that the Equanimity will arrive in Malaysia within 48 hours.
Finance Minister Lim Guan Eng told reporters yesterday the government planned to take inventory of items on the yacht and open the vessel for public viewing, before eventually selling it "at the highest price", according to Reuters.
•Additional reporting by Nadirah H. Rodzi