US returns $611 million of funds recovered from assets related to 1MDB to Malaysia

Malaysian and US investigators say at least $6 billion was stolen from sovereign fund 1MDB between 2009 and 2014.
Malaysian and US investigators say at least $6 billion was stolen from sovereign fund 1MDB between 2009 and 2014. PHOTO: REUTERS

KUALA LUMPUR (REUTERS) - Malaysia on Wednesday (May 12) said the United States Department of Justice has returned RM1.9 billion (S$611 million) of funds recovered from assets related to sovereign fund 1Malaysia Development Berhad (1MDB).

Malaysian and US investigators say at least US$4.5 billion (S$6 billion) was stolen from 1MDB between 2009 and 2014, in a wide-ranging scandal that has implicated high-level officials, banks and financial institutions around the world.

The US has been returning funds it has recovered from seized assets that were allegedly bought with stolen 1MDB money.

Malaysia has so far received RM16.05 billion (S$5.16 billion) of seized and repatriated 1MDB funds, the finance ministry said in a statement.

It plans to use the recovered funds to repay liabilities of 1MDB and its former unit SRC. 

1MDB has RM39.8 billion in outstanding debt, while the unit SRC has RM2.57 billion of remaining debt, the ministry said.

The funds – held in a special trust account – are sufficient to service 1MDB’s debt obligations for this and next year, the ministry said.

The account does not currently include the US$700 million settlement reached with Malaysian banking group Ambank and US$60 million settlement with audit firm Deloitte earlier this year.

Negotiations are also currently ongoing with auditor KPMG, the finance ministry said, without disclosing more details.

Over the past three years, Malaysia has been trying to recover 1MDB funds from global banks, financial institutions, individuals and other entities it says have caused losses from 1MDB.

This week, 1MDB filed 22 lawsuits in a court in Malaysia to recover assets worth in excess of US$23 billion.

Those being sued include units of Deutsche Bank, J.P. Morgan and Coutts & Co.

Goldman Sachs, which helped raise billions for 1MDB, last year paid US$2.5 billion to settle a Malaysian probe into the investment bank’s role in the 1MDB scandal.

It has also promised to help Malaysia recover assets worth US$1.4 billion.