America justice department has begun processes to seize more than $1 billion of assets from a Malaysian investment company, 1DMB, who was accused of purchasing assets with funds siphoned out of the firm. It is the largest single action the department has ever launched.
The goodies concerned
include luxury properties, artworks by Van Gogh and Monet, and a jet, according
to court filings. Authorities say 1MDB’s money was also spent on gambling and
used to make the “Wolf of Wall Street”, a film about a high-living swindler
starring Leonardo DiCaprio. It was made by a production company co-founded by
Riza Aziz, the stepson of Malaysia’s prime minister, Najib Razak. (A spokesman
for the firm, Red Granite Pictures, said neither it nor Mr Riza had done
anything wrong.
Mr Riza is among several
people the Justice Department claims are “relevant” to its case. So is Low Taek
Jho, a Malaysian tycoon who helped to set up 1MDB, and two former officials at
an Abu Dhabi state firm with which 1MDB did business. Also listed in the
complaint (but not named) are four employees of 1MDB and a high-ranking
Malaysian government official who is described as a relative of Mr Riza and for
the moment known only as “Malaysian Official 1”.
1MDB was launched in 2009,
the year Mr Najib became prime minister. It was supposed to bring investment to
Malaysia by forging partnerships with foreign firms. But by 2014 it was
struggling to service debts of more than $11 billion. Questions about it multiplied
last year when it was discovered that around $700m had entered Mr Najib’s bank
accounts shortly before a close election in 2013. (Mr Najib says the money was
not related to 1MDB, but was a perfectly legal, personal donation from a Saudi
royal, much of which has been returned. Malaysia’s attorney-general agrees.)
The Justice Department says
the assets it is seeking to recover are associated with “an international
conspiracy to launder funds misappropriated” from 1MDB. Its filing alleges that
between 2009 and 2015 more than $3.5 billion belonging to the firm may have
been pinched by “high-level officials of 1MDB and their associates”. The
complaint provides extensive detail on the deals in question, which it divides
into three “phases”, beginning in 2009, 2012 and 2013.
The proceedings now starting
in America relate only to the seizure of assets, and do not amount to criminal
charges against the individuals alleged to be involved. In the meantime several
cases are advancing elsewhere. In May the Swiss financial regulator fined BSI,
a private bank which handled some of 1MDB’s money, and launched proceedings
against two of its former employees.
On July 21st authorities in
Singapore said that they had seized or frozen assets worth S$240m ($175m), half
of it belonging to Mr Low or his family, as part of an ongoing probe into
transactions linked to 1MDB. The local financial regulator also announced that
it would be taking action against three big banks—DBS, UBS and Standard
Chartered—for “lapses and weaknesses” in their efforts to prevent
money-laundering. With investigations underway in half a dozen countries,
expect to hear much more.
Credit: The Economist
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