Indonesian police on Tuesday agreed to release a luxury yacht at the center of an international money laundering probe related to the Malaysian stated fund 1MDB, after a Jakarta judge ruled that its seizure was “invalid and legally baseless."
At a pretrial hearing Tuesday, South Jakarta District Court judge Ratmoho ruled in favor of Equanimity (Cayman) Ltd, which owns the $250-million vessel, and has been challenging its seizure in Indonesian and U.S. courts.
"We declare the confiscation by police as invalid and legally baseless," Ratmoho said during the hearing.
On Feb. 27, Indonesian police and FBI agents boarded the Cayman Islands-flagged Equanimity while it was moored in Benoa Bay, off southern Bali, seizing documents and questioning its 34-member crew, in response to request from investigators in the United States.
Rudy Heriyanto, a director at the Criminal Investigation Department of the Indonesian police, said local authorities were assisting the FBI when the yacht was impounded, but vowed to follow the court’s ruling.
"We will obey the orders of the South Jakarta Court and immediately return the cruise ship to its owner," he told reporters late Tuesday.
The U.S. Department of Justice (DOJ) alleges that Malaysian financier Jho Low, whose full name is Low Taek Jho, bought the luxury vessel with money stolen from the Malaysian state fund known as 1Malaysia Development Berhad (1MDB).
In August 2017, DOJ announced it was pursuing criminal action against those involved in the misappropriations and fraudulent diversion of funds from 1MDB. U.S. federal prosecutors have not charged anyone criminally in connection with the alleged embezzlement.
Formed in 2009 ostensibly to pursue development projects that would benefit Malaysian citizens, 1MDB is at the center of money-laundering investigations in at least six countries, including Switzerland and Singapore.
In the hearing Tuesday, judge Ratmoho ruled that the seizure of the Equanimity was illegal and that Indonesian police had overstepped their authority after receiving a letter from the FBI asking to conduct a joint operation.
"Canceling the police confiscation letter dated Feb. 26, 2018. Requiring the petitioner to return the cruise ship to the applicant," Ratmoho said.
Andi Simangungsong, a lawyer for the Equanimity Cayman Ltd, welcomed the ruling.
“With this verdict, what is important to us is that this yacht, with the cancellation of its seizure … be returned to its owner,” he said, adding that the vessel would soon depart Indonesian waters.
“After police investigators release the vessel, we will surrender it completely to our client,” he said.
The 1MDB case, according to the DOJ, is the largest single action in the history of Washington's so-called kleptocracy initiative, which seeks to stem international corruption by reclaiming the money allegedly stolen from public coffers.
Jho Low has never held a formal position at the state fund but he “nevertheless exercised significant control over 1MDB” during the acquisition of the Equanimity, according to a DOJ lawsuit.
Court documents allege that more than $730 million of 1MDB money was ultimately routed to the personal bank account of “Malaysian Official 1,” a thinly veiled reference to Malaysian Prime Minister Najib Razak.
Najib, who founded 1MDB and is running for another term of office, has denied any wrongdoing, describing the allegations of misappropriation as “an unnecessary distraction for the country.”
Federal prosecutors believe that the money used to acquire the yacht was part of the $1.7 billion in real-estate and other assets that the DOJ was trying to recover from a total of more than $4 billion allegedly siphoned off from 1MDB.