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Malaysia: US Justice Officials Recover another $49M in 1MDB Funds

Ray Sherman
Kuala Lumpur
2020-05-07
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A man walks past a 1Malaysia Development Berhad billboard in Kuala Lumpur, March 1, 2015.
A man walks past a 1Malaysia Development Berhad billboard in Kuala Lumpur, March 1, 2015.
Reuters

The U.S. government has recovered another $49 million tied to the corruption-plagued Malaysian state fund 1MDB that allegedly was used to purchase luxury properties in California and New York City, the Department of Justice (DOJ) announced.

In a statement posted on its website on Thursday morning (Kuala Lumpur time), the DOJ said it had reached a settlement in a civil forfeiture case against United Arab Emirates citizen Khadem al Qubaisi, who once headed Abu Dhabi’s International Petroleum Investment Co. (IPIC).

“Instead of benefitting the people of Malaysia, as intended, these funds were used by the co-conspirators to finance lavish acquisitions of personal property, luxury real estate and business investments in the United States and elsewhere,” Assistant Attorney General Brian A. Benczkowski said in the news release.

“This settlement agreement ensures that nearly $50 million (216 million ringgit) in stolen funds will be recouped and sends a clear signal that the DOJ is committed to tracing, seizing and forfeiting criminal proceeds that are laundered through the U.S. financial system.”

Al Qubaisi was arrested in 2016 in the UAE on charges linked to 1Malaysia Development Berhad (1MDB), according to the Wall Street Journal.

The funds were believed to be laundered through financial institutions in several jurisdictions, including the United States, Switzerland, Singapore and Luxembourg.

“The assets subject to the settlement agreement include the sale proceeds of high-end real estate acquired in Beverly Hills as well as a luxury penthouse in New York City that al Qubaisi allegedly acquired with funds traceable to misappropriated 1MDB monies,” the DOJ said in its news release.

Under the terms of the settlement, the Atlantic Property Trust, which oversees the assets, agreed to the forfeit subject to pending complaints in which it has a potential interest, the DOJ said without releasing details of those complaints. Al Qubaisi’s wife, who serves as trustee, is required to cooperate and assist in the orderly transfer, management and disposition of the assets.

Calvin Shivers, assistant director of the FBI’s Criminal Investigative Division, said the case demonstrated that the FBI’s reach was long.

“Let this stand as a message to anyone who may consider using United States markets for money laundering: You will not prosper and you will be investigated and brought to justice,” he said.

$1 billion recovered

This settlement adds to the more than $1 billion (4.3 billion ringgit) in assets that the U.S. has recovered or assisted in the recovery, according to the DOJ.

On April 14, officials announced that the DOJ had returned $300 million (1.3 billion ringgit) allegedly misappropriated by fugitive financier Low Taek Jho, better known as Jho Low. The subject of an international manhunt, Low faces criminal charges in Malaysia for his role in allegedly embezzling billions of dollars from 1MDB through his relationship with former Prime Minister Najib Razak.

Najib set up 1MDB in 2009 to promote economic development in Malaysia through global partnerships and foreign direct investment. Its funds were intended to be used for improving the well-being of the Malaysian people.

1MDB instead amassed billions in debts. In 2016, the DOJ accused “Malaysian Official 1” – later identified as Najib – and associates of embezzling and laundering more than U.S. $4.5 billion (19.5 billion ringgit) in 1MDB-linked money between 2009 and 2014.

Najib, who faces a total of 42 criminal counts, is standing trial on charges linked to abuse of power and laundering money tied to 1MDB and in a second court on charges linked to a 1MDB subsidiary, SRC International. He could face additional trials.

Najib’s 1MDB trial, which adjourned on March 12 because of concerns his defense team might have been exposed to COVID-19, is to resume on May 13, Bloomberg news service reported.

In March, Malaysian Prime Minister Muhyiddin Yassin said task force officials had briefed him that 1.4 billion ringgit ($323 million) tied to 1MDB had been returned and another 6.9 billion ringgit ($1.6 billion) had been identified.

“The prime minister has instructed that efforts to track and reclaim 1MDB funds from various countries continue,” his office said at the time.

Malaysian officials could not be immediately reached for comment on Thursday, a national holiday in observance of Wesak Day, which celebrates the birth, enlightenment and death of the Buddha.

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