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U.S. Department of Justice files lawsuits in connection with 1MDB

U.S. Department of Justice (DOJ) filed lawsuits on Wednesday (July 20) seeking to seize dozens of properties tied to Malaysian state fund 1Malaysia Development Berhad (1MDB), saying that over $3.5 billion was misappropriated from the institution.

The lawsuits, filed in Los Angeles, seek to seize assets "involved in and traceable to an international conspiracy to launder money misappropriated from 1MDB".

The lawsuits said the alleged offences were committed over a four-year period and involved multiple individuals, including Malaysian officials and their associates, who conspired to fraudulently divert billions of dollars from 1MDB.

None of the lawsuits named Malaysian Prime Minister Najib Razak.

But they named Riza Aziz, his step-son, as a "relevant individual" in the case. They also named Malaysian financier Low Taek Jho, or Jho Low, and Abu Dhabi government officials Khadem al-Qubaisi and Mohamed Ahmed Badawy Al-Husseiny.

The U.S. lawsuits said funds misappropriated from 1MDB were transferred to the co-founder of Petrosaudi, a company that had a joint venture with 1MDB, and thereafter to a high-ranking official in the Malaysian government it identified only as "Malaysian Official One".

The assets involved in the case include penthouses, mansions, artwork and even a private jet.

"That misappropriation occurred in multiple phases over the course of several years," the lawsuits said.

An “immediate release” from the United States’ Department of Justice on Wednesday, July 20, 2016 announced that United States is seeking to recover more than $1 Billion obtained from corruption involving Malaysian Sovereign Wealth Fund.

Attorney General Loretta E. Lynch announced the filing of civil forfeiture complaints seeking the forfeiture and recovery of more than $1 billion in assets associated with an international conspiracy to launder funds misappropriated from a Malaysian sovereign wealth fund.  The complaints filed on Wednesday represent the largest single action ever brought under the Kleptocracy Asset Recovery Initiative.

Attorney General Lynch was joined in the announcement by Assistant Attorney General Leslie R. Caldwell of the Justice Department’s Criminal Division, U.S. Attorney Eileen M. Decker of the Central District of California, FBI Deputy Director Andrew G. McCabe and Chief Richard Weber of the Internal Revenue Service-Criminal Investigation (IRS-CI).

According to the complaints, from 2009 through 2015, more than $3.5 billion in funds belonging to 1Malaysia Development Berhad (1MDB) was allegedly misappropriated by high-level officials of 1MDB and their associates.  With today’s complaints, the United States seeks to recover more than $1 billion laundered through the United States and traceable to the conspiracy.

1MDB was created by the government of Malaysia to promote economic development in Malaysia through global partnerships and foreign direct investment, and its funds were intended to be used for improving the well-being of the Malaysian people.  Instead, as detailed in the complaints, 1MDB officials and their associates allegedly misappropriated more than $3 billion.

US DoJ describes 'Malaysian Official 1' as main beneficiary of transactions from 1MDB

US$731 million was allegedly siphoned from Malaysia’s sovereign wealth fund 1MDB into a bank account owned by the unnamed 'Malaysian Official 1', according to the lawsuit filed by the US Department of Justice (DOJ) yesterday.

DOJ did not name ‘Malaysian Official 1’ but described the individual as a "high-ranking official in the Malaysian government who also held a position of authority with 1MDB."

Upon its formation, Malaysian Official 1 assumed a position of authority with 1MDB, said DOJ.

Prime Minister Najib Abdul Razak's stepson Riza Aziz is described in the suit as a relative of ‘Malaysian Official 1’.

According to the suits, the largest transaction made to Malaysian Official 1 was a US$681 million deposit made to an AmBank account in March 2013.

"Plaintiff alleges on information and belief that Malaysian Official 1 is the ultimate beneficiary of the AMPRIVATE BANKING-MR Account.

"The AMPRIVATE BANKING-MR Account is the same account that later received certain payments totalling approximately $681 million in March 2013.

"The attorney-general of Malaysia has publicly stated that the account into which these $681 million payments were made belonged to Malaysian Official 1."

According to the suits, the amount allegedly came from a US$3 billion bond 1MDB raised to invest in a joint venture with Aabar.

From the bond, US$1.26 billion was diverted into an account belonging to Tanore Finance Corporation, which then pumped in the US$681 million to ‘Malaysian Official 1’.

In August 2013, US$620 million was returned to Tanore's Singapore bank account, which DOJ claimed was owned by an associate of Penang-born tycoon Jho Low.

The US authorities quoted Malaysian attorney-general Mohamed Apandi Ali as saying the US$681 million - which was received in Prime Minister Najib Razak’s bank account - was a personal donation from a member of the Saudi royal family.

The suit also claims that another US$50 million in 1MDB funds were siphoned into the Malaysian Official 1's account in two other instances.

In the first instance, the suit said US$24.5 million of US$1.03 billion diverted from 1MDB to Good Star Limited, believed to be owned by Jho Low, was "transferred to an account at Riyad Bank maintained in the name of a Saudi prince."

The unnamed prince is said to be a co-founder of PetroSaudi.

Citing JP Morgan Chase banking records, the DOJ said US$20 million of the US$24.5 million was then channelled into Malaysian Official 1's account in 2011.

In the second instance, the suit said US$1.367 billion raised in bonds by 1MDB for power purchase agreements "were misappropriated and fraudulently diverted to bank accounts in Switzerland and Singapore."

These funds were then allegedly channelled into British Virgin Islands firm Aabar Investment PJS Ltd (Aabar-BVI), which deposited US$636 million into a Singapore bank account held by Blackstone Asia Real Estate Partners.

Of this amount, US$30 million was deposited into Malaysian Official 1's account in October and November 2012.

The DOJ claimed the Blackstone account is owned by the same Jho Low associate who owned the Tanore account.

Malaysian government to fully cooperate with lawful investigation

In an immediate response to allegations, the Prime Minister's Office (PMO) said the government would "fully cooperate with any lawful investigation of Malaysian companies or citizens in accordance with international protocol".

According to Najib's press secretary Tengku Sarifuddin Tengku Ahmad, the prime minister has always maintained that the law would be enforced, without exception, if any wrongdoing is proven.

PM must come clean

"The prime minister must, once and for all, come clean on the matter which can no longer be swept under the carpet...Neither can the prime minister pretend that this latest action is not bringing shame and scandal to the country," Selangor Menteri Besar Azmin Ali said in a statement on Thursday.

Azmin added that he had always maintained that Najib's decision last year to sack then Deputy Prime Minister Muhyiddin Yassin, replace then attorney-general Gani Patail as well as displace top Malaysian Anti-Corruption Commission (MACC) officers involved in the 1MDB investigation "strongly suggested" a conspiracy to cover up the scandal.

"In light of the latest development, the prime minister can no longer hide behind a wall of silence and must instead address the nation on this matter," he said.

In a separate statement, PAS deputy president Tuan Ibrahim Tuan Man also voiced a similar sentiment, questioning whether Najib, who is also the finance minister, will continue to keep his silence.

Tuan Ibrahim also wondered how the DOJ successfully discovered evidence of wrongdoing by a Malaysia-based company whereas Malaysian authorities had failed to do so.

"What is the status of the inspector-general of police's (IGP) probe into 1MDB? Will the IGP cooperate with the DOJ to get the evidence that he failed to discover in his investigations into 1MDB?

"What about the auditor-general? Will he be able to now complete his audit report, which is under the Official Secrets Act (OSA), with these new information?

"And what about the attorney-general and MACC after this? Do they still stand by what they said earlier?

"What about the Bank Negara Malaysia governor Muhammad Ibrahim who had closed the 1MDB case? With this new information, will the case be reopened?" Tuan Ibrahim questioned in his statement today.

He said the rakyat are watching these institutions now, to see whether they are working for the people or certain individuals only.

1MDB chief Arul Kanda Kandasamy should also think of what's best for himself and the country, Tuan Ibrahim advised.

 

Assets listed in the DOJ Release page 2 & 3

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  1. THE L’ERMITAGE PROPERTY: All right and title to the real property commonly known as 9291 Burton Way, Beverly Hills, California 90210, including the L’Ermitage Hotel (“L’ERMITAGE PROPERTY”), including all appurtenances, improvements, and attachments thereon.
  2. THE L’ERMITAGE BUSINESS ASSETS: All assets related to the L’ERMITAGE PROPERTY, including but not limited to all chattels and intangible assets, inventory, and equipment (“L’ERMITAGE BUSINESS ASSETS”), including any and all funds in accounts owned, held or maintained at financial institutions by LBH Real Estate, or for the benefit of LBH Real Estate or the L’ERMITAGE PROPERTY, and all leases, rents, and profits derived from said business. Collectively herein, the L’ERMITAGE PROPERTY and the L’ERMITAGE BUSINESS ASSETS are referred to as, “L’ERMITAGE.”
  3. HILLCREST PROPERTY 1: All right and title to the real property located in Beverly Hills, California1 owned by 912 North Hillcrest Road (BH), LLC (“HILLCREST PROPERTY 1”), including all appurtenances, improvements, and attachments thereon, as well as all leases, rents, and profits derived therefrom.
  4. PARK LAUREL CONDOMINIUM: All right and title to the real property located in New York, New York owned by Park Laurel Acquisition LLC (“PARK LAUREL CONDOMINIUM”), including all appurtenances, improvements, and attachments thereon, as well as all leases, rents, and profits derived therefrom.
  5. BOMBARDIER JET: All right and title to Bombardier Global 5000 aircraft bearing manufacturer serial number 9265 and registration number N689WM, with two Rolls Royce engines bearing manufacturer’s serial numbers 12487 and 12488 (“BOMBADIER JET”), including all appurtenances, improvements, and attachments thereon, all aircraft logbooks, and all leases, rents, and profits derived therefrom.
  6. TIME WARNER PENTHOUSE: All right and title to the real property located in New York, New York owned by 80 Columbus Circle (NYC) LLC (“TIME WARNER PENTHOUSE”), including all appurtenances, improvements, and attachments thereon, as well as all leases, rents, and profits derived therefrom. The TIME WARNER PENTHOUSE includes all right and title to the real property commonly known as SU-11, New York, New York (“TIME WARNER STORAGE UNIT”), including all appurtenances, improvements, and attachments thereon, as well as all leases, rents, and profits derived therefrom. Pursuant to L.R. 5.2-1, residential addresses are listed by the city and state only. 
  7. ORIOLE MANSION: All right and title to the real property located in Los Angeles, California owned by Oriole Drive (LA) LLC (“ORIOLE MANSION”), including all appurtenances, improvements, and attachments thereon, as well as all leases, rents, and profits derived therefrom. 
  8. GREENE CONDOMINIUM: All right and title to the real property located in New York, New York owned by 118 Greene Street (NYC) LLC (“GREENE CONDOMINIUM”), including all appurtenances, improvements, and attachments thereon, as well as all leases, rents, and profits derived therefrom. 
  9. EMI ASSETS: Any and all rights, including copyright and intellectual property rights, as well as the right to collect and receive any profits, royalties, and proceeds of distribution owned by or owed to JW Nile (BVI), Ltd.; JCL Media (EMI Publishing Ltd.); and/or Jynwel Capital Ltd., relating to EMI Music Publishing Group North America Holdings, Inc. and D.H. Publishing L.P. 
  10. SYMPHONY CP (PARK LANE) LLC ASSETS: All right to and interest in Symphony CP (Park Lane) LLC, a Delaware limited liability company, owned, held or acquired, directly or indirectly, by Symphony CP Investments LLC and Symphony CP Investments Holdings LLC, including but not limited to any interest in the real property and appurtenances located at 36 Central Park South, New York, New York, 10019, known as the Park Lane Hotel, any right to collect and receive any profits and proceeds therefrom, and any interest derived from the proceeds invested in Symphony CP (Park Lane) LLC by Symphony CP Investments LLC or Symphony CP Investments Holdings. 
  11. WALKER TOWER PENTHOUSE: All right and title to the property located in New York, New York owned by 212 West 18th Street LLC (“WALKER TOWER PENTHOUSE”), including all appurtenances, improvements, and attachments thereon, as well as all leases, rents, and profits derived therefrom. 
  12. LAUREL BEVERLY HILLS MANSION: All right and title to the property located in Beverly Hills, California, owned by Laurel Beverly Hills Holdings, LLC (“LAUREL BEVERLY HILLS MANSION”), including all appurtenances, improvements, and attachments thereon, as well as all leases, rents, and profits derived therefrom. 
  13. HILLCREST PROPERTY 2: All right and title to the property located in Beverly Hills, California owned by 1169 Hillcrest Road LLC (“HILLCREST PROPERTY 2”), including all appurtenances, improvements, and attachments thereon, as well as all leases, rents, and profits derived therefrom.
  14. VAN GOGH ARTWORK: One pen and ink drawing entitled La maison de Vincent a Arles by Vincent Van Gogh. 
  15. SAINT GEORGES PAINTING: One painting entitled “Saint- Georges Majeur” by Claude Monet. 
  16. NYMPHEAS PAINTING: One painting entitled “Nympheas avec Reflets de Hautes Herbes” by Claude Monet. 
  17. THE QENTAS TOWNHOUSE: All right and title to the property located in London, United Kingdom (“U.K.”).
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