In the latest twist in the 1Malaysia Development Berhad scandal, the US Department of Justice (DoJ) announced on Wednesday 20 July that it has filed a civil lawsuit seeking to seize more than £1bn in assets that it claims were embezzled from the state fund.
Malaysian Prime Minister Najib Razak was not specifically named in the lawsuit, nor is he accused of any wrongdoing. However, the lawsuit filed by the DoJ - one of the largest ever asset seizure sought by the department - has 32 references to a 'Malaysian Official 1'.
Najib may not be named in the lawsuit but his stepson, Riza Aziz, Low Taek Jho or better known as Jho Low, a Malaysian financier and family friend, Eric Tan Kim Loong, an associate of Low and two Abu Dhabi government officials — Khadem Abdulla Al-Qubaisi and Mohammed Ahmed Badawy Al-Husseiny — have all been implicated in the lawsuit.
The Wall Street Journal - which first broke the 1MDB story in 2015 - along with several other media outlets, claim that Malaysian Official 1 is none other than Najib. The Malaysian Official 1 described in the lawsuit as a high-ranking official in the Malaysian government who also held a position of authority with 1MDB. The court documents also say Riza is a relative of Malaysian Official 1.
The DoJ is bringing the action forward under the Kleptocracy Asset Recovery Initiative, a federal effort to recover assets stolen by foreign officials and laundered in the US. Those named in the civil suit have not been charged with any crimes, although law enforcement officials confirmed there is an ongoing criminal investigation, according to a report by the LA Times.
"The Malaysian people were defrauded on an enormous scale in schemes whose tentacles stretched around the world," Andrew McCabe, the FBI's deputy director said at a news conference announcing the legal action.
The DoJ claims that 1MDB officials and their associates stole more than $3.5b from the fund between 2009 and 2015 and laundered at least $1b through the US. The fund's officials tried to conceal the fund's origins through complex transactions that involved shell companies and bank accounts located in various countries.
Riza is reported to have received some of the funds through Red Granite Pictures, which backed 2013 hit, The Wolf of Wall Street, whichfeatured Leonardo DiCaprio. Red Granite was founded by Riza and Kentucky businessman, Christopher McFarland, in 2009 and fully financed the $100m production. It also produced the 2014 movie Dumb and Dumber To, the third instalment in a series of films featuring Jim Carey and Jeff Daniels.
Why was Najib not named in civil suit?
According to US Attorney General Loretta E Lynch, Najib was not named in the lawsuits as the complaints were made only to seize assets. When asked if there was a prior arrangement not to name Najib, she said: "Our agreement is only to draft the complaint as we do in civil forfeiture matters and it's a complaint against the actual money or assets as opposed to against an individual."
"We don't have announcements on anyone not named so far. So this will be a complaint that seeks to restrain and forfeit the specific assets mentioned, she said at a Department of Justice press conference.
When asked why the Malaysian Official 1 was not named, Lynch said a civil complaint traces the movement of the assets and would only "allege what we need to allege to obtain what we need to obtain," Malaysiakini reports.
The ultimate goal, Lynch said, is to return the funds believed to have been misappropriated back to the people of Malaysia. She noted that some of the funds have "dissipated" through the paying off of gambling debts and lifestyle expenses.
Any delay in filing for the civil forfeiture could result in the assets sought being transferred to other parties, making it more difficult to seize, she said. "We are able to trace $1bn which has gone through the US financial system and we are able to locate specific assets in the US and overseas.
1MDB and Najib respond
A spokesperson for Najib said: "The Malaysian government will fully co-operate with any lawful investigation of Malaysian companies or citizens in accordance with international protocols. As the prime minister has always maintained, if any wrongdoing is proven, the law will be enforced without exception."
On Wednesday 20 July, Red Granite said that none of the funding it received was illegitimate and that nothing the company or Riza did was wrong.
In a separate statement, released Thursday 21 July, 1MDB said that it was not party to the DoJ civil suit, and that it does not have any assets in the US, nor had it benefited from the various transactions described in the civil suit. It also said that it had not been contacted by the DoJ or any other foreign agency in relation to their investigations.
1MDB has said it will fully cooperate with any foreign lawful authority, "subject to international protocols governing such matters and the advice of the relevant domestic lawful authorities."