The U.S. Justice Department filed civil lawsuits late last week to seize a second trove of assets allegedly purchased with funds embezzled from the Malaysian state-run investment fund 1MDB. Last July the Feds went after more than $1 billion in financial assets, real estate, artwork, film rights and a private jet. Now the Kleptocracy Asset Recovery Initiative, as Justice calls it, is targeting $540 million in assets owned by relatives and associates of Prime Minister Najib Razak.
The most striking item on the list is a necklace worth $27.3 million featuring a 22-carat pink diamond. The lawsuit alleges that 1MDB funds were used to buy it and other jewelry for the wife of “Malaysian Official No. 1.” U.S. officials told the Journal that Official No. 1 is Mr. Najib.
The 1MDB fund denies that money is missing, Mr. Najib denies any wrongdoing, and Attorney General Mohamed Apandi Ali cleared Mr. Najib in January 2016. Mr. Apandi Ali said in a statement Friday, “We also note that there has been no evidence from any investigation conducted by any law enforcement agencies in various jurisdictions that shows that money has been misappropriated from 1MDB.”
Yet the U.S. Justice Department has provided considerable evidence that $3.5 billion went missing, while the Swiss Attorney General puts the figure at $4 billion. Singapore and Switzerland have already punished financial institutions for breaking money-laundering rules in moving 1MDB funds.
Justice last week released new information allegedly showing that about $850 million thatDeutsche Bank loaned to 1MDB was diverted to accounts controlled by Mr. Najib and his associates. One lawsuit alleges that proceeds from a $3 billion 1MDB bond offering in 2013 were diverted to help purchase Coastal Energy, a Houston-based oil firm. The Abu Dhabi sovereign-wealth fund International Petroleum Investment Co. says that 1MDB owes it about $6.5 billion for defaulted debt that IPIC guaranteed.
The Malaysian government accuses the U.S. of pursuing a political vendetta. But Barack Obama pursued closer ties with Mr. Najib, even inviting him to play golf in Hawaii in December 2014, right up to when the Journal broke the 1MDB story in July 2015.
Defense Minister Hishammuddin Hussein, who is Mr. Najib’s cousin, on Sunday urged the U.S. to press criminal charges so the accused can clear their names. The Journal has reported that U.S. investigators are preparing to charge at least one of Mr. Najib’s associates. Since Malaysian authorities have concluded that there’s nothing worth investigating in the 1MDB matter, civil and criminal cases in other jurisdictions are the best hope Malaysians have of finding out whether their country has become a kleptocracy.
Wall Street Journal
– https://blog.limkitsiang.com
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