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Monday, July 3, 2017

A case of many wonders in DoJ’s latest action

Malaysia can learn much from the DoJ's latest lawsuit under its Kleptocracy Asset Recovery Initiative.
1mdb_doj_malaysia_600By Hafiz Hassan
One can only wonder at some of the political reactions and responses to the United States Department of Justice’s (DoJ) latest lawsuit brought under the Kleptocracy Asset Recovery Initiative.
First, one can only wonder at the attorney-general’s (AG) disappointment and frustration that his chambers (AGC) was not informed or alerted by the DoJ of the latest action.
But the lawsuit is a civil action. Specifically, it a civil action in rem (literally, against a thing) to forfeit assets involved in money laundering offences which are in violation of US law. Simply put, it is a civil forfeiture action.
Thus, as former AG Abu Talib Othman put it, the DoJ does not need to get in touch with the AG.
Second, one can only wonder at the prime minister’s press secretary’s concerns with “unnecessary and gratuitous naming of certain matters and individuals” which “suggests a motivation that goes beyond the objective of seizing assets”.
But the lawsuit, commenced by way of a complaint, must meet the requirements of the US Federal Rules of Civil Procedure (USFRCP). In principle, a complaint must state a cause of action. And a cause of action is “a factual situation, the existence of which entitles one person to obtain from the court a remedy against another person”.
A Malaysian Federal Court judge once said that a cause of action is the entire set of facts that gives rise to an enforceable claim. Thus, if the complaint states matters and names individuals in setting out the entire set of facts, it is far from unnecessary and gratuitous. The opposite is in fact the case, for an incomplete set of facts constitutes an incomplete cause of action, which is bound to be dismissed by the court.
Third, one can only wonder at Azalina Othman’s calling of the latest lawsuit as a rehashing of the 1Malaysia Development Berhad (1MDB) issue by the DoJ. The AG calls it a repeat of the first lawsuit. But the defendant in the latest lawsuit (Viceroy Hotel Group) is different from the defendants in the earlier lawsuits (named and identified in paragraphs 5(a)-(t) of the latest lawsuit).
This makes the latest action a separate action from the earlier ones (each action bearing a different case number). The facts are “rehashed”, so to speak, because each action must meet the requirement of the rules of setting out the factual situation.
Fourth, one can only wonder at Abdul Rahman Dahlan’s comments that while the DoJ had every right to file a suit, it was important to base the case on facts and not on rhetoric or ill-intentioned statements.
But the complaint in the latest lawsuit is a 250-page document and 950-paragraph of statements with compelling substance and depth, as are the statements in the earlier lawsuits. And all the statements in each of the lawsuits are verified and declared under the penalty of perjury to be true and correct by a special agent of the Federal Bureau of Investigation (FBI). This is a first requirement of a complaint under the USFRCP.
Fifth, one can only wonder at Hishammuddin Hussein’s urgings that the DoJ provide evidence to support the latest lawsuit, failing which the DoJ would only tarnish its own reputation and credibility. But the lawsuit, as are the earlier ones, is a civil forfeiture action.
The procedure to be followed is prescribed by the USFRCP which includes: (1) notice to all potential claimants; and (2) full publication notice by either newspaper or internet. Claimants have 30 days from when they are notified to submit a sworn claim indicating the basis for asserting an interest in the property and must, within 21 days after a claim is filed, file an answer with the court directly responding to the allegations in the complaint.
If those deadlines are not met, a default judgment of forfeiture may be granted. If a timely claim is filed, the action will proceed with civil discovery in the nature of interrogatories, and depositions may take place.
If the action is contested and no settlement is agreed on by the parties, it will proceed to a trial by civil jury where only then evidence will be presented. Thus, in due course the evidence will be presented. Just wait…
Sixth, one can only wonder at Hishammuddin’s challenge to the DoJ to press charges if they have proof of wrongdoing in the 1MDB affair. But in civil forfeiture, the action may be brought at any time prior to or after criminal charges are filed, or even if criminal charges are never filed.
There is a reason why a civil forfeiture action is filed first and importantly in time. There is a time period requirement under the law to either file a civil case or include the seized asset in a criminal charge and name it for criminal forfeiture. If a civil case is not filed within the time period, the government will be prevented from ever filing a civil forfeiture action.
And because civil forfeiture does not depend upon a conviction which requires a higher burden of proof, it is usually filed in priority to criminal action. Often, the civil action will be filed under seal before criminal charges are brought. Further, in a civil action case, the government does not have to prove that the property owner committed or participated in the commission of the underlying criminal activity. As long as there is proof that the property is sufficiently linked to a crime, and the owner cannot satisfy the test for “innocent owner” by a preponderance of the evidence, the property may be forfeited.
Seven, it is no wonder that the prime minister has said that “many” statements have been issued in relation to the latest lawsuit and that he will no longer be issuing statements.
But alas, the AG did not take heed and accused the DoJ of being politically driven in its lawsuits to seize assets allegedly linked to 1MDB. One can only wonder how actions driven by the commitment to ensure that the US is not a safe haven for assets corruptly obtained can be politically motivated. More so when the actions are in pursuance to the law.
According to Jean B Weld, a US attorney who has written on forfeiture laws and procedure in the country, the US has a robust and effective asset forfeiture legal regime. In more than 25 years of its forfeiture programme, the DoJ has accomplished much.
Malaysia can certainly learn from this, more so when the DoJ has a commitment to continue to extend its assistance to its international partners to recover assets corruptly obtained or laundered.
Hafiz Hassan is an FMT reader.

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