US court grants DOJ stay request on 1MDB suits

A United States court has granted a stay on the US Department of Justice's application to put on hold its civil forfeiture suits on assets allegedly purchased using funds misappropriated from 1MDB.

The DOJ, last month, asked for a stay in the civil proceedings to avoid jeopardising an ongoing criminal investigation.

"The court sees no reason to doubt the government’s claim that a criminal investigation is ongoing into the underlying money laundering allegations that form the basis for all of these civil forfeiture cases," read a court document signed by US district judge of the US District Court for the Central District of California Dale S Fischer.

The court noted that the DOJ had stated how the disclosure of facts in the cases could reveal methods of the investigation, subject witnesses and informants to intimidation or retaliation, and raise the potential for evidence destruction.

"Given the complex nature of the alleged crimes and the sensitive political and diplomatic issues involved, it is apparent that revelation of any significant amount of information by the government could endanger the operation of the criminal investigation.

"Further, the court sees no reason to engage in piecemeal discovery with some discovery pursuant to protective order now only to be essentially repeated later after the criminal investigation has terminated.

"Nor would the stay violate any of the claimants’ due process rights."

Although the stay will continue until vacated by the court, the DOJ, however, must provide status updates in relation to the investigation every 180 days to allow the court to assess whether to continue the stay.

The DOJ had previously said that the civil proceedings would likely have an "adverse effect on the government’s ability to conduct the related criminal investigation." This includes investigations in foreign jurisdictions.

A declaration by a Federal Bureau of Investigation (FBI) agent said the government had been conducting the criminal probe prior to the commencement of DOJ's action, and that investigation was still ongoing.

Parties involved in the civil suits, however, had urged the court to continue with the proceedings.

They argued that the move was DOJ's latest tactic to delay proceedings and avoid arguing the case on its merits.

Previously, the DOJ had filed civil forfeiture suits on three separate occasions in a bid to seize properties totalling US$1.7 billion, which it claims are the proceeds of misappropriation from 1MDB.

The first round of suits was filed in June 2016, and the other two rounds were filed this year.

The DOJ, however, filed applications on 13 of the 14 suits filed last year, asking the court to put the proceedings on hold. - Mkini