The US Department of Justice has initiated a process to seize US$330 million (RM1.343 billion) from a top law firm in the UK.
The DOJ, through the UK’s National Crime Agency, served a warrant on Clyde & Co’s London office.
The warrant targeted US$330 million held by Clyde & Co on behalf of a client at the National Westminster Bank, according to UK-based The Guardian which sighted the court documents.
The DOJ believes the monies are linked to the proceeds of stolen funds from 1MDB.
The DOJ had in 2016 detailed three phases in which 1MDB-linked funds were systematically siphoned through a network of complex transactions.
In 2017, it also revealed a fourth phase in which a Ponzi-scheme series of transactions were structured to cover up the fact that money had been stolen.
The DOJ’s action against Clyde & Co is specific to the first phase, which involves 1MDB’s joint-venture with PetroSaudi International.
Referred to as the Good Star/PetroSaudi phase, US$700 million out of US$1 billion intended for the joint-venture was diverted to a company owned by fugitive businessperson Low Taek Jho, or Jho Low, in 2009.
The remaining US$300 million stayed with the joint-venture company. The joint venture partner, PetroSaudi International, is controlled by Saudi businessperson Tarek Obaid along with a Saudi prince.
Between 2010 and 2011, 1MDB pumped another US$830 million into the joint venture, with another US$330 million diverted to Low’s firm in a similar fashion.
According to the DOJ, the money diverted to Low was used to buy various properties and shares in the US and UK.
It was also used for a US$20 million cash payment to then prime minister Najib Abdul Razak and to fund his stepson Riza Shahriz Abdul Aziz’s production of the film “The Wolf of Wall Street”.
However, little is publicly known about the money that remained in the control of PetroSaudi - which the DOJ is now targeting.
The Guardian, citing court documents, said PetroSaudi used the 1MDB funds to purchase two secondhand and ageing drillships, which were used to secure a contract with Venezuela’s state-owned Petróleos de Venezuela (PDVSA). After PDVSA refused to pay PetroSaudi’s invoices for the drilling in Venezuela, PetroSaudi sought payment through a standby credit from a Portuguese bank, said the report.
PetroSaudi was awarded US$380 million by an arbitration tribunal after an unsuccessful challenge by PDVSA, the majority sum which was placed in Clyde & Co’s escrow account.
The DOJ maintained that the money is proceeds of fraud on 1MDB.
PetroSaudi sued Clyde & Co last year after the law firm refused the oil company’s requests to make payments from the escrow account, citing fears that it could become liable to criminal charges if it allows the transactions.
The report said the DOJ described PetroSaudi’s bid to force Clyde & Co to pay out the money as a “collateral attack” on its seizure efforts.
Clyde & Co said it was holding the fund as a director of the arbitration tribunal and maintained that it is fully complying with legal and regulatory obligations.
The report said PetroSaudi and Obaid did not respond to request for comment.
Malaysiakini cannot independently verify the report. - Mkini
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