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US goes after more than $1B taken from Malaysian fund
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Attorney General Loretta Lynch (center) with (from left) US Attorney for the Central District of California Eileen Decker, Assistant Attorney General Leslie Caldwell, FBI Deputy Director Andrew McCabe, and IRS Criminal Division Chief Richard Weber, speaks at a news conference, July 20, at the Justice Department in Washington, announcing that the US government is seeking the forfeiture of more than $1billion in assets that federal officials say were misappropriated from a Malaysian sovereign wealth fund. (AP/Jacquelyn Martin)
T
he United States moved Wednesday to recover more than US$1 billion that federal officials say was stolen from a Malaysian wealth fund by people close to prime minister Najib Razak, money that was used for high-end real estate, artwork and production of the Hollywood film, "The Wolf of Wall Street."
The diverted funds paid for luxury properties in New York and California, a $35 million private jet and expensive paintings by Vincent Van Gogh and Claude Monet, according to federal government complaints that demand the recovery and forfeiture of the ill-gotten assets.
The complaints, filed in Los Angeles, allege a complex money laundering scheme that the Justice Department says was intended to enrich top-level officials of a government-controlled Malaysian wealth fund.
That fund, known informally as 1MDB, was created in 2009 by Najib with the goal of promoting economic development projects in the Asian nation.
Instead, officials at the fund diverted more than $3.5 billion over the next several years through a web of shell companies and bank accounts in Singapore, Switzerland, Luxembourg and the US, the complaints allege.
About $1.3 billion raised through purportedly legitimate bond offerings was swiftly transferred to a Swiss bank account and, from there, distributed to fund officials for their personal benefit.
"In seeking to seize these forfeited items, the Department of Justice is sending a message that we will not allow the United States to become a playground for the corrupt," United States Attorney Eileen Decker, the US Attorney in Los Angeles, said at a news conference.
"And we will not allow it to be a platform for money laundering or a place to hide and invest in stolen riches," she added.
The money the government wants to recover reflects the amount officials were able to trace through the US financial system.
In a statement, Najib's press secretary said the "Malaysian authorities have led the way in investigations into 1MDB" and that the government would fully cooperate with the US investigation.
"As the Prime Minister has always maintained, if any wrongdoing is proven, the law will be enforced without exception," the statement said.
The Justice Department says the forfeiture demand is the largest single action it's taken under its Kleptocracy Asset Recovery Initiative, which seeks to recover foreign bribery proceeds and embezzled funds.
Federal officials say the funds laundered into the US for the benefit of 1MDB officials and their associates were used to pay for property including Manhattan penthouses and Beverly Hills mansions; to settle gambling debts in Las Vegas casinos; and to pay for a London interior decorator, expensive artwork and the production of films, including the 2013 Oscar-nominated movie "The Wolf of Wall Street."
"Neither 1MDB nor the Malaysian people ever saw a penny of profit from that film or from any of the other assets that were purchased with funds that were siphoned from 1MDB," said Assistant Attorney General Leslie Caldwell, head of the Justice Department's criminal division.
"Instead, that money went to relatives and associates of the corrupt officials of 1MDB and others."
Representatives of 1MDB said in a statement that it would cooperate.
The complaints identify by name multiple Malaysian nationals that the government alleges profited from the scheme.
Among them is Riza Shahriz Bin Abdul Aziz, who co-founded Red Granite Pictures, a movie production studio whose films include "The Wolf of Wall Street."
According to the complaint, eleven wire transfers totaling $64 million were used to fund the studio's operations, including the production of the movie starring Leonardo DiCaprio.
Riza is the stepson of Najib, the prime minister, who is not named in the complaints.
But the Justice Department described Riza as a relative of an unnamed "Malaysian Official 1" — a high-ranking Malaysian government official with authority to approve all appointments and removals from 1MDB's board of directors and whose approval was needed for the fund's financial commitments.
Phone messages left at the movie studio on Wednesday were not immediately returned.
But opposition lawmaker Tony Pua said Malaysia has become a laughing stock with the US move as the government had insisted that no money was missing from the fund. He said the government must open up investigations into the fund and uncover the identity of the Malaysian senior official behind the money laundering.
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Associated Press writer Eileen Ng contributed to this report from Kuala Lumpur, Malaysia.
