The Justice Department has announced that it has turned over an additional $156 million in misappropriated 1Malaysia Development Berhad (1MDB) funds to the people of Malaysia. The delivery—the fourth such to date—brings the total returned by the department to Malaysia to approximately $1.4 billion.
“We are very happy that this fourth tranche of assets from the Justice Department investigation is being transferred back to Malaysia,” said Ambassador Edgard D. Kagan, the U.S. Ambassador to Malaysia. “This extraordinary sum of money is going back to the people of Malaysia where it belongs and where it can finally be used for its original intended purpose – to better the lives of everyday Malaysians.”
1MDB was established by Najib Razak, who became Prime Minister of Malaysia in 2009. Created as a sovereign wealth fund—a state-owned investment fund—1MDB was intended to benefit the people of Malaysia. Low Taek Jho—also known as Jho Low—a Malaysian businessman, was also given access to the fund.
According to court documents, funds from 1MDB were laundered through major financial institutions all over the world, including in the U.S., Switzerland, Singapore, and Luxembourg. As alleged in the civil forfeiture complaints, from 2009 through 2015, high-level officials of 1MDB, their associates, and Low allegedly misappropriated more than $4.5 billion in funds belonging to 1MDB.
Eventually, Najib lost his position in government and was arrested for his role in the scheme. He was charged and convicted on abuse of power, money laundering, and criminal breach of trust. He was sentenced to 12 years in prison.
(Najib’s son, Mohd Nazifuddin Najib, was named in the Panama Papers.)
Ng Chong Hwa—also known as Roger Ng—a citizen of Malaysia and a former Managing Director of Goldman Sachs, was also instrumental in the scheme. He was found guilty of conspiring to launder billions of dollars embezzled from 1MDB, conspiring to violate the Foreign Corrupt Practices Act (FCPA) by paying more than $1.6 billion in bribes to government officials in Malaysia and Abu Dhabi, and conspiring to violate the FCPA by getting around the internal accounting controls of Goldman Sachs.
Last year, Ng was sentenced to ten years in prison. At the sentencing, IRS-Criminal Investigation (IRS-CI) Special Agent-in-Charge Hatcher said, “The 1MDB case and the sentencing of Mr. Ng, highlight IRS Criminal Investigation’s enforcement efforts to abolish international bribery schemes. U.S. Financial Institutions have safeguards in place to combat these frauds and Mr. Ng intentionally circumvented these safeguards. This sentence is a testament to what happens when you break U.S. laws to bribe international government officials.”
According to the Department of Justice, Ng, Low, and others conspired to launder the proceeds of their criminal conduct by funding Hollywood films such as “The Wolf of Wall Street” and purchasing big-ticket items, including a $51 million Jean-Michel Basquiat painting, a $23 million diamond necklace, millions of dollars in Hermes handbags, and luxury real estate in Manhattan.
Low, who is Malaysian, reportedly holds various passports. Low remains at large: the U.S. has issued warrants for his arrest and Interpol has issued red notices. In November 2018, Low was indicted by U.S. authorities for alleged money laundering, bribery, and U.S. campaign law violations. Some reports have placed Low in China, but his official whereabouts are unknown.
U.S. law enforcement has been involved with the case for years. In 2016, 41 civil forfeiture actions were filed by the Money Laundering and Asset Recovery Section (MLARS) of the Justice Department’s Criminal Division. Those actions led to the seizure of over $1.7 billion in stolen assets—the largest recovery to date under the department’s Kleptocracy Asset Recovery Initiative (a team of prosecutors, financial analysts, and investigators working to prosecute individuals involved in corruption and return proceeds to benefit the people harmed by these acts).
The funds include funds finally forfeited and funds the department assisted in recovering and returning. The department continues to litigate actions against additional assets allegedly linked to this scheme.
Principal Deputy Assistant Attorney General Nicole M. Argentieri, head of the Justice Department’s Criminal Division; Assistant Director Michael D. Nordwall of the FBI’s Criminal Investigative Division; and Chief Guy Ficco of the IRS Criminal Investigation (IRS-CI) made the announcement. The FBI’s International Corruption Squads in New York and Los Angeles and IRS-CI are leading the investigation.
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