Wednesday, July 20, 2016
U.S. set to seize $1 billion in assets linked to 1MDB
Federal prosecutors are poised to launch one of the largest asset seizures in U.S. history as they step up their investigation into billions of dollars siphoned away from a Malaysian government investment fund, according to people familiar with the matter.
Authorities are expected to file civil lawsuits as soon as Wednesday morning seeking to seize more than $1 billion worth of assets, which are expected to include properties and other assets purchased with money allegedly misappropriated from the Malaysian fund, according to people familiar with the matter.
The Wall Street Journal has reported that people linked to the fund have invested millions of dollars in real estate and businesses in the U.S.
Agents from the Federal Bureau of Investigation’s international corruption unit have also been conducting a wide-ranging criminal investigation into people and institutions connected with 1Malaysia Development Bhd., known as 1MDB, a sovereign-wealth fund set up by Prime Minister Najib Razak in 2009 to drive the country’s economy.
The expected asset seizures would be the U.S. government’s first action tied to the 1MDB investigation. It is unknown what assets will be seized, but the action is expected to surpass civil suits filed since 2015 seeking to seize $850 million in assets involving three telecom companies in an unrelated case, according to people familiar with the matter. The people say the investigation is continuing.
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The move by U.S. authorities to seize assets tied to an investment fund run by a foreign government would be a major escalation in Washington’s global efforts to fight corruption and block allegedly illegally obtained funds from moving through the world’s financial system.
The expected actions by U.S. authorities also threaten to upend the country’s relationship with Malaysia, a moderate Muslim nation that has long been an important U.S. ally in Southeast Asia. Malaysia has deep ties to the Middle East and has been seen as a bulwark against China, which has increasingly asserted its power across Asia. President Barack Obama cultivated a relationship with Mr. Najib, including playing golf together in Hawaii over the Christmas holidays in 2014.
The asset seizure is being led by the Justice Department’s Kleptocracy Asset Recovery Initiative, which was set up in 2010 to target the spoils of overseas corruption cases. Its biggest attempted seizure so far was $850 million of assets related to alleged corruption by three global telecom companies and intermediaries close to the elder daughter of Uzbekistan’s president. VimpelCom Ltd., a telecommunications company based in Amsterdam, and its wholly owned subsidiary, Unitel LLC, agreed in February to pay $795 million to settle a corruption case with U.S. and Dutch regulators. VimpelCom admitted wrongdoing and Unitel pleaded guilty. The Uzbek president’s daughter couldn’t be reached for comment at the time. The asset forfeiture case is still in litigation.
The Journal has reported over the past year about many aspects of the alleged money laundering and siphoning of cash away from 1MDB. Funds that originated with 1MDB made their way into real estate in New York City and Los Angeles worth tens of millions of dollars and the funding of the 2013 film “The Wolf of Wall Street,” starring Leonardo DiCaprio and directed by Martin Scorsese, according to people familiar with probes in two countries.
At the center of those U.S. inquiries are several characters in the long-running 1MDB drama: Riza Aziz, stepson of Mr. Najib and son of Malaysia’s first lady, Rosmah Mansor; Jho Low, a young Malaysian financier who helped set up 1MDB and played an important role in nearly all of its dealings, and Khadem Al Qubaisi, a former Abu Dhabi managing director of a sovereign-wealth fund with extensive dealings with 1MDB, according to people familiar with the U.S. investigation.
Investigators believe at least $50 million of luxury real estate in New York City and Los Angeles was bought by Mr. Aziz using funds originating with 1MDB, according to people familiar with the matter. Mr. Aziz, who runs Hollywood production company Red Granite Pictures, bought the two properties from Mr. Low, who has even broader investments and dealings in the U.S.
The Journal reported in May how Mr. Low had started liquidating an art collection worth at least $300 million, including the sale of a prized Basquiat painting at a loss. He also owns stakes in hotels, a music publishing business and several other companies abroad.
A spokesman for Red Granite Pictures, which produced “The Wolf of Wall Street,” said earlier this year that there was nothing improper about Mr. Aziz’s business dealings and that the company was cooperating with inquiries. Lawyers for Mr. Low and Mr. Al Qubaisi have previously declined multiple requests for comment on the investigations.
Asset seizures in the U.S. would be a culminating moment for the at least six global investigations into allegations of fraud and money-laundering related to 1MDB. After Mr. Najib set it up, 1MDB raised more than $13 billion of debt, some of it with the help of Goldman Sachs Group Inc.
But as much as $6 billion of the money went missing, according to a person familiar with one country’s investigation. Hundreds of millions of dollars of it was diverted into Mr. Najib’s own bank accounts in Malaysia ahead of important elections, according to bank transfer documents reviewed by the Journal and people familiar with investigations in two countries.
Mr. Najib was at the helm of 1MDB throughout all of the transactions that are under investigation. The Journal has reported that money from the fund was used to help him win a tight re-election campaign in 2013 and that he and his wife spent $15 million of money that originated with 1MDB and ended up in their bank accounts.
Mr. Najib and Malaysia’s attorney general have said the money in his bank accounts was a gift from the Saudi royal family. The attorney general cleared Mr. Najib of wrongdoing and said most of the money was returned. Saudi Arabia’s foreign ministry acknowledged a donation to Malaysia but declined to comment further. The 1MDB fund denies wrongdoing and says it is ready to cooperate with any investigation. It said on several occasions it hasn’t been contacted by a foreign investigative agency.
The properties U.S. investigators are probing were bought with a portion of money diverted to what appeared to be an Abu Dhabi business partner of 1MDB, according to the people familiar with the probes and documents reviewed by the Journal.
The business partner allegedly moved the money through a British Virgin Islands company, which then sent it to a company owned and controlled by Mr. Najib’s stepson, Mr. Aziz. He used some of the money transferred to his company to buy a 7,700-square-foot, $33.5 million duplex in the Park Laurel condominium tower overlooking New York’s Central Park and an 11,000-square-foot walled mansion in Beverly Hills with a 120-foot-long pool for more than $17.5 million, according to documents reviewed by the Journal and people familiar with probes in two countries.
Mr. Aziz is also a major collector of movie paraphernalia, including a rare $1 million movie poster for the 1927 Fritz Lang science-fiction film “Metropolis.”
Regulators in Switzerland and Singapore have brought actions this year related to 1MDB investigations. In coordinated announcements, they targeted Swiss private bank BSI SA that they say played a pivotal role in some of 1MDB’s biggest transactions.
Switzerland’s financial regulator, Finma, accused BSI of committing serious breaches of money-laundering regulations in its dealings with 1MDB “despite clearly suspicious indications.” BSI was ordered to pay 95 million Swiss francs ($99 million).
BSI said at the time that its CEO was stepping down immediately and that it cooperated fully with investigations by regulators in Switzerland and Singapore. The company said later it was appealing the penalties brought by Switzerland.
—Aruna Viswanatha contributed to this article.
Posted by wikisabah at 6:09:00 PM