The Noose is tightening on 1MDB–Bro Obama cannot help


July 21, 2016

The Noose is tightening on 1MDB–Bro Obama cannot help

For those who missed the live-streaming of the United States Department of Justice Press Conference on Wednesday, July 20, 2016 in Washington, DC, regarding the 1MDB scandal, here is a partial transcript. The full transcript is available at recapd.com.

A few preliminary observations. First, this civil filing of asset forfeiture is only the first action following an intense and still ongoing investigation. There could be other charges later on, including criminal ones against specific individuals. The presence of senior officials from the criminal divisions of the DOJ and IRS, as well as the top FBI official, at that press conference would indicate this. Assets do not become corrupt by themselves; individuals through their corrupt acts created those assets.

Second, this is a civil complaint against the assets that were acquired from alleged corrupt acts perpetrated on 1MDB. Those assets are now legally tied up. There could be two possible responses. At one extreme the owners of those assets would choose not to challenge the complaint at which point those assets become US Government property and will be auctioned off. The US Government would recoup its costs and the people of Malaysia would be entitled to claim the leftover. The other would be for their owners to challenge the order. That would incur substantial legal fees as the filings are in many courts and your adversary is the US Government with its near unlimited resources. And American lawyers are expensive. With those assets frozen, their owners could not liquidate or mortgage them to finance their defense. Knowing that should be satisfaction enough for Malaysians.

A court challenge would be very enlightening. Rest assured that the ensuing trials would reveal much of the truth.

Third, this is by far the largest (in monetary terms) asset seizure in US history. As such those professional prosecutors would not settle for anything less than total victory. Before this,  the largest forfeiture under the Kleptocracy Asset Recovery Initiative involved the Amsterdam-based Vimpel.com, a telecommunication giant, and its wholly-owned subsidiary in Uzbekistan. That involved top Uzbek officials related to that country’s President.

Fourth was the impressive performance by the Attoney-General and her team at that press conference. It is not simply a matter that she is a seasoned professional prosecutor with a Harvard law degree while her Malaysian counterpart is a failed UMNO operative with a legal qualification from an obscure British Inn of Courts.–Dr.M Bakri Musa, Morgan-Hill, California

Attorney-General Lynch (below):Today the Department of Justice has filed a civil complaint seeking to forfeit and recover more than [US]$1 billion in assets associated with an international conspiracy to launder funds stolen from 1MDB. This $1B in assets are just a portion of the more than $3B that was stolen from 1MDB and laundered to American institutions in violation of US law.

1MDB was created in 2009 to initiate economic development through international partnership and foreign direct investment with the ultimate goal of improving the well-being of the Malaysian people. Unfortunately and tragically, a number of corrupt officials treated this public trust as a personal bank account. Our complaint alleges that from 2001 to 2015 these officials and associates conspired to misappropriate and launder billions of dollars from 1MDB. They laundered their funds through opaque actions in bank accounts in countries around the world including Switzerland, Singapore and the United States. The funds were then used to purchase a range of assets for the conspirators and their relatives and associates including high-end real estate in New York and Los Angeles and art works by Monet and a Bombardier Jet aircraft.

Today’s case is the largest single action ever brought by the Kleptocracy Asset Recovery Initiative which was established by AG Eric Holder in 2010 to forfeit the proceeds of foreign official corruption and where possible to use the recovered assets to benefit the people harmed. This case and the kleptocracy initiative as a whole should serve as a sign of our firm commitment to fighting international corruption. And it should also send a signal that the Department of Justice is determined to prevent the American financial system to be used as a conduit for corruption, and should make clear to corrupt officials around the world that we will be relentless in our efforts to deny them the proceeds of their crimes.

Assistant US AG (Criminal Division) Leslie R Caldwell: The complaint filed today really goes in great detail about the complex web of transactions these co-conspirators used to launder billions of dollars they stole from the people of Malaysia.

What I’d like to focus on now is allegations involving two bonds offerings in 2012 through which 1MDB raised some of the money siphoned off by the corrupt officials and their associates. The stated purpose of the bond offerings was to allow 1MDB to raise money to invest in various energy assets of the Malaysian Government and people. Almost immediately after receiving the proceeds of the two bond issues, roughly 40 percent of the money that was raised, which was about $1.7B, was transferred out of 1MDB account and into Swiss bank account that was in the name of a shell corporation incorporated in the British Virgin Islands. The complain alleges that the name of that shell company was chosen because it sounded like the name of a legitimate company that was involved in the bond offering but in fact the Swiss bank account was controlled by corrupt officials and associates.

 

From Switzerland the corrupt officials transferred money using a series of transactions involving more shell companies and bank accounts located all over the globe. Eventually more than $223M of that money found its way in the account of shell companies whose beneficial owner was a close relative of a senior 1MDB official and that individual used the money to buy luxury real estate in the US and other assets and also used the money to fund a motion picture company called Red Granite who in turn used more than $100M of that money to finance the award-winning 2013 film “The Wolf of Wall Street.” Of course neither 1MDB nor the Malaysian people saw a penny of profit from that film or the other assets purchased with funds siphoned from 1MDB. Instead that money went to relatives and associates of the corrupt officials of 1MDB and others.

Because the assets were laundered money, the future rights to that film are subject to the forfeiture complaint filed today in Los Angeles.

The assistance we’ve gotten from international partners has been critical in identifying and restraining assets and I think that international cooperation and the action we are taking today which I said is the largest action taken to date in connection with our kleptocracy initiative should send a message to kleptocrats and corrupt kleptocrats and others that the US is not a safe haven for their stolen money and they cannot avoid law enforcement through shell companies, nominee entities and other structures that are essentially designed to thwart law enforcement. The department will continue to track and seize assets that kleptocrats and other corrupt officials steal from the people of their countries.

US Attorney, Central California (Los Angeles) Eileen M Decker: Another phase of this money laundering scheme occurred in early 2013 in connection with a third bond offering arranged by Goldman Sachs International. In this offering, 1MDB raised approximately $3 billion purportedly to form a joint venture with an entity from Au Dhabi to promote growth   Instead the officials misappropriated a significant amount of the funds raised. In fact only days after the initial bond sale, approximately $1.26 billion was diverted for the benefit of individuals associated with 1MDB. Approximately $137 million of the pilfered money was spent to purchase works of art, including a $34 million work by Claude Monet. It was not to the benefit of the population of Malaysia but to enhance the luxury and lavish lifestyles of those stealing money from 1MDB. Funds diverted from the third bond offering were also traced to the purchase of an interest in the Park Lane Hotel in New York. We seek to forfeit approximately a quarter billion dollars invested in that luxury hotel. The laundering of the proceeds continued throughout 2013 with an additional $106 million used to purchase an interest in EMI Music Publishing.

EMI is the world’s third largest music publishing company by revenue, and the company has the rights to publish approximately 2.3 million musical compositions including a number of top hits from Grammy award-winning artists. Since the conspirators purchased them in EMI, it was they and not the citizens of Malaysia who earn money every time those songs were performed publicly, recorded, or downloaded. 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 and that we will not allow it to be a platform for money laundering or a place to hide and invest in stolen riches.

FBI Deputy Director Andrew McCabe (above):  As alleged in the complaint, not long after 1MDB was established in 2009 corrupt officials at 1MDB and their associates began a sophisticated scheme to enrich themselves. In the first two years of their existence, almost $1billion was transferred out of 1MDB to bank accounts in shell corporations that were controlled by associates of corrupt 1MDB officials. The funds were stolen under the pretense of having 1MDB invest in an oil exploration joint venture with a foreign partner. On paper, the $1billion was to be 1MDB’s in what purported to be national resource rights. But this wasn’t a legitimate investment for 1MDB or the Malaysian people. Instead, the funds transferred to the shell companies were used for the personal enrichment of the corrupt officials and their associates. They used the money to pay gambling debts at Las Vegas casinos, they rented luxury yachts, they hired an interior decorator in London and spent millions on properties some of which is subject to this seizure and forfeitures. Among them was a jet purchased at the price of $35 million.

So why does this matter so much to us? Certainly there is a lot going on in the world right now, terrorists attacks, violent crimes, and serious threats to American citizens and people around the world. Why does a corruption case halfway around the world matter so much to us here today?

 

Well, I’ll tell you a few of the reasons. First, because some of the profits of these schemes were invested in the US. And when corrupt officials bring their ill-gotten gains to the US, they also bring with them their corrupt practices and disregard for the rule of law. And that presents a threat to our economy, impacts trade and investment, fuels the growth of criminal enterprises, and undermines our democratic processes.

Second, because the stable, healthy democracies around the world are the cornerstone of global security, the more we can do to help our international partners establish and maintain stable governments, accountable to the rule of law, the more we do to ensure US national security. And finally, we did it because the FBI and the DOJ, and our colleagues in federal law enforcement are uniquely positioned to provide the sort of assistance. The Malaysian people were defrauded on an enormous scale. Its schemes whose tentacles reached around the world. This case is beyond any single agency’s ability to effectively investigate. We have investigators and prosecutors with deep experience working on matters like this so our environment is a natural fit.

Last year we established three dedicated international corruption squads based in New York, Los Angeles, and here in Washington, DC. These squads include agents, analysts and accountants who are experts in complex financial schemes. These specialized teams are showing real results. This is the largest kleptocracy seizure in US history. We hope this investigation will send a message to corrupt officials around the world that no person, no company, no organization is too big, too powerful, or too prominent. No one is above or beyond the law.

This case is ongoing, Corruption unfortunately, will never be eradicated because quite frankly, greed never goes away. But we are committed to working with our partners here at home and around the world to do what we can to stop it, to ensure the legitimacy of public officials and to create a level playing field for all.

IRS Criminal Investigation Chief Richard Webber: 1MDB was originally established to drive strategic initiatives for the long-term economic development of Malaysia. Instead, it is alleged that money was siphoned from this fund for personal investment, not for the good of the Malaysian people and not for the achievement of their goals.

The case is another example of the ability to follow money through complex money laundering schemes and the web of opaque transactions and fraudulent shell corporations. In October 2015 my LA field office joined the investigation specifically focusing on Red Granite Pictures. Approximately $238 million was wired to Red Granite Capital in Singapore, an entity controlled by Riza Aziz (the stepson of Malaysian Prime Minister, Najib Razak). Wire transfers totaling approximately $64 million was sent from Red Granite Capital account for an account at Citi National Bank in the US, maintained by Red Granite Pictures, a production company also owned by Aziz. This money was used to fund Red Granite Pictures operations including the production of the film “The Wolf on Wall Street.” Additionally the misappropriations was used to acquire $100 millions in relics in the US and the United Kingdom and elsewhere for the benefit of Aziz, including in the list of properties, and we have the properties outlined in the civil complaint in various diagrams but the properties include a Beverly Hills mansion, currently under construction, a Park Laurel condo in New York City, and a townhouse in the United Kingdom.

Fighting worldwide corruption is in the interest of the United states. Corruption threatened good governance, sustainability development and the democratic process and fair business practices. Corruption erodes trust in government and private institutions alike and undermines confidence and fairness of open markets, and it breeds contempt for the rule of law. This investigation is continuing and ongoing. We will not allow the massive and blatant aversion of dollars from 1MDB and the alleged laundering of those funds through US financial institutions to continue.

This case represents a model for international cooperation in significant cross border money laundering matters and sends a message that criminals cannot evade law enforcement authorities by simply laundering money through multiple jurisdictions and through a web of shell corporations.

19 thoughts on “The Noose is tightening on 1MDB–Bro Obama cannot help

  1. I am still not convinced that these investigations will lead anywhere. US authority in the world has been diluted in recent years and with the impending standoff with China in the South China Sea they will not want to damage relations with Malaysia Plus the problems with Islamic extremists in SEA will easily convinced them that a corrupted Muslim leader in power is better then a radical one.
    But of course for Malaysians it is the shame of it all : to be investigated by a foreign power. Can we hope that UMNO will finally see the light and remove the main player in this saga.

  2. With due respect to Bernard, I opine that US has resolve to see that they will take this action to the end. They have learned from past experience that it is not worth a while to prop up corrupt leaders. Soon, corrupt leader will be banished and they have to deal with successive governments with altered pride. I stand confidence of USA Cleptocracy war.

  3. Truth is eye are not on Najib, it’s on the rest of us particularly Malay Muslim. Both sides of their traditional political divide, UMNO and PAS are lying to them. They are all corrupted in spirit. Are Malays to let corruption and lying define them? Will being Malay mean accepting of corruption and lying?

  4. Quote:- “…sends a message that criminals cannot evade law enforcement authorities by simply laundering money through multiple jurisdictions and through a web of shell corporations”

    Looks like the American Ivy League schools, from whom Riza Aziz / Jho Low are star graduates, will have to revamp their MBA syllabuses to include a couple of semesters on “The Malaysian 1MDB Model on the nomenclatural use of “donations” as a legally efficacious methodology to bypass, neutralize national laws on embezzlement and criminal breaches of trust” Our AG should be seconded as a visiting lecturer.

    Quote:- “The Malaysian people were defrauded on an enormous scale”

    I never thought in my widest fantasy, even a couple of weeks ago, that I would actually hear a prosecutor from another country saying this.

    As a nondescript member of this “Malaysian people”, I thank you. Everything else from now on is a bonus.

    Ambassador John Mallott please convey our national appreciation to the US government agencies involved. As you Americans like to say, one helluva job.

    I think Kevin Morais, Altantuya, Hussain Najadi, (and perhaps others who didn’t make it to public notice, my apologies), can very soon truly rest in peace.

    As for Sirul, still an uninvited guest on Australian taxpayers’ money, please be assured you are not forgotten. You fateful day under the Malaysian sun is drawing near.

    If I am twenty something again, I would now be dancing in the streets.

    MF Muhammed, looks like the US of A, whose automobile industry has seen an economic slump in recent years, has ironically fixed the malfunctioning brakes of our careening national vehicle.

    I never thought I’d say this, perhaps, just perhaps, Allah is great after all.

  5. Quote:- “Will being Malay mean accepting of corruption and lying?”

    What else is left, other then marching en mass to Sri Perdana and dragging the “No.1 Official” out of there?

  6. The fruits of NEP, have finally rotted. It has fallen on the very family that created it, , against the very concept of 1 Malaysia – the man that created 3 categories of Malaysians – the Elite Umnoputras, the bumiputras, the us the lowlife lowest caste of all pendatangs that must work our ass off, or leave the country. Ironically fate finally bless his family with 1MDB.
    Where does this bring us as a Nation? Sure, we can all hang the culprits of 1MDB, but the root cause of the disease will only entrenched its growth and power through UMNO and the concept of bumiputras.
    For all the wrongs, it is also the minorities that must take a fair share of the blame, for it was profitable and convenient to circumvent via Ali Babas, and bribe for monopolies and contracts. It was convenient too for the non bumis to buy all those federally funded agrochemicals for half the market price and resell them. It was convenient to build substandard airports, hospitals and bridges, since who cares that the pride and good of the Nation is mere trash for the bin and do not bring food and lavish gifts.
    What Malaysia really need is that pride that the great Tunku tried to instill on us. What Malaysia need is what Jaafar Onn tried to do half a century ago. Malaysia and Malaysians will have a great future, if we had stuck to our constitution instead of amending it for political and personal gains for leadership.

    The Razak Family was the traitors in the Japanese occupation. It is now revealing that the sibling of this family is now the greatest thief.

    Will a new Malaysia come from this grand thievery? Our King is silent, our AG says there is nothing wrong, our newspapers are focused on a below market price bungalow, and the Great Thief says that, everything is hunky dory and there are more important things to take care of. We cannot expect the institutions and the royalty to bring us a future – they have never been bothered.

    All we got is a much elder Dr. M that could bring this change. With him, perhaps lies the slimmest of all hope for the Nation – if him and the voters has seen the light at the end of the tunnel.

  7. The willfulness of Najib actually raise an old even.more important question – about Altantuya. We know he is a crook then so how unlikely he is not guilty of part of the murder?

  8. Quite some time ago, I said in this blog that the 1PM-cum-1Finance Minister is the most “fiscally irresponsible” Finance Minister we have ever had.

    He turned out to be much, much worse.

    The international reputation of Malaysia is in tatters.
    We have joined the league of notorious Third World kleptocracies.

  9. As for Obama, he is looking at it from the point of view of the November presidential election.

    Hillary Clinton has been accused of receiving less than transparent, even corrupt funding before and during the primary from countries Americans now find increasingly anathema to American domestic interests. Trump has been and will be making a big issue out of it. So Obama sees 1MDB, a gigantic prime example of 3rd World kleptocracy, an opportunity to tone down Trump.

    The very public and unusually harsh words and tone of the AG and her colleagues when referring to a leader of a “Muslim” country very friendly to the US may be a clue; to make sure Trump hears and remembers it.

    So this presidential election may be a godsend for the long suffering peoples of Malaysia.

  10. A video of the PC is availabe at:

    AG Lynch Announces a Kleptocracy Enforcement Action to Recover More than $1 Billion…

    Some pointy questions posed at the end by members of the Press. Including why the identity of the “Malaysian Official One” is not stated when it is rather evident who all the various clues in many statements point to.

    On that last matter, Tony Pua just posted on his Facebook page:

    “Malaysian Official One” is 100% PM Najib Razak.
    And Malaysia Official One stole Billions of ringgit from 1MDB’s borrowed funds.
    You deny? So sue me!

    Source:

  11. Malaysia official no 1 could be an intent to give a
    chance to our AG to turn around and commence his work. A huge hint yet our AG could not understand the body language in the press release. Did he see the DOJ press release?.. He
    remain acting smart by insulting back to the DOJ, IRS and FBI saying our PM is not mentioned and should not be charged .

  12. I would like to present 2 comments from today’s electronic media for comparison.

    The first is from the above article and is attributed to FBI Deputy Director Andrew McCabe:

    “Second, because the stable, healthy democracies around the world are the cornerstone of global security, the more we can do to help our international partners establish and maintain stable governments, accountable to the rule of law, the more we do to ensure US national security. And finally, we did it because the FBI and the DOJ, and our colleagues in federal law enforcement are uniquely positioned to provide the sort of assistance. The Malaysian people were defrauded on an enormous scale. Its schemes whose tentacles reached around the world. This case is beyond any single agency’s ability to effectively investigate. We have investigators and prosecutors with deep experience working on matters like this so our environment is a natural fit.”

    The second is reported in FMT as coming from Attorney-General Mohamed Apandi Ali:

    However, he clarified there had been no evidence from investigations carried by any Malaysian law enforcement agencies in various jurisdictions to show that money has been misappropriated from 1MDB.

    “There have been no criminal charges preferred against any individuals for the offence of misappropriation of funds from 1MDB.”

    They are not on the same planet let alone on the same page!

  13. From the US as a nation perspective, the first reason cited by the deputy FBI director for the investigation on 1MDB is to prevent corrupting influence of money brought to the US shore. This reason is meaningful to US, and the prosecution will be limited to containing the corrupting influence. In other words, it is not of US interest to prosecute “Malaysia Official One”, to whom the prosecution involves bilateral relationship.

    The second reason cited by the deputy FBI director is about Malaysians been cheated. US has no jurisdiction over the interest of Malaysians, who are half way around the world. The second reason is cited because of the US liberal’s “One World View”, which is antithetical to sound US traditional value based on nation-state.

    From Malaysia as a nation perspective, we must feel ashamed for not able to prosecute the 1MDB by our own law enforcement; but this 1MDB scandal is not the first big corruption or financial mismanagement committed by our series of Prime Ministers. We want prime minister to be in charge of for-profit businesses (Petronas, MAS, 1MDB, Proton, 5-year economy plans) and to have direct access to big sum of money, but somehow we think we could prevent him from using the money for perpetuating his political reign; such expectation is not realistic and has not been realized anywhere in the world. In other words, by allowing government to command economy, we must accept corruptions; otherwise, don’t allow the government to command economy the way it is doing now.

    The stupidity of opposition such as Tony Pua is to believe US should do the prosecution on behalf of Malaysians. But for those “One World” socialists or socialist-wanna-be, they have no ability to understand why US government wants to use the term “Malaysia Official One” because they have no understanding of nation-state concept in the first place.

  14. Looks like Karma is working : What goes round…..comes round…..( as already happened in TDM’s case ? ) – this time round, it is coming from the back to catch him by the Tail…….unawares …….

    But with power if one CORRUPTS the Nation, one is a gone case to Perdition….

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