1MDB scandal is the perfect example of kleptocracy, US attorney says

7 years ago - Published in Finance, Fiscal & Legal

The United States has called the 1Malaysia Development Berhad (1MDB) scandal "kleptocracy at its worst", just as Prime Minister Najib Razak is preparing to rally Malaysia's ruling party at its last national congress before a general election due within months.

Speaking at the Global Forum on Asset Recovery hosted by the US and UK in Washington, US Attorney General Jeff Sessions said on Monday that the Department of Justice (DOJ) "is working to provide justice to the victims of this alleged scheme".

“1MDB was created by the Malaysian government to promote long-term economic development for the benefit of the Malaysian people. “But allegedly corrupt officials and their associates reportedly used the funds for a lavish spending spree: $200 million for real estate in Southern California and New York. $130 million in artwork. $100 million in an American music label. Not to mention a $265 million yacht,” he said in remarks carried on the US Department of Justice (DoJ) website.

"In total, 1MDB officials allegedly laundered more than $4.5 billion in funds through a complex web of opaque transactions and fraudulent shell companies with bank accounts in countries ranging from Switzerland and Singapore to Luxembourg and the United States. This is kleptocracy at its worst," he said at the Global Forum on Asset Recovery hosted by the US and United Kingdom. He did not identify any of the officials he thought were corrupt.

Officials at 1MDB did not immediately respond to requests for comment.

Sessions said the DoJ’s anti-kleptocracy initiative had returned at least $254 million in corruption proceeds to the people of Italy, Khazakhstan and Peru, and millions more to the people of Nicaragua, South Korea and Taiwan, since 2004.

1MDB was once a pet project of Najib, who chaired its advisory board until last year. The fund is the subject of money-laundering investigations in at least six countries including Switzerland, Singapore and the United States.

The U.S. lawsuits have alleged that $681 million of the misappropriated funds from 1MDB was transferred to the account of “Malaysian Official 1”, which U.S. and Malaysian sources have previously identified as Najib.

Najib, who faces a general election next year, has denied any wrongdoing and was cleared of any offense by Malaysia’s attorney general.

U.S. President Donald Trump welcomed Najib to the White house in September, praising Malaysia’s investments in the United States while avoiding any talk of the DoJ’s investigation into the scandal.