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Tensions likely in US-Malaysia relations over seizure move

FMT Reporters

 | July 21, 2016

Bloomberg report gives details of the US Department of Justice’s move to seize more than USD1 billion in assets it says are connected to 1MDB.

NEW YORK: The move by the US Department of Justice to seize more than USD1 billion worth of assets said to be connected to 1MDB is going to cause tension with the Malaysian Government.

A Bloomberg report observes that Malaysia has been a longtime ally of the US on issues including counterterrorism and trade and that the latest development could “lay the groundwork” for tensions.

The report said: “It’s unclear how local law enforcement will respond in Malaysia, where officials have taken pains to keep criticisms from surfacing, have cleared (Prime Minister) Najib (Razak) of any wrongdoing and closed its own investigations.”

It said Najib did not immediately respond to a request for comment and that he had consistently denied wrongdoing.

More than USD3.5 billion allegedly connected to 1MDB travelled a trail of fraud from Malaysia through a web of shell companies, the report said.

Prosecutors, who are not accusing Najib of wrongdoing, are seeking to recover assets they say are linked to Najib’s stepson, Riza Aziz, and other associates, according to the report.

Bloomberg quoted 1MDB as saying that it would fully cooperate with investigators and that it “is not a party to the civil suit, does not have any assets in the United States of America, nor has it benefited from the various transactions described in the civil suit.”

According to the report, some of the money was handled by international banks including Goldman Sachs Group Inc, JPMorgan Chase & Co, Standard Chartered Plc and Deutsche Bank AG.

A chunk of it was used to fund the Hollywood blockbuster “The Wolf of Wall Street”.

According to the report more than USD13 million of it was wired to an account at a Las Vegas casino.

“Unfortunately and tragically, a number of corrupt officials treated this public trust as a personal bank account,” US Attorney General Loretta Lynch said at a news conference in Washington.

Lynch declined to comment on the identity of the unnamed top Malaysian official, said the report.

Money was pilfered from the government fund based on false representations made by 1MDB officials and representatives of the shell companies, prosecutors said.

The diverted cash was used to purchase a breathtaking catalog of loot that prosecutors moved on Wednesday to seize, according to the Bloomberg report.

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