THE plot behind the 1Malaysia Development Berhad (1MDB) state fund scandal has thickened with the intervention of the United States government.
Gambling debts in Las Vegas, a private jet, and funding for Oscar-nominated movie ‘The Wolf of Wall Street’ are among the opulent expenses allegedly bankrolled by the Malaysian sovereign wealth fund in a scandal involving billions of dollars of taxpayers’ money.
Amid colossal allegations of transborder graft and money laundering, the U.S. Department of Justice is looking to seize more than $1 billion in assets that federal officials say were misappropriated from the 1Malaysia Development Berhad (1MDB) wealth fund.
Apart from film rights to ‘The Wolf of Wall Street’, artwork from Claude Monet and Vincent Van Gogh; a US$250 million investment in Parklane Hotel, New York; a US$176 million EMI Music investment; and $100 million worth of real estate in the U.S. and U.K. are said to be among the assets involved.
1MDB is wholly owned by the Malaysian Finance Ministry. Malaysian Prime Minister and Finance Minister Najib Razak oversees the state fund.
According to the complaints, from 2009 through 2015, more than $3.5 billion in funds belonging to 1MDB was allegedly misappropriated by high-level officials of 1MDB and their associates, the department said.
It said the $1 billion was laundered through the United States and “traceable to the conspiracy”.
The department pointed out that 1MDB was created by the government of Malaysia to promote economic development in Malaysia through global partnerships and foreign direct investment, and its funds were intended to be used for improving the well-being of the Malaysian people.
However, 1MDB officials, including top-level Malaysian officials, and their associates allegedly misappropriated more than $3.5 billion.
After the department filed civil complaints on Wednesday, Attorney General Loretta Lynch told a news conference that the complaints represented the largest single action ever brought under the Kleptocracy Asset Recovery Initiative.
“The Department of Justice will not allow the American financial system to be used as a conduit for corruption,” Lynch said in a statement.
“We are seeking to forfeit and recover funds that were intended to grow the Malaysian economy and support the Malaysian people.
“Instead, they were stolen, laundered through American financial institutions and used to enrich a few officials and their associates.”
She added that a number of corrupt officials had treated 1MDB as their private bank account.
FBI Deputy Director Andrew G. McCabe, echoing Lynch’s statement, said: “The Malaysian people were defrauded on an enormous scale.”
Malaysian Prime Minister Najib Razak’s step son, Riza Aziz, is among those implicated in the scandal. According to Variety, Riza was a financier and producer of ‘The Wolf of Wall Street’, which was produced by Red Granite Pictures.
Assistant Attorney General Leslie R. Caldwell, who was present at the announcement, said it was a case where life imitated art, alluding to the theme of the movie.
“The associates of these corrupt 1MDB officials are alleged to have used some of the illicit proceeds of their fraud scheme to fund the production of ‘The Wolf of Wall Street’, a movie about a corrupt stockbroker who tried to hide his own illicit profits in a perceived foreign safe haven,” she said.
“But whether corrupt officials try to hide stolen assets across international borders – or behind the silver screen – the Department of Justice is committed to ensuring that there is no safe haven.”
MalaysiaKini, citing the lawsuit by the department, reported that US$731 million was allegedly siphoned from 1MDB into a bank account owned by the unnamed ‘Malaysian Official 1’.
Although ‘Malaysian Official 1’ was not named, the individual was described as a “high-ranking official in the Malaysian government who also held a position of authority with 1MDB,” and a relative of Riza.
Additional reporting by Associated Press