CONTROVERSIAL Malaysian businessman Jho Taek Low, or Jho Low, netted over US$300 million in less than a week through the US$2.2 billion purchase of a US energy company with money stolen from 1Malaysia Development Berhad (1MDB), the US Department of Justice (DOJ) alleged recently.
Referring to the acquisition of US-based Coastal Energy Co by Abu Dhabi sovereign-wealth fund International Petroleum Investment Co (IPIC), the department provided detailed allegations of 1MDB funds being used to bankroll the acquisition in 2013 and 2014, the Wall Street Journal reported on Tuesday.
The DOJ, in an asset seizure lawsuit dated last Wednesday, alleged the deal arranged by Goldman Sachs Group Inc involved money stolen from Malaysia’s troubled sovereign wealth fund 1MDB.
The money, it alleged, was funnelled via numerous shell companies and bank accounts to purchase the US energy company controlled by Texas oil tycoon Oscar Wyatt Jr.
As part of the alleged scheme to defraud 1MDB, Low had approached Coastal on the prospect of acquisition, said the department. Coastal, being sceptical on whether Low could come up with the cash, had asked the businessman to find a bigger partner.
Soon after, Low returned with IPIC’s Spanish energy unit Compañía Española de Petróleos SAU (Cepsa) and had formed a joint venture with a shell company he controlled. Low’s shell company had invested US$50 million in the deal while Cepsa had funded the remainder of the US$2.2 billion acquisition, the department’s lawsuit said referring to statements announcing the purchase.
According to the lawsuit, Cepsa had transferred US$350 million to Low’s shell company the next week.
The 1MDB was created in 2009 by Malaysia’s Prime Minister Najib Razak to promote economic development projects.
It is currently the subject of numerous multi-agency probes across the world, including in Singapore, Hong Kong, Australia and Switzerland, as well as a civil lawsuit filed by the DOJ which claims fund officials have diverted more than US$3.5 billion through a web of shell companies and bank accounts abroad.
Najib has been implicated in the scandal following allegations US$800 million, reportedly sourced from 1MDB via a network of offshore funds and accounts controlled by Low and his associates, was deposited into Najib’s personal accounts.
Najib, who chaired the fund until last year, has vehemently denied any wrongdoing in the handling of 1MDB. The DOJ has said it found several hundreds of millions of dollars deposited into the personal bank accounts of a certain “Malaysian Official 1”, who US and Malaysian officials have identified as Najib.
In March, US prosecutors said they were planning to file criminal charges against Low. His current whereabouts are reportedly still unclear and he has constantly denied any wrongdoing.
The Coastal deal reportedly caught the DOJ’s attention as the US$50 million invested by Low came from 1MDB.
“The Justice Department has questioned people involved in the deal in recent months, according to people familiar with the investigation,” WSJ reported.
On June 7, the department moved to seize a London penthouse which was allegedly bought with some of the US$350 million made from the Coastal deal.
Earlier in the year, it was revealed Low had bought the penthouse, an office building and another flat, all in the upmarket Mayfair district using £77 million (US$97.7 million) of 1MDB money.
“Low acquired an interest in the Stratton penthouse and the Stratton flat. He used funds traceable to misappropriated 1MDB proceeds to purchase the Stratton office,” the DOJ said in its filing.
The move comes amid an international investigation into what is believed to be one of the largest cases of financial fraud in history.