The
Malaysian Bar is deeply disturbed by the grim disclosures contained in
the complaint filed by the United States Department of Justice
(“DOJ”)[1] “to forfeit assets involved in and traceable to an
international conspiracy to launder money misappropriated from 1Malaysia
Development Berhad (“1MDB”)…”[2] The DOJ has made serious allegations
of siphoning or diversion of funds, fraud, and the misuse of the banking
system for illegal activities, by the individuals and entities named in
the complaint.
Various
persons have in the past weeks sought to interpret the DOJ’s 136-page
complaint. It is appalling that some have deliberately set out to
distort the proceedings, and have attempted to create confusion,
ostensibly to protect wrongdoers. In the interest of upholding the rule
of law and the cause of justice, the thrust, purpose and ramifications
of the DOJ proceedings must be appreciated.
The
legal proceeding commenced by the DOJ seeking the forfeiture of assets —
including rights to profits, moveable assets and real property —
constitute a civil action. These assets, located primarily, but not
exclusively, in the United States, are alleged to be proceeds from
criminal conduct. The DOJ maintains that this is the largest single
asset seizure action ever brought under its Kleptocracy Asset Recovery
Initiative.[3]
The
DOJ’s court document states that the assets to be forfeited represent
“a portion of the proceeds of over [US]$3.5 billion misappropriated from
1MDB.”[4] It has been reported that the United States authorities
intend “to recover more than [US]$1 billion that was laundered through
the United States and traceable to the conspiracy.”[5] In this regard,
it would appear from the court document that the United States
authorities possess comprehensive knowledge of the movement of the
alleged misappropriated funds, have sighted relevant documentary
evidence, and even reviewed telephone conversations. The substance,
depth and reach of the allegations are compelling, and should not be
ignored. The affected parties will have the opportunity to challenge
the DOJ’s action in court, hence the process is transparent and adheres
to the principles of natural justice.
The
complaint made by the DOJ does not preclude criminal action, as the
forfeiture is but a first step to prevent dissipation of the specified
assets. The act of money laundering, and involvement in a conspiracy to
do so, are criminal offences. Thus, upon forfeiture of the assets, it
is likely that there would be criminal proceedings to prosecute those
responsible for the alleged misappropriation of 1MDB funds and the
laundering of those funds in the United States and elsewhere.
Such
proceedings in the United States should not surprise our law
enforcement agencies or officers. There are similar provisions in our
law for the freezing or forfeiture of assets in Malaysia that are
connected with money laundering activities or are the proceeds of crime,
whether or not any individuals are prosecuted.[6] These have often
subsequently led to the prosecution of individuals. The laws in
Malaysia also allow for criminal proceedings against individuals for
alleged money laundering activities, even if those activities occur
outside Malaysia.[7]
It
is noteworthy that the Malaysian Anti-Corruption Commission has issued a
statement confirming that it cooperated with the United States Federal
Bureau of Investigation in the latter's investigations.[8] In
international efforts to stop money laundering and curb corruption, many
countries — including Malaysia — have passed laws that allow for
"universal jurisdiction" in respect of money laundering activities or
corrupt practices. Such legal actions cannot in any way be categorised
as attempts to interfere in the domestic affairs of a sovereign state.
The
principal aim of international crime prevention and anti-corruption
treaties such as the United Nations Convention against Corruption, which
Malaysia ratified in 2008, is to specifically provide for the
prosecution of those involved in international or transnational criminal
activities. No country that is a signatory to such treaties or
conventions should attempt to hide or shield such persons, or permit
such persons to evade or avoid prosecution, or to block access to
evidence or information.
It
is untenable to hold that the DOJ document does not show that money has
been misappropriated from 1MDB.[9] The allegations of financial
improprieties concerning 1MDB funds — described as having been "stolen,
laundered through American financial institutions and used to enrich a
few officials and their associates"[10] — are referred to in no fewer
than 193 paragraphs in the document.
Further,
it has been reported that 1MDB is being investigated for alleged
financial irregularities and possible money laundering in at least nine
countries: Australia, Hong Kong, Luxembourg, Singapore, Switzerland,
Thailand, United Arab Emirates, United Kingdom and United States of
America.[11] It is significant that immediately after the DOJ announced
its action, Singaporean authorities declared that they have seized bank
accounts and properties amounting to S$240 million in total, as a
result of their own investigations into the flows of 1MDB-related funds
through Singapore, which began in March 2015 and are still in
progress.[12]
There
are parties who have stated that 1MDB has not suffered any losses but
only "has debts".[13] This is a perverse and unsustainable position,
given that the PAC report reportedly named members of 1MDB's senior
management that it said should face a criminal investigation,[14] and
that five of the twelve members of the PAC have reportedly stated that
the PAC's report shows that a total of US$7 billion have flowed out from
1MDB and were unaccounted for.[15]
Several
individuals have been specifically named in the DOJ's court document,
but not the Prime Minister. However, this is not to say that he cannot
be identified from the descriptive statements contained in the court
document.[16] The conclusion — based on any clear reading of those
descriptive statements — that the person named as "MALAYSIAN OFFICIAL 1"
in the court document is the Prime Minister appears irresistible.
The
court document contains many other troubling disclosures. It is
alleged that in March 2013, USD681 million was transferred to a bank
account belonging to "MALAYSIAN OFFICIAL 1",[17] and that this sum
emanated from a 1MDB bond sale. This allegation contradicts statements
by our authorities that the funds were a "personal donation" to the
Prime Minister from the Saudi royal family, given to him without any
consideration.[18]
In
addition, the court document also alleges that USD20 million and a
further USD30 million traceable to 1MDB funds, were transferred to the
same personal bank account owned by "MALAYSIAN OFFICIAL 1" in 2011 and
2012, respectively.[19] It would appear that the transfer of these
funds had not been previously uncovered or disclosed by any of our
enforcement agencies. These allegations therefore expose deficiencies
and flaws in the investigations that have been conducted so far in
Malaysia, and a lack of transparency regarding the findings that such
investigations have yielded.
While
the DOJ's proceedings and any other possible related proceedings in the
United States of America must be allowed to take their course and not
be prejudged, a fresh and comprehensive investigation of all persons
directly or indirectly implicated in the allegations made by the DOJ
must be pursued. These allegations must not be ignored or permitted to
be swept under the carpet, as that would only fuel the already existing
perception of a cover-up. In this regard, the recent statement by the
PAC, in the wake of the DOJ proceedings, that any further investigation
into 1MDB is unnecessary, is deeply disconcerting.
There
is a palpable need for greater fervour, transparency and accountability
in the investigation by our enforcement authorities, and for
appropriate and concrete action to be taken against all wrongdoers,
without delay. The truth must be revealed and justice must be done.
Steven Thiru
President
Malaysian Bar
11 August 2016
[1] Civil suit document filed by the United States Department of Justice dated 20 July 2016 ("DOJ civil suit").
[2] DOJ civil suit, para 5.
[3]
Press statement by the United States Department of Justice entitled
"United States Seeks to Recover More Than $1 Billion Obtained from
Corruption Involving Malaysian Sovereign Wealth Fund" dated 20 July 2016
("DOJ press statement").
[4] DOJ civil suit, para 33.
[5] DOJ press statement.
[6]
Section 41 of the Malaysian Anti-Corruption Commission Act 2009, and
Sections 44, 45, 50, 51 and 52 of the Anti-Money Laundering,
Anti-Terrorism Financing and Proceeds of Unlawful Activities Act 2001.
[7]
Sections 44, 45, 50, 51 and 52 of the Anti-Money Laundering,
Anti-Terrorism Financing and Proceeds of Unlawful Activities Act 2001.
Sections 44 and 53 also deal with the freezing and seizure of assets
located outside Malaysia.
[8] Press statement issued by the Malaysia Anti-Corruption Commission entitled "SPRM Bekerjasama Dengan FBI" dated 22 July 2016.
[9] Press statement by the Attorney General of Malaysia Tan Sri Dato' Sri Haji Mohamed Apandi Bin Haji Ali entitled "US DEPARTMENT OF JUSTICE FILING OF CIVIL ACTION" dated 21 July 2016.
[10] DOJ press statement.
[11] "How Malaysia's 1MDB Fund Scandal Reaches Around the World", Bloomberg, 22 July 2016.
[12]
Joint statement by the Attorney-General's Chambers of Singapore,
Commercial Affairs Department of the Singapore Police Force and the
Monetary Authority of Singapore entitled "Investigations into 1MDB-Related Fund Flows through Singapore" dated 21 July 2016.
[13] "Don't be blindsided by 1MDB: Najib", New Straits Times Online, 9 August 2015.
[14] "Malaysia's Probe Into 1MDB Fund Was Flawed", Wall Street Journal, 26 May 2016.
[15] "PAC members: We never said no wrongdoing, cash went missing", MalaysiaKini, 12 April 2016.
(b) DOJ civil suit, para 129: "[RIZA SHAHRIZ BIN ABDUL] AZIZ is a relative of MALAYSIAN OFFICIAL 1 and a friend of LOW [TAEK JHO]."
(c) DOJ civil suit, para 39: "Upon its formation, MALAYSIAN OFFICIAL 1 assumed a position of authority with 1MDB. MALAYSIAN OFFICIAL 1 had the authority to approve all appointments to, and removals from, 1MDB's Board of Directors and 1MDB's Senior Management Team. In addition, any financial commitments by 1MDB, including investments, that were likely to affect a guarantee given by the government of Malaysia for the benefit of 1MDB or any policy of the Malaysian government, required, the approval of MALAYSIAN OFFICIAL 1."
(d) DOJ civil suit, para 238: "The Government of Malaysia provided a "Letter of Support," dated March 14, 2013, in connection with the Project Catalyze transaction… the letter is signed by MALAYSIAN OFFICIAL 1.", read together with "A 1MDB default would test limits of Najib's support: Gadfly", StockHut, 19 April 2016.
(e) DOJ civil suit,
para 263: "… a press release issued on January 26, 2016, the Malaysian
Attorney General confirmed that, "the sum of USD681 million (RM2.08
billion) [was] transferred into the personal account of [MALAYSIAN
OFFICIAL 1] between 22.03.2013 and 10.04.2013," and that, " In August
2013, a sum of USD620 million (RM2.03 billion) was returned by
[MALAYSIAN OFFICIAL 1]. . . ." The Malaysian Attorney General ultimately
characterized the payment of $681 million as a "personal donation to
[MALAYSIAN OFFICIAL 1] from the Saudi royal family which was given to
him without any consideration."
[17] DOJ civil suit,
para 229: "…between approximately March 21, 2013, and March 25, 2013,
$681,000,000 was transferred from the Tanore Account to an account
belonging to MALAYSIAN OFFICIAL 1."
[18] Press statement by the Attorney General Tan Sri Dato' Sri Haji Mohamed Apandi bin Haji Ali entitled "IN RELATION TO THE INVESTIGATION PAPERS RETURNED BY MACC ON SRC INTERNATIONAL AND "RM2.6 BILLION" dated 26 March 2016.
[19] DOJ civil suit, para 261.
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