(adapted from M. Musa Bakri)
1MDB was created in 2009 to initiate
economic development through international partnership and foreign direct investment
with the ultimate goal of improving the well-being of the Malaysian people. Unfortunately
and tragically, a number of corrupt officials treated this public trust as a
personal bank account. Our complaint alleges that from 2001 to 2015 these
officials and associates conspired to misappropriate and launder billions of
dollars from 1MDB. They laundered their funds through opaque actions in bank
accounts in countries around the world including Switzerland, Singapore and the
United States. The funds were then used to purchase a range of assets for the
conspirators and their relatives and associates including high-end real estate
in New York and Los Angeles and art works by Monet and a Bombardier Jet aircraft.
A complex web of transactions these co-conspirators used to launder
billions of dollars they stole from the people of Malaysia. In 2012 through which 1MDB raised
some of the money siphoned off by the corrupt officials and their associates.
The stated purpose of the bond offerings was to allow 1MDB to raise money to invest
in various energy assets of the Malaysian Government and people. Almost
immediately after receiving the proceeds of the two bond issues, roughly 40
percent of the money that was raised, which was about $1.7B, was transferred out
of 1MDB account and into Swiss bank account that was in the name of a shell
corporation incorporated in the British Virgin Islands. The complain alleges
that the name of that shell company was chosen because it sounded like the name
of a legitimate company that was involved in the bond offering but in fact the
Swiss bank account was controlled by corrupt officials and associates.
From Switzerland the corrupt officials
transferred money using a series of transactions involving more shell companies
and bank accounts located all over the globe. Eventually more than $223M of
that money found its way in the account of shell companies whose beneficial
owner was a close relative of a senior 1MDB official and that individual used
the the money to buy luxury real estate in the US and other assets and also
used the money to fund a motion picture company called Red Granite who in turn
used more than $100M of that money to finance the award-winning 2013 film “The
Wolf of Wall Street.” Of course neither 1MDB nor the Malaysian people saw a
penny of profit from that film or the other assets purchased with funds
siphoned from 1MDB. Instead that money went to relatives and associates of the
corrupt officials of 1MDB and others.
In early 2013 in connection with a third bond offering arranged
by Goldman Sachs International. In this offering, 1MDB raised approximately $3
billion purportedly to form a joint venture with an entity from Au Dhabi to
promote growth Instead the officials
misappropriated a significant amount of the funds raised. In fact only days
after the initial bond sale, approximately $1.26 billion was diverted for the
benefit of individuals associated with 1MDB. Approximately $137 million of the pilfered
money was spent to purchase works of art, including a $34 million work by
Claude Monet. It was not to the benefit of the population of Malaysia but to
enhance the luxury and lavish lifestyles of those stealing money from 1MDB.
Funds diverted from the third bond offering were also traced to the purchase of
an interest in the Park Lane Hotel in New York. The
laundering of the proceeds continued throughout 2013 with an additional $106
million used to purchase an interest in EMI Music Publishing.
Not long after 1MDB was established in 2009 corrupt
officials at 1MDB and their associates began a sophisticated scheme to enrich
themselves. In the first two years of their existence, almost $1billion was
transferred out of 1MDB to bank accounts in shell corporations that were
controlled by associates of corrupt 1MDB officials. The funds were stolen under
the pretense of having 1MDB invest in an oil exploration joint venture with a
foreign partner. On paper, the $1billion was to be 1MDB’s in what purported to
be national resource rights. But this wasn’t a legitimate investment for 1MDB
or the Malaysian people. Instead, the funds transferred to the shell companies
were used for the personal enrichment of the corrupt officials and their
associates. They used the money to pay gambling debts at Las Vegas casinos,
they rented luxury yachts, they hired an interior decorator in London and spent
millions on properties some of which is subject to this seizure and
forfeitures. Among them was a jet purchased at the price of $35 million.
EMI is the world’s third largest
music publishing company by revenue, and the company has the rights to publish
approximately 2.3 million musical compositions including a number of top hits
from Grammy award-winning artists. Since the conspirators purchased them in
EMI, it was they and not the citizens of Malaysia who earn money every time
those songs were performed publicly, recorded, or downloaded. In seeking to seize
these forfeited items the Department of Justice is sending a message that we
will not allow the United States to become a playground for the corrupt and
that we will not allow it to be a platform for money laundering or a place to
hide and invest in stolen riches.
Corruption threatened good governance,
sustainability development and the democratic process and fair business
practices. Corruption erodes trust in government and private institutions alike
and undermines confidence and fairness of open markets, and it breeds contempt
for the rule of law.
Corruption
unfortunately, will never be eradicated because quite frankly, greed never goes
away. We have to do what we can to stop it, to ensure the legitimacy of public
officials and to create a level playing field for all.
Assets do not become corrupt by themselves;
individuals through their corrupt acts created those assets.
The Kleptocracy Asset Recovery Initiative which was
established by AG Eric Holder in 2010 to forfeit the proceeds of foreign official
corruption and where possible to use the recovered assets to benefit the people
harmed. This case and the kleptocracy initiative as a whole should serve as a
sign of our firm commitment to fighting international corruption. And it should
also send a signal that the Department of Justice is determined to prevent the
American financial system to be used as a conduit for corruption.
When corrupt officials bring their ill-gotten gains to the US, they
also bring with them their corrupt practices and disregard for the rule of law.
And that presents a threat to our economy, impacts trade and investment, fuels
the growth of criminal enterprises, and undermines our democratic processes.
The Department of Justice has filed a civil complaint seeking to
forfeit and recover more than [US]$1 billion in assets associated with an international
conspiracy to launder funds stolen from 1MDB. This $1B in assets are just a
portion of the more than $3B that was stolen from 1MDB and laundered to
American institutions in violation of US law.
This is a civil complaint against the assets that were acquired from alleged
corrupt acts perpetrated on 1MDB. Those assets are now legally tied up. There
could be two possible responses. At one extreme the owners of those assets
would choose not to challenge the complaint at which point those assets become US
Government property and will be auctioned off. The US Government would recoup
its costs and the people of Malaysia would be entitled to claim the leftover. The
other would be for their owners to challenge the order. That would incur
substantial legal fees as the filings are in many courts.
Attorney General Loretta Lynch is a seasoned professional prosecutor with a Harvard law
degree while her Malaysian counterpart is a failed UMNO operative with a legal qualification
from an obscure British Inn of Courts.
The Malaysian people were defrauded on an enormous scale. Its schemes
whose tentacles reached around the world. This case is beyond any single
agency’s ability to effectively investigate.
Stable, healthy
democracies around the world are the cornerstone of global security.
No one is above or beyond the law.
