Malaysia's Minister For Finance appoints KPMG partner as "Special Officer",despite KPMG's contribution to 1MDB's losses

by Ganesh Sahathevan

Kok Seng is the Partner-in-Charge for KPMG Northern Region.  He has extensive audit, accounting and consulting experience both in Malaysia and Washington, D.C., USA. His experience is not limited to audit assignments but also covers the various corporate exercises which include corporate advisory on initial public offerings, cross border acquisitions, special issues and share valuation. He currently sits in the Penang State Shared Services and Outsourcing and Creative Multimedia Content Council.
(see http://aamc2015.usm.my/index.php/2-uncategorised

KPMG's _proudly boast on their website:

Special officer to the finance minister, Dato’ Ooi Kok Seng, who was also present, had mentioned that the government had not yet received the funds from a one-off special dividend from Petroliam Nasional Bhd (Petronas) of RM30 billion which will be used for tax refunds announced during Budget 2019. “At the moment the funds are not in as it is only a few days past the new year. However, [the public] should not worry as the finance minister has given the assurance that full refunds will be made through the special dividend,” he said.

Dato’ Ooi Kok Seng is KPMG Head (North).He seems to have won the favour of the Penang Government and the DAP, despite KPMG's 1MDB history.This excerpt from the DAP website is indicative of their relationship:

The Penang state government has chosen the internationally renowned accounting firm, KPMG and its senior partner Chartered Accountant Ooi Kok Seng, for the verification exercise and to formulate the template and presented to the public. As an independent audit firm, KPMG is required to uphold the highest standards of professional standards ensuring that it complies with the principles of objectivity, independence and no conflict of interest before undertaking any task.


KPMG's contribution to 1MDB's losses has been well documented by this writer and by Sawarak Report (see stories below).

This conflict adds to that concerning PwC, Goldman Sach's auditor for some 37 years, who have nevertheless been appointed to oversee 1MDB.

END

Don't Ask Us! - KPMG Global's Astonishing Response on 1MDB

• 24 March 2015
 
• 15

1MDB is not anything to do with us – Global Chief of KPMG, John Veihmeyer

For weeks the mantra of the chairman of 1MDB’s governing Advisory Board (Malaysia’s Prime Minister) has been that the management of the fund has been ‘cleared’, because the accounts were ‘forensically’ audited by international accountancy firms of global standing.

The firms who have given 1MDB clean bills of health have been the Malaysia branches of the accountancy giants Deloitte and KPMG.

Malaysia’s top team at KPMG – no accountability to HQ?

However, last week Sarawak Report demonstrated evidence pointing to a series of sharp practices on the part of KPMG during the audit process for the year ending March 2010.

These enabled 1MDB to conceal the loss of USD$700 million, which was the sum siphoned out of its joint venture with the little known oil company PetroSaudi.

Following this expose, the Sydney-based Malaysian investigative financial journalist, Ganesh Sahathevan, directly challenged the Global Chairman of the company, John Veihmeyer, to give his response to the allegations.

Sahathevan asked whether KPMG Global had been aware of any of the transactions relating to 1MDB outlined in the expose?  He added that:

“much of what has been reported was in the public domain since at least 2014, and hence there is also the question of why the Global Board took no action despite that fact?”

KPMG’s international image – a massive global firm

The rapid response Sahathevan received from KPMG merits reading in full, because it puts paid to any assumptions that a local branch of this ‘global network’ of accountancy firms can be relied upon to maintain any sort of acceptable standard laid down by a central authority.

The General Counsel (top lawyer) for Mr Veihmeyer states that the corporate headquarters has no involvement in the matter, because the KPMG network represents nothing more than a ‘Swiss Cooperative’ of happy Helvetic brand sharers.

In short, he explains, no one at HQ is responsible for what their fellow franchise holders get up to. They are just there to help and advise when required.

Dear Mr Sahathevan

I refer to your email below addressed to Mr John Veihmeyer, Global Chairman, KPMG International Cooperative (KPMG International).

I am the General Counsel of KPMG International and am responding on behalf of Mr Veihmeyer.

KPMG International is a Swiss Cooperative. Member firms of the KPMG network of independent firms are affiliated with KPMG International. KPMG International provides no client services. No member firm has any authority to obligate or bind KPMG International or any other member firm vis-à-vis third parties, nor does KPMG International have any such authority to bind or obligate any member firm.

KPMG International does not have any relationship with, or connection to, 1MDB”.

Yours faithfully

Tom Wethered

Malaysians and others, who had assumed that accreditation by KPMG represented some form of guarantee of high standards; quality control; centralised monitoring and disciplinary process to ensure high standards of accountancy practice must therefore stand disappointed.

According to KPMG’s top legal eagle, theirs is a form of franchise that has its cake and eats it at the same time.

Name bearers get to carry the brand, but without any form of accountability whatsoever:

“nor does KPMG International have any such authority to bind or obligate any member firm” [Tom Wethered]

Franchise without accountability?

If a Malaysian were to find dog meat in his McDonald’s burger in KL, he would expect to receive some response from the company HQ from under its golden arches in California – and doubtless he would.

By contrast, if KPMG Malaysia assists in the cover-up of a billion dollar heist of public money, it turns out that their global HQ in Amsterdam merely refers you to the cantons of Switzerland and their company’s new corporate structure, which is accountability free.

Having their cake and eating it 

Mr Wethered’s response that “KPMG International does not have any relationship with, or connection to, 1MDB”  represents a stark contrast, however, with the firm’s own publicity material.

The KPMG website and numerous articles make reference instead to the guarantee of quality that their brand lends to its affiliates across the world.

KPMG’s own website, under the banner line “Acting With Integrity”, declares:

“KPMG is a global network of professional firms providing Audit, Tax and Advisory services. We have more than 155,000 outstanding professionals working together to deliver value in 155 countries worldwide.”

On the other hand, scrutiny of this KPMG website soon makes plain that behind the fine words and sentiments there is indeed what appears to be a significant dearth of actual governance in this corporate structure:

ABOVE ALL, WE ACT WITH INTEGRITY

We are constantly striving to uphold the highest professional standards, provide sound advice and rigorously maintain our independence….

The KPMG Global website concedes that its Head Officers provide policies, even regulations. But, there is no mention of enforcement.

The Global Board is the principal governance and oversight body. The key responsibilities of the Board include approving long-term strategy, protecting and enhancing the KPMG brand, and approving policies and regulations

There is no single line of accountability within the organisation.

Leadership

Internationally, the affairs of KPMG are the responsibility of several bodies.

Aspirations, but can they be enforced?

The controls that would lead the third party readers of its audit reports to feel comforted that quality control is enforced, appear to be missing, as indicated by the letter sent by KMPG’s top counsel.

Although there is a deluge of information about the values and quality that this network of affiliated firms is “striving to achieve”, there seems to be a lack of clear accountability within the structure of the organisation.

Without accountability and enforcement structures the high values and claims of integrity that pack out KPMG’s corporate messaging are surely effectively meaningless?

What better example than this latest abdication of responsibility over the scandal of 1MDB?

KPMG’s Positive PR

The legal counsel of KPMG seems therefore to be entirely correct in his statement that the global headquarters can wash its hands entirely of this little fracas over in Malaysia.

Star Interview with former Global Head Michael Andrew presented a very different state of affairs.

Yet, as Mr Sahathevan and others suggest, this is not the public face of the company.

Certainly, the ‘Swiss Cooperative’s’ corporate PR does not accurately represent this state of affairs and basic lack of governance.

Take for example the recent ‘Up Close And Personal’ article by Malaysia’s Star Newspaper about the role of the recently retired Global Chairman of KPMG.

In his interview Mr Andrew told the Star that clients in KL had the right to expect the same level of service as in Europe.

He also said that the company upheld its “duty to the broader community”:

KPMG’s brand, Andrew says, is all about being independent and objective because the firm and its employees has a public interest of responsibility to the broader community.

“We have to ensure that we uphold the governance standards in every country for our multi-national clients. They expect the same standards in Kuala Lumpur as they do in Johannesburg, Frankfurt or New York,” he says.

He adds that corporate governance defines the KPMG brand. “If we don’t meet the governance standards, then people won’t have confidence in our business. Integrity is at the heart of everything we do.

“This is ensuring that we understand that our duty is to the broader community than just to any particular client or particular transaction. Because if we do some work, which turns out to be incorrect, it’ll affect our global brand,” he says.

Every three months, KPMG employees are required to sign a declaration to maintain their independence around their audit clients. [The Star Online 10th Aug 2013]

However, despite that commitment to the broader community, in the case of 1MDB the public was never informed about the siphoning of $700 million in public funds out of the fund, thanks to KPMG Malaysia’s accountancy practices.

And now it turns out that KPMG Global regards itself as having no responsibility at all in the matter.

Were it to be more widely recognised that KPMG Global exerts so little quality control over its branches, the reputation on which this ‘cooperative’ relies might very well lose a lot of its lustre.

Maika and the Oriental Assurance Capital sale: Trustees led by Gnanalingam have no right to the proceeds ; RM 145 Million sent to Gnanalingam's Pembinaan Redzai should be clawed back;together with Tune Insurance IPO profits

by Ganesh Sahatevan

                                               
                                  MAIKA'S SAVIOURS:THE TRUSTEES

Tan Sri G.Gnanalingam

Ravin Ponniah

Tan Sri Ir. Kunasingam 

                                                               A/L V. Sittampalam

                                                               Dato’ N. Sadhasivan 

                                                                           
                                                                                Datuk R. Karunakaran

The Maika  rescue was initiated via a  trust GT Resoruces Sdn Bhd, and the trustees were the following persons :


Gnanalingam said GT Resources, run by a board of trustees chaired by him and comprising Datuk Kuna Sithampalan, Bank Negara and Petronas director Datuk N. Sadhasivan, ex-Malaysian Industrial Development Authority director-general Datuk R. Karunakaran and special officer in the Prime Minister's Department Ravin Ponniah, had already obtained 12 per cent of the shares held by the Maika management.

(Maika payout by July 31;23 April 2010New Straits Times)

This morning Sarawak Report has shown how some RM 145 Million, being the proceeds from the sale of Maika's then primary asset, its stake in Oriental Assurance Capital was paid over by Maika to Gnanalingam's private company , Pembinaan Redzai Sdn Bhd.

That money needs to be clawed back, and the clawback should include any profits made by the trustees from the Tune Insurance IPO.

END 

Maika Papers Raise Further Concerns Over Shareholders' Missing Money

• 13 March 2019
 
• 0

Sarawak Report has viewed further documents that have so far remained hidden from the public relating to the disposal of Maika Holdings assets by supposed corporate ‘white knights’ deputed by the former government to ‘bail out’ the struggling fund.

The ‘rescue’ back in 2010 included a promise that any profits from the disposal of the company’s assets would be distributed amongst some sixty six thousand original shareholders of the fund – mostly members of the Malaysian Indian Congress party, linked to BN, who had received a paltry return on their investments over several years.

These papers indicate that in recent weeks liquidators have expressed acute concern that huge sums of cash arising from the sale of those assets went to the wrong place, namely a company owned by one of the said ‘white knights’ G Gnanalingam, instead of Maika Holdings itself (in order to be distributed to shareholders as was promised).

Loan at the centre of the dispute was from one of Mr Gnanalingan’s companies Pembinaan Redzai Sdn Bhd to G Team Resources & Holdings Sdn Bhd, which he set up to buy out Maika Holdings

Sarawak Report understands that the matter has now been referred to the police and MACC investigators, following a series of legal interchanges between the liquidators and G Gnanalingam viewed by Sarawak Report.

“Huge Mistake”

At the heart of the issue is what liquators described in a letter dated as late as September 4th of last year as a “huge mistake” on the part of previous managers of Maika Holdings, whom they say “wrongly transferred” the staggering sum of RM145,753,073.28 to Gnanalingam’s company Pembinaan Redzai Sdn Bhd, which had advanced a loan of RM140 million to buy out Maika shares.

The company that received the loan, G Team Resources & Holdings Sdn Bhd, was also owned by Gnanlingam and was the entity authorised by Maika’s board (with the blessing of the government) to buy up the majority of Maika shares in 2010 as part of the ‘bail out’ plan for the floundering fund which was failing to pay dividends to its thousands of modest shareholders and had stopped producing accounts.

G Team used the RM140 million to buy out the majority of those ordinary shareholders, offering them just 80% of the original share price they had paid in for when the fund was launched in the 1980s at RM1.00 a share.

Publicly, Mr Gnanalingam, the board and the government made clear that any later profits to be raised from the sale of the fund’s remaining assets (most particularly a slice of land and a profitable insurance company) would subsequently also be returned to the self same original shareholders.

This was because Gnanalingam had been appointed to the task, without the discussion of other options or tenders, on the basis that he was acting as a “trustee” for the benefit of the shareholders only:

“G Team is supported by a Cabinet committee set up by the Prime Minister [Najib] which includes HSS Integrated executive director Datuk Kuna Sitthampalan, Bank Negara and Petroliam Nasional Bhd director Datuk N. Sadasivan, former Mida director-general Datuk R. Karunakaran and Prime Minister’s Department special officer Ravin Ponniah.
“They will become trustees of Maika when we take over the company,” Gnanalingam said.
[How it was explained at the time – Star newspaper]

However, according to the letter sent by the liquidator, when the majority of the insurance company Oriental Capital Assurance Berhad (OCA) was indeed sold to Tune Insurance Holdings (part of the Tony Fernandes controlled group of companies) the above sum of over RM145 million was then transferred by cheque straight back to Pembinaan Redzai Sdn Bhd as an apparent repayment plus interest – rather than to Maika itself for proper distribution.

G Team itself meanwhile acquired 3.75% of the shares in insurance giant, for RM7,379,129.13.

Letter from the liquidator to Gnanalingan as owner of Pembinaan Redzai

It appears that Mr G Gnanalingam has refused to comply with the requests of the liquidators to rectify the “huge mistake” made back in 2015, which clearly meant that what profits there were from the sale of the insurance company to Tune were not distributed as was the declared intention.

There is another problem linked to this thorny issue, as several commentators have pointed out, which is that the valuation of the insurance giant at the time of that hasty sale appears to have been woefully underpriced. Tune Insurance (comprising mainly OCA) was floated a year later after the sale in 2012 for a hundred million dollars soon amassing a market capitalisation of RM1.2 billion.

That meant vast profits for Tune and G Team, which retained shares. It is understood that family members of Mr Gnanalinghan had also been absorbed onto the board of Tune Insurance.  However, none of these profits went towards swelling the miserable pay out originally provided to the ordinary shareholders.

A separate issue linked to the list of concerns surrounding Maika’s unusual ‘bail out’ relates to the disposal of money owed to some 5,800 shareholders of the fund (6.9%) who did not claim their pay out.  The approximately Rm7 million owing to them was not paid over to the public exchequer via Bank Negara, as demanded by the law, according to information available to the liquidators.

“It cost some RM79 million to pay off the shareholders” says one source, who has researched the documents passed to the MACC, “yet some RM179 million was raised from the land sale and the sale of OCA. It means certain entities kept over RM100 million”.

And that was before the floatation of OCA

TMJ & rulers are right to be concerned, and Wisma Putra is fudging-Malaysia ratifying Rome Statute can have consequences for the rulers;even Australia has sought to strictly define and limit the operation of the Rome.Statute of The ICC.

by Ganesh Saahthevan 

HRH Crown Prince of Johor@HRHJohorII

Yes. Kedudukan Raja-Raja Melayu mungkin tidak relevan lagi selepas ini dan kedaulatan Raja-Raja akan pasti tergugat. Sekaligus ini akan memberi impak kepada status orang Melayu dan agama Islam di Malaysia.

Friends of Johor@FriendOfJohor

@HRHJohorII
Tunku, betul ke kedaulatan Raja-Raja Melayu sudah tergugat akibat kerajaan Malaysia menandatangani penyertaan sebagai negara ahli Statut Rome (Rome Statute) seperti yang ditulis di....https://www.projekmm.com/news/pendapat/2019/03/05/statut-rom-gugat-kuasa-agong-fareed-mohd-hassan/1729404 …

1,889

9:18 PM - Mar 8, 2019

Twitter Ads info and privacy

As reported by Malaysiakini:

Wisma Putra has assured that the position of the monarchy will not be threatened after Malaysia acceded to the Rome Statute, a treaty governing the International Criminal Court (ICC).

This came after Johor crown prince Tunku Ismail Sultan Ibrahim claimed that the Malay rulers may no longer be relevant after Malaysia acceded to the treaty.

"Prior to joining the Rome Statute, the government had conducted an in-depth study on various aspects.

"The government is confident that the decision will not affect the Yang di-Pertuan Agong's position and immunity," Wisma Putra said in a statement today.

On Friday, Tunku Ismail was asked by the "Friends of Johor" Twitter account if the Rome Statute would threaten the monarchy.

He replied: "Yes, the position of the Malay rulers may no longer be relevant after this and the sovereignty of the rulers will surely be threatened. As a result, it will impact the status of Malays and Islam in Malaysia."

However, even  the Australian Government, which governs  a nation and system far more liberal than Malaysia, where there is no national religion and Queen Elizabeth II is, in effect,  head of state in name only;chose to define  its ratification of the Rome Statute with a number of express declarations: 

Australia's instrument of ratification includes a declaration affirming the primacy of Australia's criminal jurisdiction in relation to crimes within the jurisdiction of the Court. It outlines the conditions under which a person in Australian custody or control would be surrendered to the Court and clarifies Australia's interpretation of the crimes within the Statute. The declaration has full effect in Australian law and is not a reservation. It reinforces safeguards already built into the Statute to preserve Australian sovereignty over our criminal jurisdiction.

While there can be argument as to the legal effect of the declarations, for practical purposes these statements by then Australian Prime Minister John Howard are instructive, and show how Wisma Putra and its legal advisers have been careless,in the context of Malaysia's unique religious and social framework:

Howard defends ICC decision	PRINT FRIENDLY	EMAIL STORY
The World Today Archive - Thursday, 20 June , 2002  00:00:00 Reporter: ELEANOR HALL: The Prime Minister has just emerged from the party room meeting we heard about a moment ago to speak to the media about the International Criminal Court. Here's part of what he had to say: JOHN HOWARD: I'm here with my colleagues to announce that the Government has decided to proceed to ratification of the International Criminal Court Statute. The decision has been reached after a very lengthy but beneficial and widespread consultation within the Government parties. The decision to proceed to ratification will be accompanied by a number of very important and firm stipulations. At the time of ratification, Australia will deposit a declaration, which states a number of things, and I'll be releasing with my formal press statement a copy of this declaration. The declaration will reaffirm the primacy of Australian law and the Australian legal system in relation to the prosecution of offences under the legislation giving affect to the statute. It will be declared that no person can be arrested on a warrant issued by the court, or surrendered to the court without the prior consent of the Attorney General of the Commonwealth. It will also declare Australia's understanding that the offences of genocide, crimes against humanity and war crimes under the International Criminal Court Statute will be interpreted in accordance with Australian law. The matters in the declaration will be incorporated in the legislation, implementing our obligations under the International Criminal Court Statute. In other words, they will not be bear pious declarations, they will in fact become part of Australian law and therefore they will govern all behaviour in relation to Australian residence, or people in Australia, all within the control of Australia, such as example, our Defence Forces serving overseas, will remain completely subject to Australian law. There's a further important stipulation that will be put in the enabling legislation and that is that no prosecution within Australia can be launched without prior consent of the Attorney General and indeed it must be launched in his or her name. That means effectively that the capacity for frivolous or vexatious private prosecution or interest prosecution can be stymied by the Attorney General taking them over and filing a no bill, according to his or her determination, of course of the merits of such prosecution. We believe that the International Criminal Court will make a valuable further addition to the efforts of the world to bring to justice people who perpetrate atrocious crimes, and it's in that spirit that Australia has decided to ratify. REPORTER: Do you expect any of your colleagues to cross the floor? JOHN HOWARD: Look, that's ultimately a matter for them. Let me put it this way – I was greatly encouraged, even warmed, by the response in the party room this morning. There are a number of my colleagues, as happens on a lot of things, will retain reservations about the Government's decision. But having seen an exhaustive and very democratic process of consultation used will support the decision. END

US DOJ continues to seize Najib's son Riza Aziz's assets; meanwhile in Malaysia.......

by Ganesh Sahathevan



Riza Admits He Stole 1MDB Money - Pays US$60 Million!

Sarawak Report

While the Malaysian Government has yet to recover anything of significance from former PM Najib Razak and his family, the US Department Of Justice continues to identify and recover 1MDB linked  assets from  family members like step son Riza Aziz.

The US$ 60 Million settlement Riza and friends entered into with the DOJ in March last year (see Sarawak Report story above) does not seem to have stopped the DOJ from pursuing them for 1MDB linked assets.

In further action announced three weeks ago the DOJ announced that it had seized a further USD 38 Million in assets. See DOJ press release and documents below. Meanwhile in Malaysia Najib's 1MDB linked charges continue to be delayed,postponed and pushed on to no foreseeable conclusion.

END

References

First recall this report of a settlement in March 2018:

'Wolf of Wall Street' maker settles US lawsuit for $60 million  

Now see links at 

Download Proceeds of Sale of New York Real Estate

Download London Property in the Name of Red Mountain Global Ltd

Download Converted Equity in a Facilities Management Company Headquartered in Kentucky

Excerpt from document at the last link 

  The defendants in this action are: (1) up to $28,174,145.52 in escrow account number ‘7176 held by escrow agent Squire Patton Boggs (US) LLP at Huntington National Bank; 

(2) up to $1,148,739.35 in account number ‘6111 held in the name of Christopher Joey McFarland at Barclays Bank of Delaware; and 

(3) up to $162,486.88 in account number ‘9340 held in the name of Christopher Joey McFarland at Fidelity Investments, Inc., all of which being traceable to equity in COMPANY 1, a facilities management company headquartered in Newport, Kentucky (“DEFENDANT ASSETS”).

 3. The persons and entities whose interests may be affected by this action are Riza Shariz Bin Abdul Aziz, Christopher Joey McFarland,Nina Partners, LLC, Red Granite Investment Holdings, LLC, and Red Granite Pictures, LLC. 

InvolvingMalaysianSovereignWealthFund

Date 23/02/2019

http://www.mondovisione.com/media-and-resources/news/department-of-justice-us-seeks-to-recover-approximately-38-million-allegedly/?fbclid=IwAR1aLYJPBMg8ma_DE61xnG_glUGtztWHezepCac62aB7uEjYGu1kMZ4WuS4

The Justice Department announced today the filing of civil forfeiture complaints seeking the forfeiture and recovery of approximately $38 million in assets allegedly associated with an international conspiracy to launder funds misappropriated from 1Malaysia Development Berhad (1MDB), a Malaysian sovereign wealth fund.  Combined with civil forfeiture complaints filed in July 2016 seeking more than $1 billion in assets, and civil forfeiture complaints filed in June 2017 seeking approximately $540 million in assets, this case represents the largest action brought under the Department’s Kleptocracy Asset Recovery Initiative.  Assets now subject to forfeiture in this case total approximately $1.7 billion.

Assistant Attorney General Brian A. Benczkowski of the Justice Department’s Criminal Division, U.S. Attorney Nicola T. Hanna of the Central District of California, Assistant Director Robert Johnson of the FBI’s Criminal Investigative Division and Chief Don Fort of the IRS Criminal Investigation (IRS-CI) made the announcement.

According to the complaints, from 2009 through 2015, more than $4.5 billion in funds belonging to 1MDB were allegedly misappropriated by high-level officials of 1MDB and their associates.  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. 

“The complaints filed today demonstrate the Department of Justice’s steadfast commitment to recovering assets traceable to the alleged multi-billion dollar looting of Malaysia’s sovereign wealth fund,” said Assistant Attorney General Benczkowski.  “The Criminal Division and our law enforcement partners are committed to protecting the U.S. financial system and ensuring that the proceeds of overseas corruption and other criminal conduct find no safe haven here.”

“These new lawsuits target assets collected by corrupt officials and their associates through a massive scheme that stole billions of dollars from the people of Malaysia and laundered the proceeds across the world,” said U.S. Attorney Nick Hanna.  “Through a series of cases filed over the past three years, we have pursued a wide variety of assets purchased with stolen 1MDB funds, and so far we have successfully forfeited hundreds of millions of dollars. Collectively, these cases send a strong message that the United States cannot be used as a safe haven or a conduit for money pilfered by corrupt officials.”

“Today’s announcement is a testament to the FBI’s relentless effort to investigate kleptocracy and hold corrupt foreign officials accountable,” said FBI Assistant Director Johnson.  “At the onset of this investigation, we promised to work with our foreign and domestic partners to identify and return stolen assets to the Malaysian people.  This filing demonstrates our unwavering commitment to keep that promise.  We want to thank our partners, both domestic and foreign, for their hard work in helping to bring justice for the Malaysian people.  The recovery of these assets is another step in that direction.”

“The investigation into the misappropriation of the 1MDB funds represents a model for international cooperation in significant cross-border money laundering matters, and sends a message that criminals cannot evade law enforcement authorities simply by laundering money through multiple jurisdictions and through a web of shell corporations,” said IRS-CI Chief Fort.  “We are proud of the investigative work on this case and the work of our fellow law enforcement agencies in this and other complex financial investigations.”

As alleged in the complaints, the members of the conspiracy – which included officials at 1MDB, their relatives and other associates – diverted more than $4.5 billion in 1MDB funds.  Using fraudulent documents and representations, the co-conspirators allegedly laundered the funds through a series of complex transactions and shell companies with bank accounts located in the U.S. and abroad.  These transactions allegedly served to conceal the origin, source and ownership of the funds, and ultimately passed through U.S. financial institutions to then be used to acquire and invest in assets located in the U.S. and overseas.

As alleged in the earlier complaints, in 2009, 1MDB officials and their associates embezzled approximately $1 billion that was supposed to be invested to exploit energy concessions purportedly owned by a foreign partner.  Instead, the funds were allegedly transferred through shell companies and were used to acquire a number of assets, as set forth in the complaints.  The complaints also allege that the co-conspirators misappropriated close to $1.4 billion in funds raised through bond offerings in 2012, and more than $1.2 billion following another bond offering in 2013.  The complaints also allege that in 2014, the co-conspirators misappropriated approximately $850 million in 1MDB funds under the guise of repurchasing certain options that had been given in connection with a guarantee of the 2012 bonds.

The complaints filed today in the Central District of California identify additional assets traceable to the 2012 and 2013 bond offerings.  These assets include luxury real estate in London, proceeds from the sale of luxury real estate in New York City, and converted equity in a facilities management company headquartered in Kentucky.    

The FBI’s International Corruption Squads in New York City and Los Angeles and the IRS-CI are investigating the case.  Deputy Chief Woo S. Lee and Trial Attorneys Kyle R. Freeny, Jonathan Baum, Barbara Levy and Joshua L. Sohn of the Criminal Division’s Money Laundering and Asset Recovery Section and Assistant U.S. Attorneys John Kucera and Michael R. Sew Hoy of the Central District of California are prosecuting the case.  The Criminal Division’s Office of International Affairs is providing substantial assistance.

The Department also appreciates the significant assistance provided by the Attorney General’s Chambers of Malaysia, the Royal Malaysian Police, the Malaysian Anti-Corruption Commission, the Attorney General’s Chambers of Singapore, the Singapore Police Force-Commercial Affairs Division, the Office of the Attorney General and the Federal Office of Justice of Switzerland, the judicial investigating authority of the Grand Duchy of Luxembourg, and the Criminal Investigation Department of the Grand-Ducal Police of Luxembourg.

The Kleptocracy Asset Recovery Initiative is led by a team of dedicated prosecutors in the Criminal Division’s Money Laundering and Asset Recovery Section, in partnership with federal law enforcement agencies, and often with U.S. Attorney’s Offices, to forfeit the proceeds of foreign official corruption and, where appropriate, to use those recovered assets to benefit the people harmed by these acts of corruption and abuse of office.  In 2015, the FBI formed International Corruption Squads across the country to address national and international implications of foreign corruption.  Individuals with information about possible proceeds of foreign corruption located in or laundered through the U.S. should contact federal law enforcement or send an email to kleptocracy@usdoj.gov (link sends e-mail) or https://tips.fbi.gov/.

A civil forfeiture complaint is merely an allegation that money or property was involved in or represents the proceeds of a crime.  These allegations are not proven until a court awards judgment in favor of the United States.

Attachment(s): 

Download Proceeds of Sale of New York Real Estate

Download London Property in the Name of Red Mountain Global Ltd

Download Converted Equity in a Facilities Management Company Headquartered in Kentucky