SINGAPORE (June 13): Malaysian businessman Low Taek Jho is alleged to have pocketed US$300 million ($415 million) in less than a week after funds illegally siphoned from 1Malaysia Development Bhd (1MDB) were used to finance the US$2.2 billion purchase of a US energy company.
According to a report by Wall Street Journal, the US Justice Department provided detailed allegations in an asset seizure lawsuit that, between 2013 and 2014, funds from the Malaysian sovereign wealth fund were illegally diverted via a series of bank accounts and shell companies to partly finance the purchase of Coastal Energy.
The buyer for the Houston-based energy firm was a joint venture between Compañía Española de Petróleos SAU (Cespa) – a Spanish energy unit owned by Abu Dhabi sovereign-wealth fund International Petroleum Investment Co (IPIC) – and a shell company allegedly controlled by 1MDB mastermind Low, better known as Jho Low.
See: Why the 1MDB saga could be far from over for Singapore
Low invested US$50 million in the deal, while Cespa funded the remainder of the US$2.2 billion purchase, according to the Justice Department lawsuit and statements announcing the acquisition.
One week later, Cepsa transferred US$350 million to Low's shell company, according to the lawsuit.
"The commercial basis for this nearly immediate 600% return on investment is not immediately apparent,” the US Justice Department says in its lawsuit.
According to WSJ, the Justice Department is investigating the Coastal deal because the US$50 million that Low invested is alleged to have originated from 1MDB.
People familiar with the investigation say this comes after US authorities questioned people involved in the deal in recent months, according to WSJ.
See: US prepares to file criminal charges against alleged 1MDB mastermind Jho Low: report
According to WSJ, IPIC and Cespa did not respond to requests for comments, while Low’s whereabouts are unclear.
Separately, the US government on Tuesday moved to seize London property that Low is said to have purchased with some of the US$350 million proceeds from the Coastal deal.
These include a Stratton Street penthouse in the upmarket Mayfair district with views of Buckingham Palace as well as a nearby office that served as headquarters for a lingerie company, according to a WSJ report.
Court documents filed June 7 in the US District Court for the Central District of California allege that the £77 million ($135 million) used to acquire the properties are “traceable to misappropriated 1MDB proceeds”.
According to WSJ, the Justice Department said in the filings that it is seeking the forfeiture of the properties in London because they were “derived from violations of US law” and were involved with money-laundering offenses.
Singapore in February reportedly seized a US$35 million private jet belonging to the 1MDB mastermind.
See: Singapore seizes $50 mil private jet belonging to 1MDB mastermind Jho Low: report
The US alleges that the funds were laundered through the US banking system and is seeking to confiscate Low’s private jet, as well as other properties including a US$100-million interest in EMI Music Publishing Group, and a US$380-million stake in the Park Lane Hotel in New York.
US authorities also accused Red Granite Pictures of using US$100 million that was diverted from 1MDB to finance the film “The Wolf of Wall Street”. Red Granite is helmed by Riza Aziz, the step-son of Malaysia Prime Minister Najib Razak, who oversaw the 1MDB fund.
See: Jho Low gambled away millions from 1MDB funds in Las Vegas casinos: US DOJ
The Malaysian sovereign wealth fund is at the centre of several international investigations by prosecutors in at least four countries – Singapore, Switzerland, Luxembourg and the US – into alleged corruption and money laundering by public officials.
