SINGAPORE (Nov 4): The United States Department of Justice (DOJ) has recovered the assets acquired by Low Taek Jho, aka Jho Low, the fugitive businessman wanted in relation to the 1Malaysia Development Bhd (1MDB) scandal.
The assets, located in the US, the UK and Switzerland, are estimated to be worth more than US$700 million ($950 million), and were allegedly misappropriated from 1MDB. With the recovery of these assets, the civil forfeiture cases brought against Low come to a close, three years after the DOJ made a claim for the assets.
“This settlement agreement forces Low and his family to relinquish hundreds of millions of dollars in ill-gotten gains that were intended to be used for the benefit of the Malaysian people, and it sends a signal that the United States will not be a safe haven for the proceeds of corruption,” Assistant Attorney General Brian A Benczkowski of the Justice Department’s Criminal Division said in a statement.
Under the terms of the settlement, Low, his family members, and FFP, a Cayman Islands entity serving as the trustees overseeing the assets in the forfeiture actions, agreed to forfeit all assets, subject to pending forfeiture complaints in which they have a potential interest.
The trustees are also required to cooperate and assist the DOJ in the orderly transfer, management and disposition of the relevant assets. The assets subject to the settlement agreement include high-end real estate in Beverly Hills, New York and London; a luxury boutique hotel in Beverly Hills; and tens of millions of dollars in business investments.
Low and others, including officials in Malaysia and the United Arab Emirates, were alleged to have “engaged in a brazen multi-year conspiracy to launder money embezzled or otherwise misappropriated from 1MDB”, according to the DOJ. Low used the funds “to engage in extravagant spending sprees, acquiring one-of-a-kind artwork and luxury real estate, gambling freely at casinos and propping up his lavish lifestyle”, among other things.
Criminal charges stand
However, Low is not yet off the hook, as the criminal proceedings against him still stand; in November 2018, a three-count criminal indictment was unsealed in a federal court in New York, charging Low and Ng Chong Hwa, 51, known as Roger Ng (a former Goldman Sachs banker), with conspiring to launder billions of dollars embezzled from 1MDB and violate the Foreign Corrupt Practices Act by paying bribes to various Malaysian and Abu Dhabi officials. Low also faces similar charges in the District of Columbia courts.
Aside from being in the doghouse with the DOJ and the US Federal Bureau of Investigation, Low is also a wanted man in Malaysia and Singapore. The Malaysian police issued warrants of arrest for Low last year.
The fallout from the scandal began as early as 2013, when news reports, including from The Edge Malaysia, began to surface about how 1MDB — intended as a sovereign investment fund to uplift the economy and help ordinary Malaysians — had been raising eyebrows in the industry with a high debt burden that it appeared unable to service.
Over the next few years, more shocking revelations came to light as 1MDB’s debts bloated and the taxpayer money invested into it was allegedly channelled into Low’s lavish lifestyle and even to fund a Hollywood venture with former prime minister Najib Abdul Razak’s stepson, Riza Aziz. Riza also faces charges of money-laundering, and may be tried in January.
Following a historic general election in 2018, which saw Najib and his government ousted by angry voters, Najib is now on trial for his involvement in the siphoning of an alleged RM2.6 billion from 1MDB coffers for his personal gain. In what is believed to be the biggest and most wide-ranging graft scandal in recent years, Najib faces four charges of abuse of power and 21 for money-laundering involving a staggering RM2.28 billion. He was also charged with seven counts of abuse of power, criminal breach of trust, and laundering of RM42 million from SRC International, a subsidiary of 1MDB. The court will announce on Nov 11 if Najib has to answer the charges.
Goldman Sachs’ role
The widespread web of alleged corruption extends even to US investment bank Goldman Sachs, which collected US$600 million in fees from the three bond issuances it helped arrange. The bank’s revenue from those deals works out to roughly 7.7% of the face value of the securities, which far exceeded the industry average of 1.3% on comparable deals in the same period. Goldman is said to have set aside up to US$1 billion in anticipation of penalties relating to its role in the 1MDB affair.
Malaysia has filed criminal charges against the bank as well as its former employees, Tim Leissner and Ng, in relation to the bond sales, while the US DOJ announced criminal charges against them in 2018. Leissner pleaded guilty in August last year and is awaiting sentencing, while Ng pleaded not guilty this May and may face trial next year. Singapore is also investigating whether any of the fees Goldman earned flowed to its unit here, as part of the larger probe into 1MDB-related fund flows.
In April, the US DOJ recommended that any settlement between the US government with Goldman should include a guilty plea at the parent company level. However, Goldman has consistently sought to distance itself from Leissner and Ng, although on Sept 25, its president and chief operating officer John Waldron said the bank is looking to put the scandal behind them and return the money to Malaysia.
Other bankers are under investigation in Switzerland, where authorities have also sanctioned Coutts & Co and JPMorgan for their involvement in 1MDB deals. Coutts was fined CHF6.5 million ($9 million) for violating anti-money-laundering regulations. JPMorgan was rebuked, but no fines were imposed.
