Every Malaysian Should Know These Key Takeaways From The US DOJ Press Con On 1MDB

The filing of the civil forfeiture complaints was announced by US Attorney General Loretta E. Lynch on Wednesday, 20 July, during a press conference held at the Department of Justice in Washington.

Lynch was joined in the briefing by Assistant Attorney General Leslie R. Caldwell of the Justice Department’s Criminal Division, U.S. Attorney Eileen M. Decker of the Central District of California, FBI Deputy Director Andrew G. McCabe and Chief Richard Weber of the Internal Revenue Service-Criminal Investigation (IRS-CI).

On why the Department of Justice is only seeking to seize a portion of the misappropriated funds, Lynch explained, "We've been able to trace approximately $1 billion having gone through the US financial systems. That money laundering essentially gives us the jurisdiction over those assets. We've also been able to locate specific assets in the US and overseas.

"However, as common in corruption cases, a lot of the funds were dissipated - paying gambling expenses, lifestyle expenses, and things of that nature. But as we've noted, this investigation is ongoing, and to the extent that we can clearly locate other assets and trace them, we would continue the actions here."

The initiative was established by Attorney General 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. It should make clear to corrupt officials around the world that we will be relentless in our efforts to deny them the proceeds of their crimes," Lynch stressed during the press conference.

"Whether those initial projects are still gonna be used or not, we don't know. But certainly, they could be used by the government for the benefit of the people there," she added.

“I want to thank the team of prosecutors and paralegals from the Criminal Division’s Asset Forfeiture and Money Laundering Section and the U.S. Attorney’s Office for the Central District of California, who have worked tirelessly on this matter. I also want to thank the agents from the FBI’s International Corruption Unit and the IRS’s Criminal Investigations Division, who assisted them in this case. And I am grateful to the Criminal Division’s Office of International Affairs for their vital contributions," Lynch said.

"The stated purpose of the 2012 bond offerings was to allow 1MDB to invest, for the benefit of the Malaysian government, in certain energy assets. But almost immediately after receiving the proceeds of these two bond issues, roughly 40 percent of the funds raised - approximately $1.37 billion - was transferred out of 1MDB’s accounts," Caldwell said.

The money was then transferred via a "complex series of transactions" involving shell companies and bank accounts all over the world, all of which were controlled by corrupt 1MDB officials and their associates.

More than $230 million eventually found their way into account controlled by shell companies owned by "a close relative of a senior 1MDB official", some of which were used to buy luxury property in the US and other assets, including setting up and funding California-based film production company Red Granite Pictures.

According to Caldwell, more than $100 million from the stolen funds were used to finance the award-winning movie starring Leonardo Dicaprio. As the money used to produce the film are alleged to be laundered funds, future rights to the film are now subject to the forfeiture complaint filed on 20 July.

"According to the allegations in the complaint, this is a case where life imitated art," Caldwell said.

"The associates of these corrupt 1MDB officials are alleged to have used illicit proceeds of their fraud scheme to fund the production of The Wolf of Wall Street, a movie about a corrupt stockbroker who tried to hide his own illicit profits in a perceived foreign safe haven. But whether corrupt officials try to hide stolen assets across international borders - or behind the silver screen - the Department of Justice is committed to ensuring that there is no safe haven."

"Gaps in the legal regimes across the globe - including in the United States - allowed these criminals to avoid disclosing the ultimate beneficial owners of the accounts to which 1MDB funds were diverted. Stronger laws and more effective frameworks for international cooperation are needed to close these gaps and overcome the challenges faced by law enforcement when we investigate international corruption, money laundering and other cross-border crimes," she said.

She added, "The significant assistance we received from our international partners was critical in identifying and restraining assets. That cooperation and the action we are taking today should send a message to kleptocrats and other criminals that the United States is not a safe haven for their stolen money, and that they cannot evade law enforcement authorities simply by laundering money through multiple jurisdictions and through a web of nominees, shell corporations and other legal structures designed to frustrate justice."