U.S. Lawsuits Connect Malaysian Leader to Stolen Funds from 1MDB, According to Reuters

By Rozanna Latiff and Joseph Sipalan

KUALA LUMPUR/WASHINGTON – Malaysian Prime Minister Najib Razak stated on Thursday that conclusions should be reserved until all facts are thoroughly examined, following the U.S. government’s initiation of lawsuits aimed at seizing $1 billion in assets allegedly acquired with funds misappropriated from a state fund he managed.

The lawsuits filed by the U.S. Justice Department in a federal court on Wednesday did not explicitly name Najib, instead identifying him as "Malaysian Official 1." Some accusations against this official mirrored allegations from a Malaysian investigation into a $681 million transfer to the Prime Minister’s personal bank account.

According to the lawsuits, $681 million from a 2013 bond sale by the sovereign wealth fund 1Malaysia Development Berhad (1MDB) was diverted into the account of "Malaysian Official 1." A source close to the investigation confirmed that this title referred to Najib.

The hashtag #MalaysianOfficial1 was trending in Malaysia on Thursday.

The civil lawsuits claimed a total of $3.5 billion was misappropriated from 1MDB, a fund Najib established in 2009 and chaired its advisory board.

So far, no criminal charges have been filed.

On the same day, Swiss authorities announced the seizure of three valuable paintings by Vincent van Gogh and Claude Monet as part of the 1MDB inquiry, responding to a request from U.S. officials. A spokeswoman for the Swiss Federal Office of Justice indicated that the operation was ongoing and declined to provide details about the paintings’ location.

U.S. prosecutors are attempting to reclaim $1 billion that they assert was misappropriated from 1MDB and funneled into luxury real estate in New York, Beverly Hills, and London, as well as valuable paintings and a private jet. Additionally, they seek to seize proceeds tied to the 2013 film "The Wolf of Wall Street." Riza Aziz, Najib’s stepson and the founder of Red Granite Pictures, which produced the film, has been named in the lawsuit.

Red Granite maintained that all funding for the Oscar-nominated film, which grossed $400 million worldwide, was legitimate and that neither the company nor Riza acted improperly.

Najib, who has consistently denied any wrongdoing, pointed out on Thursday that the U.S. lawsuits pertain to civil matters rather than criminal ones. "We don’t want to come to any conclusions until that process is done," he told reporters in Kuala Lumpur, emphasizing the need to establish the facts first and asserting the government’s commitment to good governance.

He affirmed that the Malaysian government would fully cooperate with international investigations regarding 1MDB.

However, Malaysia’s Attorney-General Mohamed Apandi expressed "strong concerns regarding the insinuations and allegations" against Najib present in the lawsuits. He stated that investigations conducted by various global law enforcement agencies have not indicated that any funds were misappropriated from 1MDB.

Apandi claimed in January that the money in Najib’s bank account was a political donation from the Saudi royal family and that most of it had been returned. Saudi Foreign Minister Adel Al-Jubeir later characterized the funds sent to Najib’s personal account as a "genuine" donation from Saudi Arabia. Saudi authorities made no immediate comment regarding the U.S. action.

The lawsuits could complicate relations between the two nations, which have maintained a strong partnership during President Barack Obama’s administration, with the President visiting Malaysia twice in the past two years. The U.S. has viewed Malaysia as a key ally in combating radical Islam, as well as a member in trade initiatives and a strategic partner in countering China’s influence in Asia.

Najib, however, stated that the lawsuits would not impact diplomatic ties, asserting that it is a matter involving individuals. A senior official from the White House distanced the President from the Justice Department’s actions, explaining, "We do not have any control over Justice Department actions."

In Malaysia, former Prime Minister Mahathir Mohamad led calls for Najib to resign. "The time has come for the nation to demand the removal of the prime minister," Mahathir said, urging Malaysians to seek a referendum on Najib’s leadership.

Since the scandal first emerged 18 months ago, Najib has faced criticism but has maintained his position, silencing dissenting voices within his ruling United Malay National Organisation (UMNO) and employing strict laws to curb opposition.

In Singapore, authorities announced the seizure of S$240 million (approximately $177 million) in assets related to investigations of 1MDB for potential money laundering. They identified issues at three major banks—DBS Group Holdings, UBS AG, and Standard Chartered. UBS confirmed it had reported concerning transactions and was cooperating with regulators.

This marked the first time that Singaporean authorities mentioned 1MDB in relation to their money-laundering investigation. Previously, they had shut down operations at a Swiss private bank for serious anti-money laundering breaches without naming 1MDB.

The U.S. investigation represents the largest series of cases initiated by the Department of Justice’s Kleptocracy Asset Recovery Initiative, which aims to recover proceeds from foreign corruption.

1MDB, created shortly after Najib took office, is under investigation for money laundering in several countries, including the U.S., Singapore, and Switzerland. The fund issued a statement asserting that it is not a party to the civil suit, has no assets in the U.S., and has not benefited from the transactions described in the lawsuits.

The U.S. litigation seeks to seize assets connected to an international conspiracy to launder money misappropriated from 1MDB over four years. One critical transaction mentioned was a $3 billion bond offering arranged in early 2013 by Goldman Sachs, with a significant portion of the proceeds allegedly misappropriated.

Goldman Sachs has denied any wrongdoing, stating that they raised funds for a sovereign wealth fund without knowledge of any subsequent misappropriation.

The lawsuits also name financier Jho Low and officials from the Abu Dhabi government. The latter were former officials at a sovereign fund that engaged in transactions with 1MDB. Jho Low has not responded to requests for comments, and attempts to reach Al Qubaisi and Al-Husseiny were unsuccessful.