Here at Smith Brandon, we’ve been following the 1MDB scandal with great interest. The sheer scale of funds misappropriated from the beleaguered Malaysian sovereign wealth fund is just staggering; estimates peg it at roughly $4.5 billion. Recently, three new revelations came to light.
On Monday, June 12th, news broke that the US Department of Justice is investigating improprieties in the 2013/2014 sale of the Houston based Coastal Energy Company to Compañía Española de Petróleos, S.A.U. (CEPSA), a subsidiary of the Abu Dhabi sovereign wealth fund International Petroleum Investment Co. The $2.2 billion sale was orchestrated by Jho Low, a Malaysian financier close to the family of Malaysian Prime Minister, Najib Tun Razak. Low reportedly supplied $50 million for the deal (believed to have been misappropriated from 1MDB); one week later CESPA transferred $350 million back to Low’s shell company. Jho Low has been at the center of several lawsuits related to the scandal.
Three days later, on Thursday, June 15th, news broke that US prosecutors were expanding their efforts to seize $540 million worth of assets allegedly purchased with stolen 1MDB funds by Jho Low and others. The assets sought include a megayacht, diamond jewelry, and movie rights for “Dumber and Dumber To” and “Daddy’s Home.” US authorities had previously moved to seize more than $1 billion worth of assets purchased with 1MDB funds, including aircraft, movie rights for “The Wolf of Wall Street,” luxury real estate, and rare paintings. Thursday’s actions bring the total value of assets sought in the US to $1.7 billion. Separate investigations are reportedly underway in Luxembourg, Singapore, Switzerland, and the UAE.
Two weeks later, The Wall Street Journal reported that hacked emails of the UAE’s ambassador to the US, Yousef Al Otaiba, describe meetings between the ambassador, Jho Low, and Shaher Awartani, a business partner of Ambassador Otaiba. The article also alleged that companies connected to the ambassador have received $66 million from offshore companies that investigators believe contained misappropriated 1MDB funds. The UAE Embassy in the US dismissed the emails as part of campaign against the UAE, and declined to address evidence of the financial transfers.
Low and his family continue to deny any wrongdoing and have contested actions to seize disputed assets: we’re sure this isn’t the last we’ve heard about Jho Low and 1MDB.