US to return US$200 million in 1MDB funds to Malaysia: Sources

US to return US$200 million in 1MDB funds to Malaysia: Sources

FILE PHOTO: A man walks past a 1 Malaysia Development Berhad (1MDB) billboard at the funds flagship
FILE PHOTO - A man walks past a 1 Malaysia Development Berhad (1MDB) billboard at the funds flagship Tun Razak Exchange development in Kuala Lumpur, March 1, 2015. REUTERS/Olivia Harris/File Photo

SINGAPORE: US authorities will this month return US$200 million stolen from Malaysia's state fund 1MDB, including money from a stake in a luxury New York hotel and from a Hollywood movie producer, two sources with direct knowledge of the matter said.

The US Department of Justice, in the biggest ever case in its anti-kleptocracy programme, is pursuing billions of dollars it says were misappropriated from 1MDB, a state fund founded by former Malaysian prime minister Najib Razak.

Prime Minister Mahathir Mohamad, who defeated Najib in a shock election result last year, is working with at least six countries to recover about US$4.5 billion it says was stolen from 1MDB.

"I think they know it is our money, so they will give back our money," Mahathir told a news conference on Friday (May 3) after confirming the US$200 million figure.

Last year, Switzerland Attorney-General (AG) Michael Lauber revealed that about US$7 billion in funds from 1MDB and SRC International had flowed through the global financial system from 2009 to 2015.

He also said that the Swiss government had frozen about 400 million Swiss francs (US$393 million) as part of the probe. It will look to return some of the funds to Malaysia once investigations are completed, Lauber said then. 

Mahathir added on Friday that Malaysia is hoping to get back US$7 billion.

He did not say how the recovered money will be used. 

A government source also told CNA that representatives from the US Department of Justice will be in Malaysia next week to meet counterparts from the Attorney-General's Chamber to iron out details in order to facilitate the money transfer.

The government has set up an account to receive assets and money that were recovered by 1MDB.

The tranche of money being returned by the US includes US$140 million from the sale of a stake in New York's Park Lane Hotel, after it was given up by fugitive financier Low Taek Jho, known as Jho Low, the two sources said.

READ: Commentary: How the 1MDB scandal brought down a century-old Swiss bank

Jho Low, the alleged mastermind behind the looting of 1MDB, is wanted by the Malaysian authorities to face criminal charges. Low, whose whereabouts are unknown, has denied wrongdoing.

The sources said the remaining money is the US$60 million from Red Granite Pictures, co-founded by Najib's stepson Riza Aziz, which agreed in March 2018 to pay the US government to settle a civil lawsuit over allegations 1MDB money was used to finance the film "Wolf of Wall Street".

READ: Diamond jewellery linked to 1MDB scandal to be handed to US

The US Department of Justice did not immediately respond to a Reuters' request for comment.

Separately, Singapore police said on Friday that US$26 million in 1MDB-related funds was in the process of being returned to Malaysia, the latest tranche in US$176 million in cash and properties seized by the city-state relating to the scandal.

Malaysia recouped a further US$126 million last month by selling the superyacht Equanimity, which was bought by Jho Low for US$250 million with funds allegedly stolen from 1MDB.

Malaysia has also filed criminal charges against Goldman Sachs for its role in raising money for 1MDB.

The investment bank says it conducted correct due diligence.

Prosecutors in the US Attorney's Office in Brooklyn have said a former Goldman Sachs employee has pleaded guilty to conspiracy to launder money.

Additional reporting by Melissa Goh

Source: Reuters/Bernama/aa