The reverberation of the 1MDB scandal hit 11.0 on the Richter Scale last week when the US Justice Department announced it was filing a civil action seeking more than $1B in the forfeiture of assets allegedly purloined from the Malaysian sovereign wealth fund for the personal use of the family and close friends of the Malaysian Prime Minister, Najib Razak. The filings were the largest on record for a case involving corruption by foreign public officials.
In a 136 Compliant, nicknamed the “Wolf of Wall Street” Compliant, the Justice Department laid out in excruciating detail its claims of how the Malaysian sovereign wealth fund was systematically looted or used as collateral for personal loans by the very government officials who were there to protect the fund for the citizens of the country. The Wall Street Journal reported that “some $1 billion originating with 1MDB was plowed into hotels; luxury real estate in Manhattan, Beverly Hills and London; fine art; a private jet and the 2013 film “The Wolf of Wall Street.” Among those behind the spending, the lawsuit alleges, was Riza Aziz, stepson of Mr. Najib.”
In addition to outright thefts from 1MDB, the Compliant detailed corrupt transactions. In one, involving a Saudi firm, PetroSaudi International, Ltd., “The complaint says that between 2009 and 2011, $1 billion was diverted to a company in the Seychelles called Good Star Ltd., which was beneficially owned by Jho Low, a Malaysian financier and confidant of Mr. Najib.” Those funds were allegedly used to purchase real estate in the US. In another transaction, bonds guaranteed by the sovereign wealth fund were moved into accounts held by corrupt Malaysian officials for their personal use.
The size and scope of the forfeiture compliant may well mark a turning point for the Asset Forfeiture and Money Laundering Section at the Justice Department. Given that the Prime Minister in Malaysia has worked to squelch all substantive investigations of 1MDB as well as terminate those in the Malaysian government who have tried to run honest investigation, it may be that such an international response was all but inevitable.
In the meantime, those who follow Hollywood more closely than the world of compliance might be interested to know that The Wolf of Wall Street has just crossed over from docudrama to stranger than fiction. You can't make this stuff up, even if you tried.