More Alleged Misappropriation of 1MDB-Linked Funds by Riza Aziz, Jho Low

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New lawsuits target assets collected by corrupt officials and their associates through a massive scheme that stole billions of dollars from the people of Malaysia and laundered the proceeds across the world.

  • Riza Aziz and his business partner used US$4.2 million to buy shares in Kentucky-based company
  • Jho Low gave US$10 million under guise of Mecca, Madinah projects to MO1

Purchase of stocks in US company

Over US$4 million in 1MDB-linked funds were allegedly used by Riza Aziz and his business partner Joey McFarland to buy shares in a facilities management company in Kentucky, US.

Riza Aziz is the stepson of former prime minister Najib Abdul Razak.

The shares are among three 1MDB-linked assets that the US Department of Justice is seeking to seize in its latest round of civil forfeiture suits, which were filed on Friday in California.

According to the lawsuit, the pair bought a 43.37 per cent stake in the firm, dubbed ‘Company 1’, in June 2013.

It is unclear why they had bought stakes in the firm. An unnamed executive dubbed ‘Company 1 Executive 2’ is allegedly friends with McFarland.

The US$4.2 million used for the buy-in was transferred directly from Red Granite Investment Holdings, a company wholly owned by Riza, to another executive dubbed ‘Company 1 Executive 1’.

The money had been part of US$50 million loaned by Telina Holdings to Red Granite Capital, another Riza-owned firm, to finance the filming of the 2013 movie The Wolf of Wall Street.

Telina Holdings, a company registered in the British Virgin Islands, is owned by Khadem Abdulla al-Qubaisi, former managing director of the International Petroleum Investment Company.

According to the DOJ, The Wolf of Wall Street was used as collateral for the loan.

While Qubaisi is an alleged beneficiary of the 1MDB scandal, it is unclear how the funds from Telina are linked to 1MDB.

The department claimed that plans for the buy-in began in November, 2012, and were hashed out over the following months.

In January 2015, 18 months after the buy-in, McFarland received a distribution of about US$3.5 million from ‘Company 1’. McFarland later transferred US$1.5 million to Riza’s personal accounts.

In January this year, ‘Company 1’ spent US$28.1 million to buy back the shares from Red Granite Investment Holdings and McFarland.

It did so through an affiliate firm, New FM Acquisition Company.

The funds were then placed in an escrow account held by law firm Squire Patton Boggs.

Real estate investments in Saudi Arabia

Real estate projects in Mecca and Madinah, two of Islam’s holiest cities, were used as a pretext for fugitive businessperson Low Taek Jho to secretly transfer US$10 million to ‘Malaysian Official 1’ through an intermediary, claims the US Department of Justice claimed.

MO1 is the code name used by the DoJ to refer to former prime minister Najib Abdul Razak.

The transfer was part of US$20 million allegedly diverted to MO1 under the Good Star phase of the 1MDB scam.

These details were first highlighted by the DoJ in June 2017. Malaysiakini revisited the documents following a fresh round of civil forfeiture suits filed by the department over 1MDB on Friday.

According to the DoJ, Good Star – a firm controlled by Low – had received US$700 million in 2009, and another US$330 million diverted from 1MDB in 2011.

A total of US$24.5 million from Good Star was then transferred to a Riyad Bank account in the name of individuals dubbed ‘Saudi Associate 1’ and ‘Saudi Associate 2’.

The US$20 million to MO1 – split into two US$10 million transactions – were then transferred within days after the transfer to the Saudis in February and June 2011.

“In response to a query from RBS Coutts, Low represented that the purpose of the June 2011 wire transfer was to invest in real estate developments in Mecca and Madinah pursuant to an investment management agreement with Saudi Associate 1,” the DoJ said.

The account used by MO1 to receive the US$20 million was the same used to receive US$681 million allegedly diverted from 1MDB in 2013.

Najib has maintained that the US$681 million, the equivalent of RM2.6 billion, was a contribution from the Saudi royal family.

He showed letters which purportedly proved his claims about the Saudi donation in September last year.

However, according to the DoJ, the US$681 million was transferred from Tanore Finance Corporation under false pretences.

Tanore was a company whose account with Falcon Bank was controlled by Low’s associate Eric Tan Kim Loong.

The DoJ said an email sent from Tan’s account to Falcon Bank claimed MO1’s bank account was that of former 1MDB subsidiary SRC International.

“The email also falsely represented that the transfer of US$681 million to that account was being made pursuant to a sharia-compliant financing agreement, known as a Mudharabah Agreement, between Tanore and SRC International,” the department said.

A copy of the alleged financing agreement signed by Tan and an individual dubbed ‘1MDB-SRC Officer’ was submitted to Falcon Bank to facilitate the transfer.

‘1MDB-SRC Officer’ is believed to be former SRC International director Nik Faisal Ariff Kamil.

The DoJ said Tanore was a shell company with no legitimate business. – Malaysiakini