US Charges Malaysian Financier, Others With Laundering Billions From 1MDB

By John Bechtel

The U.S. Justice Department unsealed a criminal indictment on Thursday against fugitive Malaysian financier Jho Low alleging he paid millions of dollars to officials from Malaysia’s previous government while embezzling billions from state development fund 1MDB.

Another Malaysian national, Ng Chong Hwa (also known as Roger Ng) was named in the three-count indictment filed on Oct. 3 in a federal court in the Eastern District of New York, and has been arrested in Malaysia, according to the U.S. government.

In addition, former banker Tim Leissner pleaded guilty to two charges related to money laundering involving the state development fund 1Malaysia Development Berhad (1MDB), which was established by former Prime Minister Najib Razak and is central to the investigation.

“More than $2.7 billion (11.28 billion ringgit) was misappropriated from 1MDB and Jho Low, Ng, Leissner and others conspired to launder this money through the U.S. financial system to pay bribes to foreign officials and for the personal benefit of themselves and their relatives,” the government said in a news release about the indictments.

Ng and Leissner both held positions with the investment bank Goldman Sachs, according to media reports, and were described in their indictments as working for U.S. Financial Institution #1.

The government alleges they hid their partnership with Jho Low – whose real name is Low Taek Jho – from the financial institution because compliance and intelligence officers refused to approve the business relationship over concerns about the source of his wealth.

Among those named in the indictment as having received kickbacks are Malaysian Official 1 (MO1) and his wife, referred to as “the Madam,” in email correspondence among the three. MO1 has not been named in previous lawsuits related to 1MDB filed by the Justice Department, but sources have identified him as Najib.

Since his government was swept out of power in a general election in May, Najib and his wife, Rosmah Mansor, have been arrested by authorities in their home country and charged with a raft of graft-related offenses linked with the 1MDB financial scandal.

The indictment alleges that in June 2014, Jho Low (also known as Low Taek Jho) and an unnamed conspirator discussed through electronic chat, the need to “suck up to” an unnamed 1MDB official “and to send ‘cakes,’ referring to bribes, to ‘madam boss.’”

In October 2014, Jho Low and co-conspirators wire transferred $4.1 million (17 million ringgit) to a New York jeweler to pay for gold jewelry for the wife of MO1, U.S. justice officials alleged.

A year earlier, Jho Low was involved in an even bigger payment.

In September 2013, a high-end New York jeweler met with Jho Low along with MO1 and his wife at a hotel to show her a pink diamond necklace the jeweler had designed for her. Three weeks earlier, the necklace was purchased for about $27.3 million (114 million ringgit) from a shell company controlled by Low and others, the U.S. government alleges.

Projects Magnolia, Maximus and Catalyze

The government alleges that the conspirators cooked up three schemes to collect funds from 1MBD and diverted portions for their own use.

The first scheme, named Project Magnolia, began in early 2012. Jho Low, Ng, Leissner and other unnamed conspirators agreed that with the assistance of the financial institution, 1MDB would issue $1.75 billion in bonds guaranteed by an entity owned by Abu Dhabi’s government.

“Low explained to Ng, Leissner and others at that time that, to complete the transaction, bribes would need to be paid to officials in Malaysia and Abu Dhabi,” the government alleged in a news release, adding that millions of dollars were paid to officials in those two countries.

“After Project Magnolia closed on or about May 21, 2012, more than $500 million of the bond proceeds were misappropriated and diverted from 1MDB through numerous wire transfers to bank accounts in the name of shell companies beneficially owned and controlled by Low, Leissner, Ng and other co-conspirators,” the release said.

Some of the money was used to produce the film “The Wolf of Wall Street,” the American Justice Department said.

Najib’s stepson Riza Aziz, is founder of Red Granite Pictures, the film’s producer.

Beginning in May 2012 and running through 2013, investigators allege that the trio and unnamed conspirators pushed through a pair of bond transactions, Project Maximus and Project Catalyze, designed to raise more than $4 billion (16.7 billion ringgit) for 1MDB projects.

Following the close of Project Maximus, $790 million (3.3 billion ringgit) was transferred to accounts controlled by Low, Leissner and others, including Malaysian and Abu Dhabi officials.

More than $1 billion (4.17 billion ringgit) “were laundered, at Low’s direction to bank accounts in the name of entities beneficially owned and controlled by Low, Leissner and others, including 1MDB officials,” when Project Catalyze closed.

Also, more than $160 million (668 million ringgit) laundered through the two projects was used to purchase a New York City condominium for Jho Low and high-end art, the government alleges.

Jho Low and Ng were charged with violations of the Foreign Corrupt Practices Act by committing bribery and circumventing internal accounting controls along with conspiracy to commit money laundering.

Malaysian officials did not confirm the U.S. report that Ng had been arrested.

Fugitive

Jho Low, who is in hiding, has maintained his innocence. Earlier this week, the Malaysian government began a month-long auction to sell his $250 million yacht Equanimity to recoup some of the losses tied to 1MDB.

Former Finance Minister Daim Zainuddin said on Thursday that he had been in touch with Jho Low and the fugitive wanted to meet with him in Singapore.

“I decided not to meet him at all. We roughly know where he is now. The problem is he has many passports, he can run anywhere,” Daim said in an interview with Astro Awani TV. “What he likes is his boat. When he had the boat it was easy for him.”

Daim, who did not answer Jho Low’s most recent call last week, said he told the fugitive to return if he is innocent.

“Only guilty people run away,” he said.

Also on Thursday, the Malaysian Anti-Corruption Commission (MACC) announced that it was looking for a British man, Paul Geoffrey Stadlen, whose last known address was in Kuala Lumpur, to assist in the 1MDB investigation.

Stadlen had served as a public relations officer for Najib, according to Malaysian media.

“The commission was working closely with the Immigration Department to locate the 39-year-old Briton. As of today, the MACC has yet to blacklist Stadlen from leaving Malaysia and we are still in discussion with the Immigration Department on that matter,” MACC Chief Commissioner Mohd Shukri Abdull told reporters.

Muzliza Mustafa, Hadi Azmi and Noah Lee in Kuala Lumpur contributed to this report.