A spicy 'Kari' and a US$1 billion suit

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KINIGUIDE On Wednesday, the US Department of Justice (DOJ) launched what it touts to be its largest action ever brought under its Kleptocracy Asset Recovery Initiative (Kari).

Through a series of civil forfeiture suits, it seeks to seize over US$1 billion worth of assets that were supposedly the result of criminal proceeds from the embezzlement of over US$3.5 billion from 1MDB.

In this instalment of KiniGuide, we have a look at the Kleptocracy Asset Recovery Initiative, and see how it has fared in the past.

What is the Kleptocracy Asset Recovery Initiative?

The initiative was announced by the then US attorney-general Eric Holder in 2010, during his address at the African Union summit in Uganda at the time.

The purpose of the initiative, he said, is to “(combat) large-scale foreign official corruption and recovering public funds for their intended - and proper - use...”

This entailed creating a dedicated team of prosecutors and Federal Bureau of Investigation (FBI) agents, which work together with other law enforcement agencies to trace suspected proceeds of foreign corruption laundered through the US financial system.

Having a dedicated team is important for the initiative to work because corruption at such a scale is often masked by layers and layers of shell companies. This makes for a tedious and time-consuming task to link graft suspects to allegedly corrupt purchases.

What are the lawsuits about?

The lawsuit comprises 12 separate but almost identically worded court filings seeking the civil forfeiture of 17 pieces of property (including paintings, a private jet, intellectual property and investments) amounting to over US$1 billion.

The money used for purchasing these properties are allegedly traced to the embezzlement of 1MDB funds, which amounted to about US$3.5 billion siphoned out of the Malaysian state investment fund in three phases from 2009 to 2013.

The proceeds were allegedly laundered through bank accounts in Singapore, Switzerland, Luxembourg, and the US, in a complex series of transactions.

The US is named as the plaintiff of all 12 lawsuits, while the properties being sought are named as defendants.

The filings also named several persons as ‘relevant individuals’ to the case.

These include Prime Minister Najib Abdul Razak’s stepson, Riza Aziz, Penang-born tycoon Low Taek Jho (also known by his moniker ‘Jho Low’), and an unnamed ‘Malaysian Official 1’.

Each complaint was filed at the US District Court for the Central District of California on July 20. They are 136 pages each, except for one filing that is 137 pages long...

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