COMMENT The Malaysian Bar is deeply disturbed by the grim disclosures contained in the case filed by the United States Department of Justice (DOJ) “to forfeit assets involved in and traceable to an international conspiracy to launder money misappropriated from 1Malaysia Development Berhad (1MDB)”.
The DOJ has made serious allegations of siphoning or diversion of funds, fraud and the misuse of the banking system for illegal activities by the individuals and entities named in the complaint.
Various persons have in the past weeks sought to interpret the DOJ’s 136-page complaint.
It is appalling that some have deliberately set out to distort the proceedings, and have attempted to create confusion, ostensibly to protect wrongdoers.
In the interest of upholding the rule of law and the cause of justice, the thrust, purpose and ramifications of the DOJ proceedings must be appreciated.
The legal proceeding commenced by the DOJ seeking the forfeiture of assets - including rights to profits, moveable assets and real property - constitute a civil action.
These assets, located primarily, but not exclusively, in the United States, are alleged to be proceeds from criminal conduct.
The DOJ maintains that this is the largest single asset seizure action ever brought under its Kleptocracy Asset Recovery Initiative.
The DOJ’s court document states that the assets to be forfeited represent “a portion of the proceeds of over (US)$3.5 billion misappropriated from 1MDB.
It has been reported that the United States authorities intend “to recover more than US$1 billion that was laundered through the United States and traceable to the conspiracy”.
In this regard, it would appear from the court document that the United States authorities possess comprehensive knowledge of the movement of the alleged misappropriated funds, have sighted relevant documentary evidence, and even reviewed telephone conversations.
Claims cannot be ignored
The substance, depth and reach of the allegations are compelling, and should not be ignored.
The affected parties will have the opportunity to challenge the DOJ’s action in court, hence the process is transparent and adheres to the principles of natural justice.
The complaint made by the DOJ does not preclude criminal action, as the forfeiture is but a first step to prevent dissipation of the specified assets.
The act of money-laundering, and involvement in a conspiracy to do so, are criminal offences.
Thus, upon forfeiture of the assets, it is likely that there would be criminal proceedings to prosecute those responsible for the alleged misappropriation of 1MDB funds and the laundering of those funds in the United States and elsewhere.
Not inteference of domestic affairs
Such proceedings in the United States should not surprise our law enforcement agencies or officers.
There are similar provisions in our law for the freezing or forfeiture of assets in Malaysia that are connected with money-laundering activities or are the proceeds of crime, whether or not any individual is prosecuted.
These have often subsequently led to the prosecution of individuals.
The laws in Malaysia also allow for criminal proceedings against individuals for alleged money-laundering activities, even if those activities occur outside Malaysia.
It is noteworthy that the Malaysian Anti-Corruption Commission has issued a statement confirming that it cooperated with the United States Federal Bureau of Investigation in the FBI’s investigations.
In international efforts to stop money-laundering and curb corruption, many countries - including Malaysia - have passed laws that allow for “universal jurisdiction” in respect of money laundering activities or corrupt practices.
Such legal actions cannot, in any way, be categorised as attempts to interfere in the domestic affairs of a sovereign state.
The principal aim of international crime prevention and anti-corruption treaties, such as the United Nations Convention against Corruption, which Malaysia ratified in 2008, are to specifically provide for the prosecution of those involved in international or transnational criminal activities.
No country that is a signatory to such treaties or conventions should attempt to hide or shield such persons, or permit such persons to evade or avoid prosecution, or to block access to evidence or information.
Cannot say no evidence of misappropriation
It is untenable to hold that the DOJ document does not show that money has been misappropriated from 1MDB.
The allegations of financial improprieties concerning 1MDB funds - described as having been “stolen, laundered through American financial institutions and used to enrich a few officials and their associates” - are referred to in no fewer than 193 paragraphs in the document.
Further, it has been reported that 1MDB is being investigated for alleged financial irregularities and possible money laundering in at least nine countries: Australia, Hong Kong, Luxembourg, Singapore, Switzerland, Thailand, United Arab Emirates, United Kingdom and United States of America.
It is significant that immediately after the DOJ announced its action, Singaporean authorities declared that they have seized bank accounts and properties amounting to S$240 million in total, as a result of their own investigations into the flows of 1MDB-related funds through Singapore, which began in March 2015 and are still in progress.
There are parties who have stated that 1MDB has not suffered any losses but only "has debts".
This is a perverse and unsustainable position, given that the parliamentary Public Accounts Committee (PAC) report named members of 1MDB’s senior management that it said should face a criminal investigation.
Five of the 12 members of the PAC have also reportedly stated that the PAC’s report shows that a total of US$7 billion have flowed out from 1MDB and were unaccounted for.
Irresistable to conclude PM is MO1
Several individuals have been specifically named in the DOJ’s court document, but not the prime minister.
However, this is not to say that he cannot be identified from the descriptive statements contained in the court document.
The conclusion - based on any clear reading of those descriptive statements - that the person named as 'Malaysian Official 1' in the court document is the prime minister appears irresistible.
The court document contains many other troubling disclosures.
It is alleged that in March 2013, US$681 million was transferred to a bank account belonging to 'Malaysian Official 1', and that this sum emanated from a 1MDB bond sale.
This allegation contradicts statements by our authorities that the funds were a “personal donation” to the prime minister from the Saudi royal family, given to him without any consideration.
In addition, the court document also alleges that US$20 million and a further US$30 million traceable to 1MDB funds, were transferred to the same personal bank account owned by “Malaysian Official 1” in 2011 and 2012, respectively.
It would appear that the transfer of these funds had not been previously uncovered or disclosed by any of our enforcement agencies.
These allegations therefore expose deficiencies and flaws in the investigations that have been conducted so far in Malaysia, and a lack of transparency regarding the findings that such investigations have yielded.
While the DOJ’s proceedings and any other possible related proceedings in the United States of America must be allowed to take their course and not be prejudged, a fresh and comprehensive investigation of all persons, directly or indirectly implicated in the allegations made by the DOJ, must be pursued.
These allegations must not be ignored or permitted to be swept under the carpet, as that would only fuel the already existing perception of a cover-up. In this regard, the recent statement by the PAC, in the wake of the DOJ proceedings, that any further investigation into 1MDB is unnecessary, is deeply disconcerting.
There is a palpable need for greater fervour, transparency and accountability in the investigation by our enforcement authorities, and for appropriate and concrete action to be taken against all wrongdoers, without delay.
The truth must be revealed and justice must be done.
STEVEN THIRU is the president of the Malaysian Bar.