1MDB argues US$248m siphoned to fund Najib stepson's film

1MDB contended that US$248 million of its monies were embezzled to fund the movie production of Riza Abdul Aziz, who is the stepson of ex-premier Najib Abdul Razak.

The Malaysian sovereign wealth fund’s opening statement, in its lawsuit to recover the money, also claimed that the funds were used for personal expenses such as gambling and real estate.

Before the Kuala Lumpur High Court, 1MDB and its three subsidiaries claimed that its monies were siphoned out through “various artifices, devious devices and plain old deceit that deceived and misled various innocent third parties”.

“The plaintiffs contend that the sum of US$248 million was ultimately used for the personal benefit of Riza and his associates to fund Red Granite Pictures’ motion pictures, purchase real estate, purchase movie memorabilia, and pay for gambling expenses,” the plaintiffs contended.

Besides 1MDB, the other plaintiffs are 1MDB Energy Holdings Limited, 1MDB Energy Limited, and 1MDB Energy (Langat) Limited.

Their civil action targeted Riza (above) as well as his two companies, namely California-based Red Granite Pictures Incorporated and Red Granite Capital Limited.

Independent studio Red Granite produced the 2013 movie “The Wolf of Wall Street”.

The biographical black comedy crime film is about the rise and fall of Jordan Belfort, a stockbroker in New York City who engaged in rampant graft and fraud on Wall Street. Hollywood actor Leonardo DiCaprio played the main role of Belfort.

In the opening statement for the trial that began yesterday, the plaintiffs claimed that the three defendants knowingly received funds in circumstances that the funds had been misappropriated from 1MDB.

1MDB and its three subsidiaries claimed that Riza and his two firms dishonestly assisted in the breaches of fiduciary duty by Low Taek Low (Jho Low), the fugitive businessperson still at large.

On May 7, 2021, 1MDB and its subsidiaries filed the lawsuit against Riza and the two companies.

The plaintiffs alleged that due to Riza managing both firms, he would know that the funds originating from 1MDB had been misappropriated.

1MDB and its subsidiaries are seeking, among others, a declaration that Riza is responsible for the misappropriated funds and to pay back the money to them.

‘Loan from Saudi royalty’

Through his statement of defence, Riza claimed that the money was received from a loan from Saudi royalty or the International Petroleum Investment Company (IPIC) and not from 1MDB.

The defendant claimed that it was hard for an unknown film producer to obtain loans from commercial banks and that had compelled him to seek funding from individuals or companies.

In May 2020, the criminal court granted Riza a discharge not amounting to an acquittal (DNAA) for money laundering involving US$248 million linked to 1MDB funds.

The DNAA is only for the criminal case, which is separate from the present ongoing civil action by 1MDB against him.

Riza is the stepson of former prime minister Najib, who is currently serving a six-year jail sentence over the RM42 million SRC International criminal graft case.

Previously a subsidiary of 1MDB, SRC’s ownership was later fully transferred to the Minister of Finance Incorporated (MOF Inc). Najib also used to be finance minister.

Law firm Shearn Delamore & Co is acting for 1MDB and its subsidiaries.

Riza is represented by counsel from Shafee & Co.

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