Social media is absolutely buzzing in Malaysia this morning following the latest US Justice Department’s revelations into the 1MDB probe.

It is all simply staggering and mind-boggling. What can you say?

What the DOJ puts forward indicates misappropriation on an industrial scale. We can surmise from its findings below that the 1MDB black hole is at least RM19bn. It is the first official estimate into the scale of the losses, and it is the largest action brought under the US Kleptocracy Asset Recovery Initiative.

Meanwhile, the surplus on the Sungai Besi/Bandar Malaysia and TRX land revaluations has been estimated at perhaps RM12bn-RM15bn. This would help to cover the black hole – but there would still be a shortfall in the long run.

Some key takeaways from the findings of the Justice Department:

Acting Assistant Attorney General Kenneth A. Blanco: “Today’s complaints reveal another chapter of this multi-year, multi-billion-dollar fraud scheme, bringing the total identified stolen proceeds to US$4.5 billion [RM19bn using today’s exchange rate].

Department of Justice: “… this case represents the largest action brought under the Kleptocracy Asset Recovery Initiative. Assets now subject to forfeiture in this case total almost $1.7 billion [RM7.3bn].

Assistant director Stephen E Richardson of the FBI’s Criminal Investigative Division: “I applaud all my colleagues and our international partners who have worked to help recover an immense amount of funds taken from the Malaysian people, who are the victims of this abhorrent case of kleptocracy.”

Acting US Attorney Sandra R Brown of the Central District of California: “These cases involve billions of dollars that should have been used to help the people of Malaysia, but instead was used by a small number of individuals to fuel their astonishing greed…The misappropriation of 1MDB funds was accomplished with an extravagant web of lies and bogus transactions that were brought to light by the dedicated attorneys and law enforcement agents who continue to work on this matter.”

Deputy Chief Don Fort of the IRS-Criminal Investigation: “Today’s announcement is the result of untangling a global labyrinth of multi-layered financial transactions allegedly used to divert billions of dollars from the people of Malaysia and fund the co-conspirators’ lavish lifestyles.”

Some of the shocking details include Jho Low’s purchase of a stone-and-necklace priced at $27.3m [RM117m using today’s exchange rate) for “the wife of Malaysian Official 1”. The money allegedly came from diverted bond proceeds in 2013.

The court filing (p228) claims:

This was far from the only time that TAN and LOW used the Blackrock Account to pay for jewelry purchases for themselves and their associates. Between April 2013 and September 2014, the Blackrock Account was used to purchase a total of approximately $200 million [RM854m using today’s exchange rate] in jewelry from firms located around the world, using funds traceable to the 2013 bonds and the 2014 Deutsche Bank loans.

Jho Low also bought 27 assorted gold necklaces (US$1.3m) for MO1’s wife allegedly from misappropriated Deustche Bank loans proceeds.

He even bought matching diamond ring and ear-rings for his mother allegedly using diverted 2012 bond proceeds.

Check out more details of how the funds were allegedly used. Read from page 224 onwards of this court filing.

According to the US Justice Department, as alleged in the complaints, the members of the conspiracy – which included officials at 1MDB, their relatives and other associates – diverted more than $4.5 billion in 1MDB funds.

“Using fraudulent documents and representations, the co-conspirators allegedly laundered the funds through a series of complex transactions and shell companies with bank accounts located in the US and abroad. These transactions allegedly served to conceal the origin, source and ownership of the funds, and ultimately passed through US financial institutions to then be used to acquire and invest in assets located in the US and overseas.”

The complaints filed yesterday allege that:

In 2014, the co-conspirators misappropriated approximately US$850m in 1MDB funds under the guise of repurchasing certain options that had been given in connection with a guarantee of 2012 bonds. As the complaints allege, 1MDB had borrowed a total of $1.225bn from a syndicate of banks to fund the buy-back of the options.

The complaints allege that some US$850m was instead diverted to several offshore shell entities. From there, the complaints allege, the funds stolen in 2014, in addition to money stolen in prior years, were used, among other things, to purchase:

  • a 300-foot luxury yacht valued at over $260m,
  • certain movie rights,
  • high-end properties,
  • tens of millions of dollars of jewelry, and
  • artwork.
  • A portion of the diverted loan proceeds were also allegedly used in an elaborate, Ponzi-like scheme to create the false appearance that an earlier 1MDB investment had been profitable.

As alleged in the earlier complaints, in 2009, 1MDB officials and their associates embezzled approximately $1bn that was supposed to be invested to exploit energy concessions purportedly owned by a foreign partner. Instead, the funds were transferred through shell companies and were used to acquire a number of assets, as set forth in the complaints.

The complaints also allege that the co-conspirators misappropriated close to $1.4bn in funds raised through the bond offerings in 2012, and more than $1.2bn following another bond offering in 2013.

The full US Justice Department statement can be found here.

Najib’s press secretary Tengku Sharifuddin responded to the DOJ’s findings in a statement:

Malaysian authorities have led the way in investigations into 1MDB. The company has been the subject of multiple investigations within Malaysia, including by the Malaysian Anti-Corruption Commission, Auditor General and bi-partisan Public Accounts Committee. After comprehensive review, the Attorney General found that that no crime was committed. 1MDB is still the subject of an investigation by the Royal Malaysia Police.

We note the United States Department of Justice’s civil lawsuits brought against various assets. As previously stated, the Malaysian Government will fully cooperate with any lawful investigation of Malaysian companies or citizens in accordance with international protocols.

As the Prime Minister has always maintained, if any wrongdoing is proven, the law will be enforced without exception.

1MDB’s response can be found here.

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50 COMMENTS

    • NEW The Pink Panther ( no more with Peter Sellers but may be this time Leornado DiCaprio with Miranda Kerr and local Douglas Lim as fatty entrepreneur) movie inspired by the mystery of the Pink Diamond.

      Eagerly awaiting. Red Granite production may not get the rights to the film pending DOJ freeze.

      • Vogue: Miranda Kerr Embroiled In Jewellery Scam

        http://www.vogue.co.uk/article/miranda-kerr-jewellery-scam-jho-low

        In November 2014, Jho Low spent $3.8 million on an 8.88 carat diamond pendant for his then-girlfriend Miranda Kerr (ex-wife of Orlando Bloom, now married to Snapchat founder Evan Spiegel). A $1.98 million pair of 11 carat diamond earrings with a matching necklace, ring and bracelet quickly followed. All of these gifts are said to have been bought with some of the $4.5 billion Low stole from 1MDB.

  1. Regime Barang Naik Profesor Hoo Peng Kee … on TV3 said DOJ action on MO1 is a retaliation against Najib for siding China in the South China Sea issue. Ha ha ha!

  2. Pakatan’s registration held up over Tun M’s role
    http://www.channelnewsasia.com/news/asiapacific/malaysian-opposition-coalition-s-registration-held-up-over-8960940

    The formal registration of Malaysia’s opposition coalition is allegedly being held up by disagreements over the role of former prime minister Mahathir Mohamad.

    Speaking to Channel NewsAsia in an exclusive interview on Monday (Jun 20), Dr Mahathir said: “Unfortunately in the informal meetings (between) the leaders of the party, the question of calling the head person ‘chairman’ or some other name cropped up.

    “Some people are against the word chairman being given if I hold that position. If somebody else holds (the position) it’s alright, but not me,” he said.

    “There was some ridiculous suggestion it should be called executive advisor,” Dr Mahathir added. “It is a contradiction in terms. You can’t be an executive and an advisor. But these are the things which have held up our meetings.”

  3. There have been too much heavy petting and too little actual action from DOJ. The best thing they can do to all Malaysians is to charge all these people who have been accused of criminal activities.

    However much we hate Jho Low and others for the alleged charges, the DOJ has to bring them to the court of law and submit the supporting evidence. If Jho Low is innocent as he claims to be, he will have the chance to defend himself. That’s the basis of a justice system. By making all the accusations and seizing assets, DOJ is taking the easy way out.

    It will be good that the !MDB case will be heard in the US so we can be assured of the neutrality and a lack of political interference. It will also allow us to judge if MO1 actually had a role to play and then we will be able to exercise our votes accordingly.

    But DOJ is not helping by their approach, which is rather unusual and this opens up to criticism. I don’t always agree with Hishamuddin but he’s right this time.

    • Little action is better than no action and all clear line like nasi kandar ah Gee will be first to buy. Little action but new news and big news. Similarly there is little reACTion from Ali baba to avoid rocking the boat even Pg ferry is now belongs to rapid.

      • Dedak = supporters of BN
        Deplorables = supporters of Trump
        Facists = supporters of right-wing party in Europe

        How low can you go RBA ???

  4. DOJ suit: Ministers must stop treating M’sians as brainless
    http://www.malaysiakini.com/columns/386049

    After so many years of independence, still think Malaysians are ‘bodoh’???
    If so, as elected representatives of the Rakyat, you Ministers are elected as ‘bodoh’!
    Malaysia Boleh Jadi Sampai Begitu Bodoh!

  5. What is there to be “staggering and mind-boggling”? Which idiot is surprise by any of these? There is NOTHING HERE that has not been done or happened before? Its just more of the same – more theft, more excesses, more wheeling-dealing. Did people think it was going to stop? 1MDB is NOT a one-off event, THERE WILL BE MORE 1MDB, and Najib and Rosmah are NOT EVEN UNIQUE, NOTHING SPECIAL, IN FACT ORDINARILY TRASHY AND THE CROOKS ARE VERY ORDINARY GIVEN SPECIAL PRIVILLEGES.. Their investments and their deal making are not even extraordinary, tasteless excess indulgence, expensive Bourgeoisie.

    1MDB is a CLASS PROBLEM IN MALAYSIA. ITS A CONDEMNAATION OF AN ENTIRE CLASS – specifically the MALAY POLITICAL CLASS AND THEIR AGENTS/PARTNER – that means all of BN AND Hadi’s PAS. Its a failure of race, country AND, whether they like it or not, RELIGION TOO.

    • Someone recently described this tactic of tyranny and propaganda as stupefaction. Keep ratcheting till the polulace is dumbfounded.

      The people of the “greatest democracy” now find that every day, more of them have no income, rights, peace, safety or health. Their police injure and kill thousands with impunity.Their water comes with free lead added. Their acquifers are being poisoned permanently with fracking effluents. Their forests are burning or being sold off, even as their leaders claim to be concerned about oil palm destroying our forests – but unconcerned about climate change. Their intelligence agencies help conceal, transport and process the huge flow of dangerous narcotics across the globe. Their modern medicine is fraudulent, addictive in many cases, and likely to kill or bankrupt. Recruiters funnel their youth from impoverished areas to kill people in far-away lands. Their Supreme Leader wonders which he should nuclear-bomb first: North Korea, Iran, Russia or China.

  6. I learnt one morality lesson early in childhood from my strict mom:
    When there was some money stolen from my father’s daily coffer, mom would cane all the children (first).
    Then hard-questioning time using eye-burning smoke from kemenyan + dried chilli would sooner reveal who was the real culprit.
    The morality is:
    You can’t escape punishment for stealing.
    And it is also a lesson for us siblings who might contemplate to steal or to want to steal again.
    As for those who didn’t steal but got punished, it instilled collective responsibility to discourage stealing.

    My mom was the greatest disciplinary mom who didn’t graduate from MACC or the Polis Academy or Magistrate Court.

    • Who said polisi academic does not have disciplinary action? Like one flew over the cucook nest, some went in and never come out.

      • Have you been inside PULAPOL (Pusat Latihan Polis) @ Jalan Semarak (formerly Jalan Henry Gurney)?
        Or tasted their training? Or sent to Ulu Kinta (Perak) as PFF (Police Field Force) to pursue the communists (as was the 1980s)?

        Cakap (atau nyanyi) senang macam burung cuckoo?

  7. Hollywood (read Variety or Hollywood Reporter magazines) is thinking of making 1MDB The Movie since the financial scandal is unprecedented one.
    Miranda Kerr to appear as herself but who is to act as the wife of #1 ?

  8. Leonardo DiCaprio Surrenders $3.2 Million Picasso and $9 Million Basquiat to US Government
    https://news.artnet.com/art-world/leonardo-dicaprio-gives-pack-jho-low-picasso-basquiat-996377?utm_content=from_&utm_source=Sailthru&utm_medium=email&utm_campaign=June%2017%2C%202017%20artnet%20News%20Daily%20Newsletter%20ALL&utm_term=artnet%20News%20Daily%20Newsletter%20USE

    Actor and art collector Leonardo DiCaprio is reportedly in the process of handing over to US authorities a $3.2 million Pablo Picasso painting and a $9 million Jean-Michel Basquiat collage. The move is related to a stunning embezzlement scandal connected to the 1Malaysia Development Berhad fund (also known as 1MDB), founded by the country’s prime minister, Najib Razak, for the purposes of economic development, but now alleged to have been diverted to various less noble ends.
    Read on.

  9. The Philippines had the shoe collection.
    1Malaysia has the super duper yacht.

    May I propose that the yacht be renamed “KD Equanimity” as it was
    purchased with “borrowed” hard-earned Malaysian tax payer money ?

  10. Yawn…USA propagating Saddam’s WMD in Iraq to loot of their gold and oil. Don’t forget Libya and Syria, both failed states and still in perpetual war. I always say that someday the White men gotta pay for their sins, looks like it’s happening sooner than I thought in their very own European turf ( Without Gaddafi to guard the floodgates of course). What’s happening here in Malaysia struck to me as a reminder of the Ukrainian crisis, where President Yanukovyc was deemed being too close to his Russian counterpart (deals being made with Gazprom etc). I must advice Malaysia citizens, beware of the bald eagle bearing gifts of “Democracy” , because you have everything to Lose. I am not saying it’s bad changing government, its good for accountability and as a reminder that people have voices. However, let’s not sell your souls to some foreign devil , sacrificing your nation’s dignity and long standing harmony.

    • ManfredCooper, yes there are foreign devils, imagine or real.
      So, too we have our own real devils + big time thieves.
      We had better catch our own devils + big time thieves before we worry about foreign devils.
      When the country is ‘fast’ going the way of bankruptcy + incurring more debts, what will be left of any dignity???
      Malaysians are not that stupid to sacrifice their future for the sake of real devils + big time thieves.

      I am sure you also like diamonds to give to your #1 love lady. And I am sure you have the full dignity to buy real diamonds with your own hard-earned cash.

    • You mean you don’t want NED, NDA, Open Society, CIA, etc. to bring you free “democracy” and “development” as in Venezuela, Cuba, S Korea, Ukraine, Congo, etc.?

  11. Damien

    Yes and I guess that’s only good out of the doj action
    There is still another est usd2b that r still unaccounted
    Millions have also gone into the pockets of low family members including her sister if u follow Sarawak report
    I guess that requires further confirmation from doj
    Until then keep your fingers crossed as doj will probably be official words for which reliance can be placed

    • Behind the farce of equality, there is selective concern, selective availability of “public” facilites and benefits, and selective enforcement. I must emphasise that this is true everywhere.

  12. ONLY ONE WAY TO RID OF THESE LEECHES: VOTE FOR PAKATAN HARAPAN.

    The sure things to happen if PH wins:

    Will bring to court of justice these: #1Big Thief, Fat + Low…, murderers of Altantuyaa & Teoh Beng Hock & those died in lockup, more murderers, more leeches.

    Confiscate + bring back the diamonds, leeched monies, luxury yatch, overseas properties, laundered money, other stolen assets.

    Eradication of GST, tourism tax; bring back necessary subsidies.

    Overhaul rule of law & order institutions: rid of ineffective & useless personnels who don’t uphold rule of law.

    Redefine national education policies to benefit all races.

    Build more LC, LMC & affordable houses in all states.

    No more – politics of race hates, violent vigilantes of Red Shirts & religious bigotries.

    Pls add more to the list if you (personally) believe, feel positively for & passionate want to end a regime of murders, corruptions, lies, leeches of national coffers, broken promises, race hates & questionable donations.

  13. What can we say?
    What else is there to add?
    Many speculated the direct and indirect involvement of the “wife” and they were right.
    Those who questioned are suppressed ,monitored,removed, investigated for various unrelated reasons, harassed and even charged with sedition.
    Similar like living under a communist system .
    For me, i can only say that i did NOT vote for BN.
    That’s the best part many of us can do.

  14. Foreigners(to) still continue flocking Malaysia bringing in investments, curently Bursa on a high tide of record breaking net inflow. Foreign Instituitions/ Funds smart enough to see through these allegations as repercussion for being over- cozy with China? Or they already know these will not deter DSN from achieving another year of better GDP growth, with promising prospects such as DFTZ and ECRL incoming, and possible an open secret, that BN gona win with a larger majority?

  15. As we saw with Mobarak of Egypt, the Empire sometimes decides that your usefulness as a front man is over. If you don’t take the hint and move on, bad things happen.

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