Malaysia’s Ex-Leader Najib Razak Is Charged With Money Laundering - New York Times

Malaysia’s Ex-Leader Najib Razak Is Charged With Money Laundering

Najib Razak in July. The former Malaysian prime minister faced new charges Wednesday stemming from the scandal over a state investment fund that led to his election defeat.CreditLai Seng Sin/Reuters
By Mike Ives
Aug. 8, 2018

HONG KONG — The Malaysian authorities charged Najib Razak, the former prime minister, with three counts of money laundering on Wednesday, the latest escalation in an inquiry involving billions of dollars diverted from a state investment fund.

The charges came a day after Malaysia’s attorney general announced that a $250 million yacht, which prosecutors say was bought with money stolen from the fund, had been returned to Malaysia from Indonesia, where it was seized in February.

The new charges are linked to three electronic transfers worth a total of $10 million from a onetime unit of the investment fund, 1Malaysia Development Berhad, that prosecutors say were made into Mr. Najib’s bank accounts.

That is only a small fraction of the fraud alleged to have been carried out. United States prosecutors have said that at least $4.5 billion from the fund, known as 1MDB, was laundered through American financial institutions and misspent by Mr. Najib, his family and associates.

Mr. Najib, who was ousted in a May election, pleaded not guilty to all three new charges, the local news media reported. Reuters reported that each charge carries a jail sentence of up to 15 years, plus fines of at least $1.2 million.

Mr. Najib, 65, also pleaded not guilty last month to three counts of criminal breach of trust and one count of corruption in connection with the scandal surrounding the state investment fund.

Court documents show that the first of the three wire transfers to Mr. Najib’s accounts from SRC International, the onetime unit of the state investment fund, occurred in 2014, two years after SRC was placed under the Finance Ministry’s jurisdiction.

On Wednesday, Mr. Najib’s lawyer, Muhammad Shafee Abdullah, told reporters that the money-laundering charges had “nothing to do” with 1MDB because SRC was not part of the fund when the transfers were made.

“I hope they are not arranging the coincidence of the yacht arriving in Klang with the sudden decision to charge my client today,” Mr. Abdullah added, referring to Port Klang, where the yacht has been impounded.

N. Surendran, a former lawmaker who advises Lawyers for Liberty, a Malaysian advocacy group, said that the earlier breach of trust charges against Mr. Najib were related to the same money transfers cited in the charges brought Wednesday. “It is almost certain there will be more charges looking at the large amounts and various transactions involving 1MDB monies,” he said.

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Prosecutors say this yacht, known as Equanimity, was bought with $250 million stolen from the state investment fund. It was seized in Indonesia in February and taken to Malaysia this week.CreditAgence France-Presse — Getty Images
Mr. Najib set up the investment fund in 2009, the year he became prime minister, to promote economic development.

With corruption accusations swirling around the fund in recent years, Mr. Najib’s onetime mentor, Mahathir Mohamad, successfully ran against him in the May election, promising to bring him to justice.

Since Mr. Mahathir became prime minister, Malaysian officials have blocked Mr. Najib and his wife from leaving the country; seized cash and other valuables worth as much as $273 million from the couple’s properties; and arrested Mr. Najib in connection with the investigation into SRC International.

A spokesman for Mr. Najib has called the arrest “politically motivated and the result of political vengeance” by Mr. Mahathir and his governing coalition, many of whose leaders spent decades in the opposition.

American prosecutors have accused Mr. Najib of diverting $731 million from 1MDB into his account. They say the money was spent on a parade of luxury items, including a $27.3 million pink diamond necklace, luxury real estate in the United States and paintings by Monet, Warhol, Van Gogh and others worth over $200 million.

Prosecutors say $250 million more was used to buy Equanimity, the yacht that Malaysia’s attorney general, Tommy Thomas, said Tuesday had been returned to Malaysia.

Equanimity, which has a helicopter pad and a private movie theater, was initially seized in Indonesia in February. Its owners, who are based in the Cayman Islands, have called the handover of the yacht to Malaysia “unlawful and extrajudicial” in a court filing in the United States, Reuters reported.

The United States Department of Justice alleges that the yacht was purchased with 1MDB funds by Jho Low, a Malaysian financier who is a friend of Mr. Najib’s stepson, Riza Aziz. Mr. Low’s Malaysian passport has been revoked, but as of Wednesday, his whereabouts was unknown.

Mr. Thomas said Tuesday in a statement that the Indonesian authorities had seized the yacht at the request of the United States Department of Justice, “which asserted ownership of the yacht on behalf of Malaysia and 1MDB because monies belonging to us were used to purchase it.”

On Friday, a judge was scheduled to rule on whether to uphold an interim court order restricting what the Malaysian news media can report about the case. A judge issued the order last month after Mr. Shafee, Mr. Najib’s lawyer, argued that it was necessary for a fair trial, but Mr. Thomas has said it violates Malaysian laws on free speech.

Federal prosecutors in the United States are looking at the potential culpability of Goldman Sachs in the case, according to people familiar with the investigation. Goldman helped 1MDB sell billions of dollars in bonds to investors, earning about $600 million in fees. The investment bank has said that it is cooperating with the inquiry and that it had been unaware of how money from the fund was being used.

Sharon Tan contributed reporting from Kuala Lumpur, Malaysia.