US launches bid to seize RM1.3b in suspected 1MDB funds from London law firm
Published on: Monday, February 08, 2021
By: FMT
The US Department of Justice claims that US330 million being kept by a British law firm on behalf of PetroSaudi was derived from the 1MDB scandal. (AP pic)
Kuala Lumpur: An arrest warrant has been served on a British law firm in a bid to recover hundreds of millions of dollars, claimed to be proceeds from the 1MDB corruption scandal, which it is holding on behalf of a client, The Guardian of London reported.
It said the warrant was served by the British National Crime Agency (NCA) on the central London offices of Clyde & Co, on behalf of the US Department of Justice (DoJ) late last year.
ADVERTISEMENT According to The Guardian, a sum of US$330 million was being held by the law firm in a bank account.
Previously, the Malaysian government also said a sum of US$340,258,246 retained by Clyde & Co belonging to PetroSaudi and its subsidiary company was gained through unlawful activities.
Besides the US$340 million, the government had sought to bar the use of money kept in a bank account under the name Temple Fiduciary Services Limited.
The Guardian’s report, published yesterday, said the warrant, which it described as “an arrest warrant in rem”, an order seeking to seize property or assets, was signed by a US federal judge and served on Clyde & Co on Oct 29.
ADVERTISEMENT The DoJ alleged that the funds were derived from a complex fraud against 1MDB, in which more than US$4 billion was laundered to pay bribes and finance lavish lifestyles of its alleged perpetrators.
The Guardian said US and Malaysian authorities were continuing to recover money connected to the scandal, including large sums used to finance Hollywood movies and to pay for items such as a superyacht and paintings by Van Gogh and Monet.
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It said prosecutors at DoJ alleged that the money held by the law firm was “about all that is left of the proceeds” of the first phase of the 1MDB fraud, in which US$1 billion was allegedly misappropriated.
According to prosecutors, US$700 million of the money was used for the “personal gratification of 1MDB conspirators” while US$300 million was diverted to a joint venture between 1MDB and PetroSaudi, established by the Saudi businessman Tarek Obaid with a member of the Saudi royal family.
The DoJ first accused PetroSaudi of being involved in the fraud in 2016 and later alleged that Obaid was “a key member in orchestrating and profiting” from this phase of the scheme, it said. Obaid, who was charged last year in Malaysia in connection with the alleged fraud, has consistently denied any wrongdoing.
The Guardian said US and Malaysian prosecutors began focusing their attention last year on the money held by Clyde & Co, which they alleged was the proceeds of the 1MDB-PetroSaudi joint venture.
Clyde & Co’s relationship with PetroSaudi, it said, appeared to have begun around 2015, when the law firm began representing PetroSaudi in a dispute over unpaid invoices with Venezuela’s state-owned oil company, PDVSA.
PetroSaudi ultimately prevailed in the case and last year was awarded about US$380 million, the majority of which had been placed in Clyde & Co’s escrow.
The Guardian quoted a spokesman for Clyde & Co as insisting that the funds were the proceeds of standby letters of credit and that the court of appeal had ruled that PetroSaudi was entitled to receive the money.
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“Our involvement only arises because we held the funds to the order of, and at the direction of, an arbitration tribunal,” it quoted the spokesman as saying.
The spokesman added that the firm “holds itself to the highest professional and ethical standards” and “will continue to fully comply with our legal and regulatory obligations as the case warrants”, according to the report.