What You Should Know About PM Najib (And His Family) Facing U.S. Corruption Inquiry
The U.S. investigation headed by Federal Grand Jury involves Najib and people close to him along with entities connected to troubled 1Malaysia Development fund.
Earlier today, 22 September, the New York Times (NYT) reported that our embattled PM Najib Razak, who is already under pressure from the rakyat amidst mounting political turmoil and a barrage of local and international inquiries into 1MDB that he oversees, is now going to face the scrutiny of American investigators as well...
The inquiry is being run by the Justice Department's Kleptocracy Asset Recovery Initiative, a unit of the Justice Department that investigates international corruption.
It's focused on properties in the U.S. that were purchased in recent years by shell companies that belong to Najib's stepson Riza Aziz as well as other real estate connected to a close family friend, the NYT reported.
The paper said the investigators are also looking at a USD681 million payment made from a bank based in the US to what is believed to be Najib's personal account in Malaysia. Corroborating the NYT report, the Wall Street Journal said the investigation focuses in part on allegations that nearly USD700 million in payments went to Najib's alleged personal accounts ahead of a close election in 2013.
Back in February, the NYT had reported about these purchases using shell companies by various international figures, including Riza Aziz and Jho Low, who also has been involved in 1MDB
Mr. Najib’s office did not comment on the Justice Department inquiry.
A representative for Mr. Aziz said he was not involved in any investigation, adding that “there has never been anything inappropriate” about his business activities.
A spokesman for Mr. Low said that he had not been notified that he was the subject of any investigations, and that his business “adheres to all relevant regulatory requirements.”
A spokesman for the Justice Department declined to comment.
In its February report, NYT had found that more than RM150 million in expensive properties were traced back to either Low or Riza
These had included a US$30.55 million penthouse at the Time Warner Centre in Manhattan, US$39 million mansion in Hollywood, the L’Ermitage Hotel in Beverly Hills and part of the Park Lane Hotel in New York. It also traced a US$33.5 million condominium in Park Laurel, Manhattan, as well as other properties in Los Angeles back to Riza, through shell companies.themalaysianinsider.com
What you should know about the inquiry
The inquiry was opened partly in response to an examination by The New York Times of condominiums at the Time Warner Center in Manhattan whose ownership is hidden behind shell companies.
Shell companies are usually used in real estate for those who seek privacy in wealth transfer. However, they also make it difficult to determine the real ownership of the properties.
The unit working on the inquiry had previously seized properties in the US owned by relatives of politicians from Equatorial Guinea, Nigeria, South Korea and Taiwan.
However, here's the main thing:
Given the fact that the details of the corruption allegations involving Najib and people connected to him are extremely complex, it could take years for the Justice Department investigation, which is still in its early days, to determine if any US laws were broken.
On the positive side:
The real estate property tied to Najib's stepson and to Jho Low could be seized if a case could be made that the properties had been purchased with the proceeds earned in corrupt practices. Also, the USD681 million payment being investigated falls under the US jurisdiction because it was routed through Wells Fargo, an American bank.
John Malott, a United States ambassador to Malaysia in the 1990s, who had last month written on Malaysiakini that it was "game over" for Najib internationally, says the latest report "in the world's most prestigious newspaper, the New York Times," proves that is true. As far as the rest of the world is concerned, Najib is now toast," he said.
“Najib really, really values his international image, and he was going out of his way to curry favor with America and with the Europeans,” said John Malott, a United States ambassador to Malaysia in the 1990s. In the current climate, he added, “he can travel, but is he going to be shunned? Are people going to shake hands with him?”nytimes.com
However, regardless of how long the probe takes, it goes without saying that the latest probe by the U.S. authorities definitely muddies Najib's international standing, especially at a time when he's preparing to fly to London this week for a trade convention and then on to New York for the opening of the UN General Assembly.