US delays returning RM1 bil in 1MDB funds to Malaysia

Sources told Reuters the delay in returning the funds was due to political uncertainty in the country. (Reuters pic)

KUALA LUMPUR: The US Department of Justice has delayed the return to Malaysia of another US$240 million (RM1 billion) of recovered money allegedly stolen from the 1MDB sovereign fund, two sources with direct knowledge of the matter said on Friday, with one citing political uncertainty.

Malaysia was plunged into turmoil when 94-year-old prime minister Dr Mahathir Mohamad quit on Feb 24.

He was replaced on Sunday by Muhyiddin Yassin, whose coalition includes the former ruling party that was voted out in 2018 amid accusations of corruption over 1MDB.

The US Department of Justice (DoJ) says over US$4.5 billion was looted from the fund under then prime minister Najib Razak, who is now on trial for corruption.

Since 2016, the department has filed civil lawsuits seeking to seize about US$1.7 billion in assets allegedly bought with stolen 1MDB funds.

Last May, the United States began returning some of the recovered funds. The first instalment was nearly US$200 million.

The DoJ had initially been scheduled to return the next payment of recovered funds to Malaysia on Feb 19, but there were technical reasons and the transfer did not happen, the two sources said.

The total amount was around RM1 billion, one source said.

But once Mahathir resigned, it was decided to hold the payment due to uncertainty over what would happen next, one source said.

The sources did not want to be identified as they were not authorised to speak to the media.

A DoJ spokesman declined to comment.

The finance ministry redirected questions to the attorney-general’s chambers, which did not immediately respond to a request for comment.

The sources said they were not aware of DoJ’s next steps.

The funds returned go into a special fund at the finance ministry and are meant to be used to pay 1MDB’s bondholders.

American and Malaysian investigators have said Najib received about US$1 billion of the stolen 1MDB funds. He has pleaded not guilty and says he was misled by financier Jho Low and other 1MDB officials.

It was only after Najib’s unexpected defeat in the 2018 elections that the 1MDB investigation was reopened in Malaysia and trials began.

Goldman Sachs and some of its executives are among the many charged for their role as underwriter and arranger of three bond sales that raised US$6.5 billion for 1MDB. Three units of Goldman have pleaded not guilty to charges.

Najib told Reuters this week that he expected an atmosphere more conducive to a fair hearing now that Mahathir was gone.

Muhyiddin has not talked about the 1MDB cases but has vowed to fight graft.

Two senior officials in the Mahathir administration fighting graft — the attorney-general and the chief of the anti-corruption commission — have quit after Mahathir’s resignation.