May 3, 2019 / 10:22 AM / 5 months ago

U.S. to return $200 million in 1MDB funds to Malaysia: sources

SINGAPORE (Reuters) - U.S. authorities will this month return $200 million stolen from Malaysia’s state fund 1MDB, including money from a stake in a luxury New York hotel and from a Hollywood movie producer, two sources with direct knowledge of the matter said.

Men walk past a 1Malaysia Development Berhad (1MDB) billboard at the fund's flagship Tun Razak Exchange development in Kuala Lumpur March 1, 2015. REUTERS/Olivia Harris/File Photo

The U.S. Department of Justice, in the biggest ever case in its anti-kleptocracy program, is pursuing billions of dollars it says were misappropriated from 1MDB, a state fund founded by former Malaysian prime minister Najib Razak.

Prime Minister Mahathir Mohamad, who defeated Najib in a shock election result last year, is working with at least six countries to recover about $4.5 billion the U.S. Department of Justice says was stolen from 1MDB.

“I think they know it is our money, so they will give back our money,” Mahathir told a news conference after confirming the $200 million figure.

The tranche of money the United States will return includes $140 million from the sale of a stake in New York’s Park Lane Hotel, after it was given up by fugitive Malaysian financier Low Taek Jho, known as Jho Low, the two sources said.

Jho Low, the alleged mastermind behind the looting of 1MDB, is wanted by Malaysian authorities on criminal charges. Low, whose whereabouts are not known, has denied wrongdoing.

The sources said the rest of the money was $60 million from Red Granite Pictures, co-founded by Najib’s stepson, Riza Aziz, which agreed in March 2018 to pay the U.S. government to settle a civil lawsuit over allegations 1MDB money was used to finance the film “The Wolf of Wall Street”.

The U.S. Department of Justice did not immediately respond to a Reuters’ request for comment.

Separately, Singapore police said on Friday that $26 million in 1MDB-related funds was in the process of being returned to Malaysia, the latest tranche in $176 million in cash and properties seized by the city-state relating to the scandal.

Malaysia recouped $126 million last month by selling a superyacht, Equanimity, which was bought by Jho Low for $250 million with funds allegedly stolen from 1MDB.

Malaysia has also filed criminal charges against Goldman Sachs for its role in raising money for 1MDB.

The investment bank says it conducted correct due diligence.

Prosecutors in the U.S. Attorney’s Office in Brooklyn have said a former Goldman Sachs employee has pleaded guilty to conspiracy to launder money.

Reporting by Joe Brock; additional reporting by Aradhana Aravindan and Fathin Ungku in Singapore and Joseph Sipalan in Kuala Lumpur; Editing by Darren Schuettler, Robert Birsel

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