Malaysia Sues JP Morgan, Deutsche Bank, Coutts, over 1MDB Losses

Malaysia is suing units of global investment banks J.P. Morgan, Deutsche Bank and Coutts & Co. as part of efforts to recover billions of dollars that sovereign fund 1MDB allegedly lost in a corruption scandal, court documents show.

The latest civil lawsuits – 22 of them – filed Friday by the now-defunct 1MDB and its erstwhile SRC unit, seek to recover U.S. $23 billion. They come after the government recovered at least $5 billion in 1MDB settlements from Goldman Sachs and others, Malaysia’s Ministry of Finance said Monday.

“In the government’s continuing efforts to recover the losses suffered by 1Malaysia Development Berhad (1MDB) and SRC International Sdn Bhd (SRC), the Ministry of Finance hereby confirms that on 7 May 2021, legal representatives for both entities had filed a combined total of 22 civil suits,” the ministry said in a statement.

“Six of these writs were filed by 1MDB, while 16 were by SRC for the recovery of assets with a combined total in excess of RM96.6 billion (USD 23 billion), including approximately RM300 million against various local parties,” the finance ministry said in a statement.

Malaysian and U.S. prosecutors had alleged that at least $4.5 billion (18.8 billion ringgit) was stolen from 1MDB between 2009 and 2014, in a corruption scandal that implicated foreign and local financial institutions and high-ranking officials, including former Prime Minister Najib Razak.

In one writ seen by BenarNews, 1MDB based its financial claims on “negligence, breach of contract, conspiracy to defraud/injure and/or dishonestly assist,” by the three international banks, two Petrosaudi units and two of their directors.

This writ was heard before the Kuala Lumpur High Court in an online session on Monday.

A Malaysian financial site, The Edge Markets, reported that both Najib and Low Taek Jho, the fugitive financier better known as Jho Low, were among those being sued by SRC, but BenarNews could not confirm that information.

Najib last year was convicted and sentenced to 12 years in prison on corruption-related charges in a trial over the looting of money linked to 1MDB, but he is out on bail. The ex-PM was found guilty of one count of abuse of power, three counts of criminal breach of trust, and three counts of money-laundering over allegations that he illegally received 42 million ringgit (U.S. $9.67 million) from SRC.

Najib defense lawyer Farhan Shafee told BenarNews that his client had yet to receive the summons writ. M. Puravale, a lawyer representing Jho Low’s mother in another 1MDB-linked case, said no one had approached him to represent Jho Low’s family in this latest court case, if one had been filed.

‘Pursuing other wrongdoers’

1MDB is suing Deutsche Bank (Malaysia) for $1.11 billion, the Swiss-registered Coutts unit for $1.03 billion and J.P. Morgan (Switzerland) for $800 million, in addition to interest payments from all three, according to the writ seen by BenarNews.

Since last October, Malaysia has recovered $2.5 billion from Goldman Sachs and its Malaysian subsidiary, with another $1.4 billion in a guarantee for the recovery of assets. The bank pleaded guilty to federal U.S. charges tied to bribes it paid Malaysian and Abu Dhabi officials.

Malaysia is also going to receive $700 million in settlement of claims and penalties related to 1MDB from the AmBank Group. In addition, Malaysia will receive $80 million from Deloitte to settle all claims related to its audit of the state fund.

These recoveries appear to have spurred the government to increase pressure on other financial institutions and people allegedly involved in the 1MDB case.

“Following significant and successful settlements with Goldman Sachs, AmBank Group and Deloitte PLT, the government’s recovery efforts are now focused on pursuing other wrongdoers who have caused losses to 1MDB and/or SRC during the execution of their duties, as parties directly or indirectly involved in 1MDB and/or SRC’s various operations and transactions,” Finance Minister Tengku Zafrul Abdul Aziz said in the ministry’s statement. 

“As previously mentioned, the government will not rest until all those involved are made fully accountable for the wrongdoings caused to the country through their involvement in 1MDB and/or SRC.