The baseball season is over and the Washington Nationals have been crowned as the World Series champions this year. They bested my hometown heroes Wednesday night in a Game 7 here in Houston. While the Astros had the best record in baseball, the Nationals had the better playoff run, winning a Wild Card game in the 8th, the National League Division Series in the 10th inning of Game 5 and then becoming the first and only team in Major League Baseball (MLB) history to win the World Series by winning every away game and losing all games at home. Congrats to the Nationals and all their fans.

Before the end of the baseball series, there were two stunning developments in the anticorruption world on Wednesday. They both will have significant repercussions and ramifications going forward. It is difficult to say at this point which is more important or significant but it is safe to say they are both huge. The first was the release of the guilty pleas for the Chief Executive Officer (CEO) and Chief Operating Officer (COO) of Unaoil. The second was the agreement by Jho Low,  1MDB scandal, to voluntary forfeiture of all assets the United States had sought in the various for forfeiture actions it had filed against him. Today we will consider the  forfeiture agreement Jho Low and in the next blog post, the Unaoil matter.

As reported by Byron Tau and Aruna Viswanatha in the Wall Street Journal (WSJ), “Jho Low, the businessman-turned-fugitive accused of masterminding a multibillion-dollar fraud involving Malaysia’s sovereign-wealth fund, agreed to forfeit more than $700 million in assets U.S. authorities sought to seize, according to a settlement filed Wednesday. Mr. Low will give up assets that include real estate, a luxury yacht and a private jet, according to the settlement, which doesn’t resolve the criminal cases against the Malaysian businessman or include any admission of wrongdoing by him.”

Khadim Shudder, reporting in the Financial Times (FT) noted, “The settlement, the largest civil forfeiture ever agreed by the justice department, fully resolves 10 lawsuits brought by the DoJ as it sought to recover cash allegedly stolen from 1MDB, Malaysia’s government investment fund. It marks the latest step towards a resolution of a multibillion-dollar corruption scandal that rocked Malaysia and implicated Goldman Sachs” It included assets located in the US, UK and Switzerland.

The Department of Justice (DOJ) Press Release announcing the settlement stated, “With the conclusion of this settlement, together with the prior disposition of other related forfeiture cases, the United States will have recovered or assisted in the recovery of more than $1 billion in assets associated with the 1MDB international money laundering and bribery scheme. This represents the largest recovery to date under the Department’s Kleptocracy Asset Recovery Initiative and the largest civil forfeiture ever concluded by the Justice Department.”

Assistant Attorney General Brian A. Benczkowski of the Justice Department’s Criminal Division noted, “As alleged in the complaints, Jho Low and others, including officials in Malaysia and the United Arab Emirates, engaged in a brazen multi-year conspiracy to launder money embezzled or otherwise misappropriated from 1MDB, and he used those funds, among other things, to engage in extravagant spending sprees, acquiring one-of-kind artwork and luxury real estate, gambling freely at casinos, and propping up his lavish lifestyle. This settlement agreement forces Low and his family to relinquish hundreds of millions of dollars in ill-gotten gains that were intended to be used for the benefit of the Malaysian people, and it sends a signal that the United States will not be a safe haven for the proceeds of corruption.”

Interestingly, even Jho Low himself was enthusiastic about the settlement, releasing his own Statement about the settlement. In a Letter sent to the MalaysianInsight.com he stated, “I am very pleased to confirm that a landmark comprehensive, global settlement has been reached with the United States government, which fully and forever resolves in their entirety each of the US government’s civil, criminal, and administrative actions or proceedings relating to the defendant assets at issue in the Central District of California. The historic agreement builds on a series of successful prior agreements negotiated with the US Department of Justice and is the result of good faith discussions between the parties. Importantly, the agreement does not constitute an admission of guilt, liability or any form of wrongdoing by me or the asset owners. We believe all parties consider this resolution, which is subject to final court approval, to be a successful and satisfactory result.”

Regarding that final point the DOJ had a very different interpretation on the settlement. Their Press Release said, “Low separately faces charges in the Eastern District of New York for conspiring to launder billions of dollars embezzled from 1MDB and for conspiring to violate the Foreign Corrupt Practices Act (FCPA) by paying bribes to various Malaysian and Emirati officials, and in the District of Columbia for conspiring to make and conceal foreign and conduit campaign contributions during the United States presidential election in 2012… This agreement does not release any entity or individual from filed or potential criminal charges.”

In addition to the scope of the resolution brought by the DOJ’s Kleptocracy Asset Recovery Initiative in the Criminal Division’s Money Laundering and Asset Recovery Section, there is one other key note for the compliance practitioner or white collar defense lawyer. As noted in the DOJ Press Release by Don Fort, Chief of IRS Criminal Investigations, “This case is a model for international cooperation in significant cross-border money laundering investigations”. A review of the investigative and prosecutorial services involved in this forfeiture effort reveals the following agencies: from Malaysia, the Attorney General’s Chambers, the Royal Malaysian Police, and the Malaysian Anti-Corruption Commission; from Singapore the Attorney General’s Chambers, the Singapore Police Force-Commercial Affairs Division and the Office of the Attorney General; from Switzerland, the Federal Office of Justice; from the Grand Duchy of Luxembourg, the judicial investigating authority of and the Criminal Investigation Department.”

To say this forfeiture settlement is stunning belies just how massive and significant it is. It also demonstrates the effective power of dedicated law enforcement professionals to routing out the proceeds of corruption. This settlement will stand as a testament to the international fight against the scourge of bribery and corruption, literally across the globe.

This publication contains general information only and is based on the experiences and research of the author. The author is not, by means of this publication, rendering business, legal advice, or other professional advice or services. This publication is not a substitute for such legal advice or services, nor should it be used as a basis for any decision or action that may affect your business. Before making any decision or taking any action that may affect your business, you should consult a qualified legal advisor. The author, his affiliates, and related entities shall not be responsible for any loss sustained by any person or entity that relies on this publication. The Author gives his permission to link, post, distribute, or reference this article for any lawful purpose, provided attribution is made to the author. The author can be reached at tfox@tfoxlaw.com.

© Thomas R. Fox, 2019

OCTOBER 28, 2019 2019 BY TOM FOX

In today’s edition of Daily Compliance News:

  • Boeing stymied government regulators with bill “not in the best interest of safety”. (NYT)
  • Google struggling with employee trust. (Washington Post)
  • Will WeWork investment damage Softbank? (WSJ)
  • Even in Houston businesses recognize “Climate change is going to hurt bottom lines.” (Houston Chronicle)