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The US Department of Justice (DoJ) took steps to seize $ 330 million (£ 256 million) in the bank account of a major London law firm that prosecutors say is derived from the profits of one of the largest financial frauds in the world.
The DoJ has filed civil forfeiture proceedings against funds held by city firm Clyde & Co, which prosecutors said have traced back to an “international conspiracy” that allegedly laundered money stolen from Malaysia’s state investment fund 1MDB.
In a 300-page complaint filed in a California court, Department of Justice anti-money laundering prosecutors alleged that the $ 330 million in a Clyde & Co escrow account is linked to an oil project. bankrupt in Venezuela financed with money embezzled by 1MDB.
The 1MDB fund is at the center of a sprawling corruption scandal that has rocked Malaysian politics in recent years and sparked multiple cross-border investigations.
According to US and Malaysian prosecutors, around $ 4.5 billion (£ 3.5 billion) was diverted from the state fund and laundered through an elaborate network of offshore bank accounts and shell companies to pay bribes, buy luxury property and finance. Hollywood movies, including The Wolf from Financial World.
The civil forfeiture case targeting the $ 330 million held by Clyde & Co is the latest development in the US investigation into the 1MDB affair and has shed light on how money allegedly linked to fraud came to be withheld by a major law firm London Bar.
US prosecutors allege that the money held by the company stems from a failed project involving Venezuela’s state oil company PDVSA and a joint venture between 1MDB and PetroSaudi, a company established by Saudi businessman Tarek Obaid with a member of Saudi Arabia. Royal family.
Earlier this year, Malaysian prosecutors charged Obaid with money laundering and participation in a criminal conspiracy allegedly involving former Malaysian Prime Minister Najib Razak. Obaid has consistently denied any wrongdoing.
US prosecutors have previously alleged that Obaid and the 1MDB-PetroSaudi joint venture were involved in the first phase of the multi-billion dollar fraud and have already filed civil Obaid-related asset forfeiture proceedings in 2017, which the businessman has challenged in court.
According to court documents, US prosecutors say the joint venture misappropriated hundreds of millions of dollars from the state fund to buy two “old and second-hand” drill ships before winning the contract with Venezuela.
As part of the agreement with PDVSA, the joint venture secured a credit line of about $ 300 million from the state-owned company, prosecutors said. However, a dispute subsequently arose between PetroSaudi and PDVSA, which led to a long-running arbitration case. Earlier this year, an arbitration tribunal made an award in favor of PetroSaudi.
During the arbitration proceeding, the court ordered that about $ 300 million be deposited into an escrow account at Clyde & Co, the firm representing PetroSaudi, to be paid in the event of an award.
The DoJ’s forfeiture procedures have come under increased scrutiny over the source of funds. The money also attracted the attention of Malaysian prosecutors, who requested to restrict funds held by Clyde & Co shortly before the arbitration award was rendered in July.
A spokesperson for Clyde & Co insisted that the firm “holds itself to the highest professional and ethical standards and fully complies with all legal and regulatory obligations.”
He said the funds the firm has “represent the proceeds of the pending letters of credit that the London appeals court held that a client was entitled to receive,” referring to a 2017 case involving PetroSaudi and PDVSA. “The firm kept those funds to order and under the direction of a court in the context of an underlying dispute,” he added.
Obaid has previously denied any wrongdoing in relation to the 1MDB-PetroSaudi joint venture, and in recent UK court proceedings, PetroSaudi argued that the money held by Clyde & Co came from legitimate business activity. A lawyer for Obaid did not respond to the Guardian’s request for comment.
