US links $3b deal to 1MDB scandal

This article is more than 12 months old

KUALA LUMPUR: Money misappropriated from Malaysian state fund 1Malaysia Development Berhad (1MDB) was used to finance a US$2.2 billion (S$3 billion) acquisition of US-based Coastal Energy in 2014, the United States alleged in a lawsuit filed last week.

Proceeds from the deal were then used to buy a property in London's Mayfair district, according to the lawsuit.

The US is seeking to seize the property along with two others. The lawsuit is part of the US Department of Justice effort to seize US$1 billion worth of assets linked to funds it said were siphoned from 1MDB.

The lawsuit shows that Malaysian financier Low Taek Jho allegedly used 1MDB money to fund the acquisition.

Mr Low partnered with Compania Espanola de Petroleos SAU (Cepsa) to buy Coastal Energy for US$2.2 billion.

Cepsa is the Spanish unit of Abu Dhabi's state investor, International Petroleum Investment Company.

Goldman Sachs acted as financial adviser to Cepsa.

Mr Low invested about US$50 million in the acquisition through a company called Strategic Resources (Global), with Cespa funding the remainder of the US$2.2 billion, according to the lawsuit.

Cepsa then transferred US$350 million to Strategic Resources, buying its stake in the joint venture used to buy Coastal Energy.

Mr Low's contribution was traceable to misappropriated proceeds of a US$3 billion bond Goldman raised for 1MDB in 2013, the lawsuit said. - REUTERS

1MDBNajib Razakunited states