Malaysia 1MDB Scandal `Kleptocracy at Its Worst,' Sessions Says

(Bloomberg) -- The alleged corruption related to a Malaysian state investment fund is “kleptocracy at its worst” and the U.S. is working to provide justice to the victims, Attorney General Jeff Sessions said on Monday.

1Malaysia Development Bhd. was created by the government of the Southeast Asian nation to promote long-term economic growth for the benefit of the people, but allegedly corrupt officials and their associates reportedly used the funds for a lavish spending spree, according to a transcript of Sessions' speech posted on the Department of Justice website.

1MDB officials allegedly laundered more than $4.5 billion in funds through a complex web of opaque transactions and fraudulent shell companies with bank accounts in countries ranging from Switzerland and Singapore to Luxembourg and the U.S., Sessions said. “This is kleptocracy at its worst,” he said.

The U.S. Department of Justice is seeking to seize a total of $1.8 billion in assets linked to 1MDB, including real estate, art and proceeds from the film “The Wolf of Wall Street”. The fund has consistently denied any misconduct. Prime Minister Najib Razak of Malaysia, who until last year was the chairman of 1MDB's advisory board, has denied any wrongdoing and was cleared by Malaysia's attorney general.

Singapore and Switzerland have also imposed financial penalties on several banks for lapses in anti-money laundering controls related to funds allegedly from 1MDB.

“We have nothing to add to our previous statements on this matter,” Arul Kanda, 1MDB's president, said in a text message. A representative from the Prime Minister's Office couldn't be immediately reached for comment.

To contact the reporter on this story: Elffie Chew in Kuala Lumpur at echew16@bloomberg.net.

To contact the editors responsible for this story: Ben Scent at bscent@bloomberg.net, James Poole, Shamim Adam

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