US Can’t Seize $330M Allegedly Tied To 1MDB Fraud Scheme
Caroline Simson, 10 March 2021
U.S. prosecutors came up short in their bid to seize some $330 million in assets held in escrow by Clyde & Co. that are allegedly connected to embezzled 1Malaysia Development Berhad funds when a California judge ruled that the government had not sufficiently shown how the money was tied to the alleged scheme.
U.S. District Judge Dale S. Fischer concluded on Tuesday that the government’s amended complaint filed last fall failed to show how the money — which an arbitral tribunal determined is owed to a PetroSaudi unit for drilling services provided to Venezuela’s state-owned oil company, Petróleos de Venezuela SA — was traceable to the fraud against 1MDB. Nor had the government proven that the funds were involved in a money laundering transaction, the judge found.
U.S. prosecutors alleged that the funds were connected to 1MDB’s $1 billion contribution to a joint venture with PetroSaudi, $700 million of which was allegedly improperly diverted away from the JV as part of the scheme. The remaining $300 million was allegedly used to invest in the two drillships that provided the drilling services to PDVSA, which the U.S. says led to the arbitral award to the PetroSaudi unit, PetroSaudi Oil Services (Venezuela) Ltd.
