“The crux of the matter continues to be Najib’s alleged misappropriation of these funds, any attempts to divert focus or add or remove parties from the writ do not alter this fundamental question of accountability.”
KUALA LUMPUR (Sept 27): The High Court on Wednesday (Sept 27) has upheld the US$681 million Mareva injunction (asset-freezing order) imposed by 1Malaysia Development Bhd (1MDB) on former prime minister Datuk Seri Najib Razak.
This follows judge Atan Mustaffa Yussof Ahmad dismissing Najib’s application to set aside the injunction as the court found that 1MDB has stated a case of unjust enrichment, breach of fiduciary duty, knowing and dishonest receipt, unjust enrichment and misfeasance of public office and others against Najib.
“They are substantiated by substantial evidence. Furthermore, it is clarified that the ‘good arguable case’ standard for a Mareva injunction is not as onerous as contended by Najib.
“The plaintiffs (1MDB and its subsidiary company) have unquestionably met this standard considering the evidence and legal arguments presented before the court,” the judge added.
Atan Mustaffa said the SRC International Sdn Bhd criminal trial findings are relevant to this Mareva injunction application, casting doubt on Najib’s explanation of the funds as Arab donations.
On dealing with Najib’s ongoing 1MDB-Tanore trial having impeded the former PM’s ability to disclose his defence, the judge found such assertion to be problematic and at odds with established legal protocols.
“The inconsistency in his invocation of the 'right to silence' coupled with the insubstantial nature of his defence raises legitimate concerns about the veracity of his position and necessitates further examination for potential dishonesty.
“Najib’s reliance of the right to remain silent appears less a legitimate legal argument and more of a strategic evasion, meriting further scrutiny of potential dishonesty,” the judge said.
Claims of 1MDB management wrongdoing does not absolve Najib
The court also said that although Najib’s lawyers had argued the possible wrongdoing of 1MDB’s management, it was important to note that these claims do not absolve Najib of the pressing allegations that funds traceable to 1MDB were deposited into his own accounts
“The crux of the matter continues to be Najib’s alleged misappropriation of these funds, any attempts to divert focus or add or remove parties from the writ do not alter this fundamental question of accountability,” the judge said.
On the issue of material risk of asset dissipation, Atan Mustaffa said the court finds that the evidence presented along with prior judicial rulings and Najib’s intricate financial dealings strongly support such a conclusion.
“This substantiates the court’s decision to exercise its jurisdiction in granting a Mareva injunction. Moreover, the serious allegations of dishonesty [levelled] against him (Najib) are neither nebulous or minor, and they meet the rigorous standards delineated in relevant case law,” the judge said.
While Najib’s lawyers argued there is no immediate risk of asset dissipation, following the prosecution’s failure in two forfeiture cases, the court finds this contention unconvincing.
“Material changes in circumstances such as the dismissal of two forfeiture suits and inadequacies in his asset disclosure affidavit coupled with his history of intricate financial dealings heighten the risk of asset dissipation and call into question his commitment to adhering to court mandates,” Atan Mustaffa said.
Second Mareva injunction not oppressive as huge sums involved
The court also found the second Mareva injunction not oppressive as alleged by the defence, as the court is permitted to impose successive injunctions when the factual and legal underpinnings between claims differ significantly.
“Importantly, the present application involves a sum of US$681 million, far surpassing the RM42 million at issue with the SRC civil suit, and arises from a distinct claim characterised by a unique set of facts and legal causes of action,” Atan Mustaffa said.
The court also addressed Najib’s incomplete and delayed disclosures, including the RM114 million cash, allegedly funds from Umno retrieved from the Pavilion condo raid, and the RM31 million from the failed forfeiture, and found a manifest disregard for its orders, thereby establishing a genuine risk of asset dissipation.
“Such behaviour lends credence to 1MDB’s concern that Najib may intentionally thwart the execution of any future judgements in their favour, thereby justifying the enforcement of the Mareva orders,” the judge said.
Atan Mustaffa observed the portion of Najib’s assets as liquid and this inherently amplify the risk of asset dissipation.
“Coupled with Najib’s incomplete asset disclosures, this establishes a real and present risk of dissipating assets, thereby justifying the enforcement of the Mareva orders to preserve the integrity of these proceedings,” the judge added.
The court, in dismissing Najib’s application to set aside the injunction, said the former PM’s own statements as evidenced in multiple court judgements undermine his claim and do not absolve him of liability for alleged misappropriation.
“Given the substantiated risk of asset dissipation outlined by the plaintiffs (1MDB) supporting affidavit, and weighed against the principles of justice and equity, the decision to proceed without giving notice to Najib (to impose the ex-parte [one-sided] Mareva injunction) is plausible and grounded in reality,” the judge said.
Atan Mustaffa also ordered Najib to pay costs of RM20,000 for his failure to have the order set aside.
This is the second Mareva injunction imposed on Najib, after the order to prevent the dissipation of RM42 million worth of assets imposed by former 1MDB subsidiary SRC.
Despite the US$681 million Mareva injunction having been imposed by Atan Mustaffa on Feb 8, 2022, the inter-partes (both parties) and setting-aside application was only heard last month.
1MDB had filed the US$8 billion suit in May 2021, along with 1MDB Energy Holdings Ltd, 1MDB Energy Ltd, 1MDB Energy (Langat) Ltd and Global Diversified Investment Company Ltd (previously known as 1MDB Global Investment Ltd), against Najib and seven other former senior 1MDB staff, several of whom are still missing.
Those named include 1MDB deputy chief financial officer and executive finance director Terence Geh Choh Heng, former general counsel Jasmine Loo Ai Swan, executive director of business development Casey Tang Keng Chee, former director of investments and chief investment officer Vincent Beng Huat Koh, former chief financial officer and subsequently chief operating officer Radhi Mohamad, former director of investments Kelvin Tan Kay Jim and former chief investment officer Nik Faisal Ariff Kamil.
In the statement of claim, the plaintiffs alleged that the defendants, including Najib as the former chairman of the board of advisers, had facilitated the companies to enter into sham agreements to create a circuitous trail of money to ease or conceal the misappropriation of 1MDB funds.
1MDB on Wednesday was represented by counsels Khoo Guan Huat and Siva Kumar Kanagasabai while lawyers Muhammad Farhan Shafee and Alaistair Brandah Norman appeared for Najib.
Farhan, when contacted by The Edge, said the defence will file Najib’s notice of appeal later on Wednesday.