KUALA LUMPUR (Oct 15): The High Court’s decision on Sept 27 last year to grant the ex-parte Mareva injunction sought by 1Malaysia Development Bhd and its four subsidiaries to freeze US$681 million worth of former prime minister Datuk Seri Najib Razak’s assets was to prevent a dissipation of assets.

Judge Atan Mustaffa Yussof Ahmad in his written grounds, which was released last month, said the one-sided element to the Mareva injunction application was to “preempt any clandestine attempts to dissipate assets rendering any subsequent judgment to be decided later as nugatory".

“This underscores the importance of urgency and secrecy. If 1MDB and its subsidiaries were to telegraph their intentions by serving (advance) notice (of the request for the freeze order), it would be akin to tipping off a wrongdoer, allowing them to craftily sidestep the very purpose of the Mareva injunction.

“Thus, the true question is not whether notice was given, but whether the reasons for not doing so were plausible and grounded in reality. 1MDB submitted that their ex-parte (one-sided) application for a Mareva injunction was justified due to the real risk that Najib would dissipate his assets if notice were given (in advance).

“They argue that, as outlined in their affidavit in support, Najib’s conduct demonstrates his capability to quickly transfer and hide assets, especially in the context of large fraudulent transactions. They assert that serving notice would defeat the purpose of the injunction, as it would alert Najib and give him time to disperse his assets,” the judge said in citing 1MDB’s reason to do the application silently.

The judge added that 1MDB’s application was not speculative but based on specific actions described in their affidavit. And despite the High Court Criminal Division’s dismissal of forfeiture proceedings, the Mareva injunction was still necessary so as to prevent any frustration in implementing any future judgment concerning 1MDB.

“Moreover, while Najib's right to a pension (of RM100,000 monthly) is acknowledged and respected, the Mareva injunction strikes an equitable balance, allowing him access to sufficient funds while protecting the plaintiffs' interest in ensuring potential judgments are not frustrated.

“Consequently, the Mareva injunction remains a necessary and appropriate legal measure in this case. Najib's application to set aside the Mareva injunction lacks merit,” Atan Mustaffa said in dismissing Najib’s application to set aside the Mareva injunction.

On Tuesday, Najib withdrew his application before a three-member Court of Appeal bench to set aside the Mareva injunction imposed by the High Court judge on him (see accompanying story).

A Mareva injunction is an asset-freezing order imposed by the court against a defendant to prevent the dissipating of funds pending the disposal of a suit.

Atan Mustaffa, in his 91-page written grounds for Najib's appeal, dated Sept 18 this year, said the court noted that Najib’s previous actions and omissions raised significant concerns.

He said most notably, the former PM’s failure to fully comply with the requirements of the Assets Disclosure affidavit, coupled with the suspicious receipt of a considerable sum traceable to 1MDB, suggest a propensity for asset concealment.

“Hence, in this context, the risk of asset dissipation cannot be dismissed as inconsequential or speculative,” the judge said.

He said that after the court made the disclosure order requiring Najib to disclose his assets up to the value of US$681 million within 14 days, the former PM submitted the Asset Disclosure Affidavit affirmed on March 14, 2022, that fell short of fulfilling the court’s requirements.

“The affidavit (that Najib submitted) was limited to asset disclosures up to the year 2020, failed to mention any assets held outside of Malaysia, and notably, omitted financial assets, including assets in bank accounts as well as RM114 million and RM31 million released to him following the dismissal of the first and second Forfeiture Suits respectively.

“Despite a letter from 1MDB’s solicitors on March 31, 2023, demanding additional information, and the filing of 1MDB’s affidavit in reply, Najib only submitted a belated and still incomplete additional disclosure on June 26, 2023.

“The lateness and piecemeal nature of this new list of assets cannot be reasonably attributed to a lack of information; evidence presented shows that Najib had relevant information by July 20, 2022, as disclosed in the SRC civil suit.

“This selective and tardy disclosure reflects a blatant disregard for this court's orders and establishes a real risk that Najib may dissipate assets to frustrate the enforcement of any future judgment in favour of the plaintiffs.”

Atan Mustaffa said 1MDB and its subsidiaries’ lawyers told the court that Najib’s failure to comply with the court’s disclosure order regarding his assets, particularly through his Asset Disclosure Affidavit of March 14, 2022, that omitted critical information such as overseas assets, bank accounts and significant sums, including RM114 million and RM31 million, showed his disregard for the court’s order.

1MDB pointed to the inconsistency in Najib’s narrative, especially regarding the RM114 million, which he had previously claimed to hold in trust for Umno.

“However, this claim is undermined by conflicting statements and a lack of evidence. Additionally, Najib’s failure to disclose assets related to the RM31 million raises further concerns about his compliance with the ex-parte Mareva injunction order and the interim Mareva order.

“The plaintiffs conclude that these actions, coupled with Najib’s inconsistent explanations, demonstrate a real risk of asset dissipation and justify the enforcement of the Mareva orders,” the judge said.

Pointing to the inconsistency, he said the former prime minister had given conflicting evidence (via his affidavit) over the RM114 million seized from a raid on a condominium at Pavilion Kuala Lumpur in May 2018, as Najib claimed that the money belonged to Umno.

“However, Najib also contended that part of the RM114 million comprised not only Umno’s funds but his own personal foreign currency. Such inconsistency in Najib’s narrative fatally undermines his credibility and leads this court to question the veracity of his claims.

“The evidence demonstrates that the RM114 million or a substantial portion thereof are held in foreign currency. This discredits Najib’s entire claim that he held the funds for the benefit of Umno. Notably, the Umno treasurer has gone on record to say that they had no knowledge of the funds being held for Umno’s benefit and further emphasised that Umno did not receive funds in foreign currency,” the judge added in the written grounds.

Atan Mustaffa said a critical analysis of Najib’s conduct, particularly his failure to make a complete asset disclosure in violation of the ex-parte Mareva injunction order and ad-interim injunction Mareva order, demonstrates blatant disregard for the procedural obligations of these proceedings.

“Furthermore, the inconsistencies in Najib’s narrative, particularly with regard to the RM114 million, severely undermine his credibility and invoke suspicion,” the judge observed.

1MDB, along with its subsidiaries 1MDB Energy Holdings Ltd, 1MDB Energy Ltd, 1MDB Energy (Langat) Ltd and Global Diversified Investment Company Ltd (previously known as 1MDB Global Investment Ltd), had filed a US$8 billion suit against Najib and seven other former senior 1MDB staff, several of whom are still missing.

Those named include former 1MDB deputy chief financial officer and executive finance director Terence Geh Choh Heng, former general counsel Jasmine Loo Ai Swan, former 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 then 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.

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