1MDB gets order for US$2.795b against Eric Tan, US$809,000 against Jho Low’s sister; court says money ‘tainted’

KUALA LUMPUR, Nov 25 — Sovereign investment fund 1Malaysia Development Berhad (1MDB) and its four subsidiaries obtained a court order today against Low Taek Jho’s sister Low May Lin, and his close associate Eric Tan Kim Loong for the sums of US$809,319 and US$2,795,333,000 respectively.

High Court judge Mahazan Mat Taib granted the judgment in default for the two sums against Tan and May Lin, after finding that 1MDB had proven its case in its civil suit against the duo.

The judgment in default was granted as Tan and May Lin had been served with the court papers for the lawsuit, but both of them had failed to enter an appearance, file any pleading or attend the trial.

Among other things, the judge noted that evidence in this case showed that then prime minister Datuk Seri Najib Razak who was also finance minister at that time had exercised de facto control over 1MDB’s major financial decisions.

The judge also noted that Taek Jho – better known as Jho Low – acted as Najib’s authorised proxy and shadow director despite having no formal position in 1MDB.

She said 1MDB’s board and senior management had treated Jho Low’s directions as being authoritative and representing Najib’s will, also noting that many crucial transactions were carried out and channelled through Jho Low-linked entities.

“The identities of the recipients, the structure of the transactions, and the roles of Jho Low and Datuk Seri Najib establish that the funds reaching Tan Kim Loong and Low May Lin were tainted proceeds,” she said when reading out the brief grounds of her judgment.

Earlier, the judge said the evidence in court showed an elaborate, multi-layered siphoning of money belonging to 1MDB and its subsidiaries through multiple phases (Good Star Phase, Aabar Phase, Tanore Phase, Options Buyback Phase) that spanned from 2009 to 2013.

The judge said this was orchestrated by individuals in positions of power and with the help of a network of offshores entities and trusted associates – including those sued in this case.

The judge added that money which 1MDB had seemingly raised for national interest projects were misappropriated and rapidly siphoned into offshore structures controlled by Jho Low and his associates during the four phases.

She highlighted that Tan was the beneficial owner of bank accounts belonging to the British Virgin Islands companies Alsen Chance Holdings Limited and Blackstone Asia Real Estate Partners Limited, which had received US$2.795 billion wrongly diverted from 1MDB.

The judge said Tan was Jho Low’s known close associate and also an “essential conduit in the laundering and layering of the stolen funds”, adding that the nature, size and patterns of the transfers would make it implausible for him to have innocently received those money.

The judge said Tan’s accounts were the primary vehicles for money laundering, and said his receiving of the money was “intentional, knowing and unlawful”.

As for Low’s sister, May Lin, she had received the US$809,319 directly into her personal bank account through four transfers from Low’s father, Tan Sri Larry Low Hock Peng.

The High Court today said these transfers to Low’s sister were gratuitous and had no commercial rationale, noting that these money originated from funds misappropriated from 1MDB during the Good Star phase.

“As the sister of Jho Low, her role as a personal beneficiary of siphoned funds fits squarely within the wider pattern of family-based concealment,” the judge said, later also adding that May Lin’s receiving of the funds for “no consideration” meant she had unjust and unconscionable enrichment.

In this case, 1MDB had called in three witnesses – former 1MDB CEO Datuk Shahrol Azral Ibrahim Halmi, Kroll Advisory Ltd’s Angela Barkhouse, and Kroll Advisory Ltd’s director of investigations Richard Templeman – and submitted multiple documents as evidence, including bank records and banking documents, corporate documents and charts showing the flow of funds.

The High Court said the evidence were unchallenged and consistent with full corroboration through bank documents and independent forensic analysis.

What the court also ordered today 

The High Court today also declared that both Tan and May Lin are 1MDB’s constructive trustees for the money they received, and declared that the duo are liable for it as “secret profits” originating from the fraud against 1MDB and its subsidiaries.

The High Court ordered for all these secret profits to be “disgorged”, or in other words to be given up and returned.

The High Court declared that 1MDB and its subsidiaries are entitled to trace the money received by Tan and May Lin, and ordered that those holding the assets – linked to those money – to deliver the assets to 1MDB and its companies.

The High Court also said Tan and May Lin will have to pay 5 per cent interest on the US$2.795 billion and US$809,319 sum from the date they received the money until they fully pay it off, and awarded costs of RM500,000 against the two of them.

In May 2021, 1MDB, its subsidiaries 1MDB Energy Holdings Limited, 1MDB Energy Limited, 1MDB Energy (Langat) Limited, Global Diversified Investment Company Limited (formerly known as 1MDB Global Investments Limited) filed a civil suit against Jho Low, his family – father Hock Peng, sister May Lin, brother Low Taek Szen and mother Puan Sri Goh Gaik Ewe – and Tan.

The suit claimed that Jho Low, his associate and his family members had fraudulently concealed, fraudulently misappropriated, knowingly received funds belonging to 1MDB; and was also based on the claims of unjust enrichment, breach of trust and conspiracy.

In November 2022, 1MDB and its four subsidiaries had reportedly already obtained a judgment in default against Low, his father and his brother.

In May 2024, 1MDB and its four subsidiaries also reportedly obtained a judgment in default against Low’s mother.

Lawyers who represented 1MDB and its subsidiaries today were Siva Kumar Kanagasabai, Lee Shih, Iffah Afrina Saleh, Villasha Anbalagan, and Pavidren Sivananda Ratnam.

Earlier, Siva Kumar explained that his clients were seeking five per cent interest from the date of funds received by Tan and May Lin instead of from the date of today’s decision, as the money originated from funds which 1MDB had borrowed through bank loans and the issuing of bonds.

He said 1MDB’s losses from the money, which had been siphoned off, were not limited to just the principal sum borrowed as 1MDB also had to pay interest on the money to banks and bondholders.

Siva Kumar had also told the court that 1MDB was seeking RM500,000 in costs, due to the extensive work and large team of lawyers required for the complex case, with 43 volumes of evidence produced during the trial and a global investigation to trace the siphoned money with international private investigators appointed and called to give evidence in court.

Lawyer Hamsavartheni Sivalingam today held a watching brief for BSI Bank (Singapore), while Tan and May Lin were not represented by any lawyers.