JUNE 28 — On the 21st of June, the Chief Commissioner of the Malaysian Anti-Corruption Commission announced that the Commission had filed an application at the High Court of Malaya against 41 entities for the forfeiture of monies to be recovered by the MACC. The MACC has alleged that these monies belong to 1 Malaysia Development Berhad and were dispersed from a bank account belonging to former Prime Minister Datuk Seri Najib Razak.
The monies sought to be forfeited total RM270 million. The application is said to be the largest civil forfeiture proceeding initiated in the country to date.
Since the filing of the application, RM2 million is said to have been voluntarily surrendered by some of the Respondents to the government[1]. Other Respondents have denied any wrongdoing in receiving the monies[2], whilst others have said that the monies received have since been expended[3].
In view of the significance and public interest in the claim, it would be useful to understand the legal process behindthe forfeiture proceedings.
The application was filed under section 56 of the Anti-Money Laundering, Anti-Terrorism Financing and Proceedings of Unlawful Activities Act 2001 (“the Act”). The provision reads as follows:
“56. Forfeiture of property where there is no prosecution
(1) Subject to section 61, where in respect of any property seized under this Act there is no prosecution or conviction for an offence under subsection 4(1) or a terrorism financing offence, the Public Prosecutor may, before the expiration of twelve months from the date of the seizure, or where there is a freezing order, twelve months from the date of the freezing, apply to a judge of the High Court for an order of forfeiture of that property if he is satisfied that such property is-
(a) the subject-matter or evidence relating to the commission of such offence;
(b) terrorist property;
(c) the proceeds of an unlawful activity; or
(d) the instrumentalities of an offence.
(2) The judge to whom an application is made under subsection (1) shall make an order for the forfeiture of the property if he is satisfied-
(a) that the property is-
(i) the subject-matter or evidence relating to the commission of an offence under subsection 4(1) or a terrorism financing offence;
(ii) terrorist property;
(iii) the proceeds of an unlawful activity; or
(iv) the instrumentalities of an offence; and
(b) that there is no purchaser in good faith for valuable consideration in respect of the property…”
A plain reading of section 56 shows that the principal objective of the section is the forfeiture of property which is the subject matter or proceedsof the acts described in subsection (2) above. The property may be monies or any moveable or immovable property. Thefocus of the application is the recovery of property and not the innocence or guilt of the persons subjected to the application.
However because of the constitutional safeguards against the arbitrary deprivation of property under Article 13 of the Federal Constitution, there are safeguards within section 56(1) that protect against the arbitrary use of the forfeiture power. This comes in the form of the 12 month time limitation and more importantly the safeguardthat the forfeiture is not by an executive act but by an order of the High Court that has to be satisfied that the conditions in the provision have been met.
There are 2 preliminary requirements for the MACC to establish in the forfeiture action. The first is the stipulation in the section itself that there need not be a prosecution or conviction for an offence under section 4(1) of the Act in respect of the property (or monies) to be forfeited. The second is that the forfeiture action has been commenced within 12 months from the date of the seizure or freezing of the property in question.
Since the High Court has to be satisfied that a case for forfeiture has been made out, the MACC would have to show that the monies had been obtained as a result of, or in connection with, an offence under section 4(1) or if the monies were the proceeds of an unlawful activity.Case law shows that this element is often the most contentious aspect of a forfeiture action.
Section 4(1) defines the offence of money laundering as follows:
“4. Offence of money laundering
(1) Any person who-
(a) engages, directly or indirectly, in a transaction that involves proceeds of an unlawful activity or instrumentalities of an offence;
(b) acquires, receives, possesses, disguises, transfers, converts, exchanges, carries, disposes of or uses proceeds of an unlawful activity or instrumentalities of an offence;
(c) removes from or brings into Malaysia, proceeds of an unlawful activity or instrumentalities of an offence; or
(d) conceals, disguises or impedes the establishment of the true nature, origin, location, movement, disposition, title of, rights with respect to, or ownership of, proceeds of an unlawful activity or instrumentalities of an offence,
commits a money laundering offence and shall on conviction be liable to imprisonment for a term not exceeding fifteen years and shall also be liable to a fine of not less than five times the sum or value of the proceeds of an unlawful activity or instrumentalities of an offence at the time the offence was committed or five million ringgit, whichever is the higher.”
In satisfying the requirement that the property to be forfeited pertained to a section 4(1) offence or were the proceeds of an unlawful activity, the MACC would have to satisfy the High Court that the property is the subject matter or the evidence in relation to any of the offences listed in section 4(1). This may require the MACC to produce an extensive set of documentary evidence such as, amongst others, investigation reports (where the same can be disclosed), accounting records and transaction documentation or any other evidential factors of connectivity.
The known defences to a forfeiture action include a claim that the monies had been legitimately received and were not connected with the alleged wrongdoing. Other defences could be, amongst others, that the recipient has a legitimate legal interest in the monies, s/he had no involvement in the alleged offence connected with the monies, s/he lacked knowledge and was not intentionally ignorant of the illegal use of the property or if s/he did not freely consent to its illegal use and that the recipient took all reasonable steps to prevent the illegal use of the property in question.
The forfeiture action will be conducted by way of affidavit evidence and will not, unless ordered by the court, involve witness testimony. This is likely to result in a swift resolution of the suit, which would be welcome in the context of the perennial saga involving the assets of 1MBD.
*Gregory Das is an Advocate & Solicitor of the High Court of Malaya
*This is the personal opinion of the writer and does not necessarily represent the views of Malay Mail.
