EFFORTS to recover funds allegedly stolen from 1Malaysia Development Bhd (1MDB) have hit a snag due to missteps by the previous government that were further complicated by the sudden regime change in late February.

The Straits Times reported that negotiations between the previous Pakatan Harapan (PH) government and the US Department of Justice (DoJ) had ground to a halt due to several disputes even before its collapse.

Quoting sources, the report said relations between the two negotiating parties deteriorated early on when the PH government secretly worked with Indonesian authorities to seize the Equanimity.

The superyacht, owned by the 1MDB scandal’s alleged mastermind Low Taek Jho, was first taken into US custody in Bali with the Indonesian police’s help before Malaysia’s takeover and subsequent sale.

Then, strained negotiations between Malaysia and the DoJ continued, resulting in the release of former Goldman Sachs employee Roger Ng, a key player in the scandal, into US custody in exchange for US$200 million (RM866 million) in 1MDB-linked funds.

Malaysia had also pulled out of a DoJ-led global settlement initiative with Low, Goldman Sachs and Abu Dhabi’s state-owned International Petroleum Investment Company (IPIC), which guaranteed US$6.5 billion in 1MDB bonds, in the belief that much more can be recovered through court cases.

With a new government in place that is allied with former prime minister Najib Razak, who is facing dozens of abuse of power and graft charges over the 1MDB scandal, foreign governments involved in recovering 1MDB funds including the US are also unsure of how to proceed.

This is compounded by widespread worry in Malaysia that key players of the 1MDB scandal, including Najib, may now get off the hook.

Aside from the US$200 million that the US DoJ had handed over and the US$150 million in proceeds from the Equanimity’s sale, Malaysia seems unlikely to get much of its 1MDB funds back unless it reconsiders the global settlement initiative, the report said. – April 9, 2020.