1Malaysia Development Bhd claims that because Riza Aziz, the stepson of former prime minister Datuk Seri Najib Razak, had wilfully and recklessly failed to make relevant inquiries as to the source of the funds, he is liable to account for the funds misappropriated from the company.

KUALA LUMPUR (Oct 17): 1Malaysia Development Bhd's (1MDB) lawyers claimed that Riza Aziz, the stepson of former prime minister Datuk Seri Najib Razak, had spent US$248 million in siphoned 1MDB funds on gambling, real estate, movie memorabilia, and to fund his company Red Granite Pictures and its motion picture productions.

This was said in the opening statement of 1MDB’s civil suit against Riza, Red Granite Pictures, and Red Granite Capital Ltd, as the defendants before Judicial Commissioner Datuk Raja Ahmad Mohzanuddin Shah Raja Mohzan.

The statement, which was filed in the High Court on Wednesday and made available to the press on Thursday, stated that the defendants had knowingly received funds misappropriated from 1MDB.

It further claimed that the defendants dishonestly assisted in the breaches of fiduciary duty and/or breaches of trust by fugitive Low Taek Jho (Jho Low).

In the statement, 1MDB claims that the misappropriation of its funds had been made without the knowledge or approval of the board of 1MDB, and did not benefit the company in any way.

The statement also read that Riza had the knowledge that the transactions — involving the receipt of each of the various fund transfers during the material period of 2010 and 2012 — were transactions in which a person could not honestly participate.

1MDB said that the defendants had sufficient basis to hold a suspicion about the propriety of the transfers, yet took a conscious decision not to make inquiries that would have resulted in actual knowledge.

1MDB also claimed that Riza wilfully shut his eyes to the obvious.

“Riza Aziz recklessly, consciously, and wilfully failed and refrained from making such inquiries [that] an honest and reasonable person would have made,” the statement said.

“Riza Aziz’s state of mind made it unconscionable for him, and the other defendants by extension, to retain the funds.”

Furthermore, it is 1MDB’s case that Riza, by virtue of his close relationship with both Najib and Jho Low, had actual knowledge that the funds received were misappropriated from 1MDB.

The company claimed that because Riza had wilfully and recklessly failed to make relevant inquiries as to the source of the funds, he is liable to account for the misappropriated funds.

1MDB outlined that it will be calling former 1MDB chief executive officer Datuk Shahrol Azral Ibrahim Halmi, and Jasmine Loo Ai Swan — a former general counsel of 1MDB who returned to Malaysia recently after being on the run for years — as well as financial fraud investigator Richard Templeman, as witnesses for the plaintiff in this case.

1MDB is seeking for Riza and the two Red Granite companies to pay the US$248 million back to the strategic development company.

1MDB, along with 1MDB Energy Ltd, 1MDB Energy Holdings Ltd, and 1MDB Energy (Langat) Ltd, filed the suit in May 2021.

They said that the first tranche of payment of more than US$10.173 million made to Riza was from Good Star Ltd, a company controlled by Jho Low, while the US$238 million that Red Granite Capital received was actually from bonds raised by 1MDB for the purchase of several power plants.

In his defence, Riza claims that the US$10 million was borrowed from the Saudi royal family, while the US$238 million was borrowed from Abu Dhabi-based International Petroleum Investment Company (IPIC). He also claimed to have paid the US$10 million back to the Saudi royal family.

Red Granite Pictures is the Hollywood producer of the Academy Awards-winning movie The Wolf of Wall Street, in which Riza had been given a producing credit, and other movies.