1MDB funds helped finance $2.2bn energy firm deal

Money misappropriated from a Malaysian state fund was used to partly finance the $2.2 billion acquisition of Houston-based Coastal Energy in 2014, the US government alleged in a lawsuit. Proceeds from the Coastal Energy deal were then used to buy a property in London’s glitzy Mayfair district. The United States is seeking to seize the London property, along with two others, the document showed. The lawsuit was filed as part of a US Justice Department effort to seize about $1 billion worth of assets linked to funds it says were siphoned from 1Malaysia Development Berhad (1MDB), a Malaysian state fund under investigation in at least six countries for money-laundering.

The justice department filed civil lawsuits last July alleging that about $3.5 billion had been misappropriated from 1MDB and used instead to buy assets, including luxury property and artwork in the US and abroad.

The latest lawsuit shows that Malaysian financier Low Taek Jho, a central figure in the scandal, allegedly used 1MDB money to fund the Coastal Energy acquisition.

Jho Low, as he is known, partnered with Compañía Española de Petróleos SAU (Cepsa) to buy Coastal Energy for a total purchase price of $2.2 billion.

Cepsa is the Spanish unit of Abu Dhabi’s International Petroleum Investment Company.

Goldman Sachs acted as financial advisor to Cepsa in the acquisition, according to a news release announcing the deal in November 2013.

Low invested about $50 million in the acquisition through a company called Strategic Resources (Global) Ltd, with Cespa funding the remainder of the $2.2 billion, according to the lawsuit.

Shortly afterward, Cepsa transferred $350 million to Low’s Strategic Resources, buying Strategic Resources’ stake in the joint venture used to buy Coastal Energy, the lawsuit says.

“The commercial basis for this nearly immediate 600 per cent return on investment is not immediately apparent,” the Justice Department said.

Low’s contribution was traceable to misappropriated proceeds of a $3 billion bond raised by Goldman for 1MDB in 2013, the lawsuit says.

Goldman helped 1MDB, which was founded by Malaysian Prime Minister Najib Razak in 2009, raise $6.5 billion in three bond sales in 2012 and 2013 to invest in energy projects and real estate to boost the Malaysian economy. Goldman was not immediately available for comment. The Wall Street Journal first reported on Tuesday allegations in the latest lawsuit. state investor, the