1MDB Scandal: Judge Deals Setback to US Justice Department With Ruling - Bloomberg

1MDB Scandal: Judge Deals Setback to US Justice Department With Ruling - Bloomberg

A U.S. judge rejected the Justice Department’s attempts to seize $325 million from an oil exploration joint-venture linked to the 1MDB scandal, in a setback for federal prosecutors in a multibillion dollar kleptocracy case.

The U.S. ruling emerged at a London court hearing this week where Petrosaudi Oil Services (Venezuela) Ltd. is battling to win release of hundreds of millions of dollars at the heart of the case.

U.S. District Judge Dale Fischer in Los Angeles earlier this month granted Petrosaudi’s request to dismiss the Justice Department’s forfeiture claim, ruling that the government had failed to make an adequate allegation between the money and any criminal offense. The Justice Department created the Kleptocracy Asset Recovery Initiative in 2010, with the aim of seizing proceeds from foreign corruption.

“It appears that the government would like to take advantage of an inference that one or more PetroSaudi entities were knowingly involved in the theft of the $700 million and the subsequent laundering and cover-up without actually making any allegations to that effect,” Fischer said in her March 9 ruling.