Jho Low was ‘shadow director’, 1MDB says

1MDB has claimed that fugitive businessman Low Taek Jho or Jho Low was the “shadow director” in the strategic investment company as a proxy of Najib Razak in giving instructions to the board and senior management of 1MDB.

1MDB and its four subsidiaries – 1MDB Energy Holdings Limited, 1MDB Energy Limited, 1MDB Energy (Langat) Limited and Global Diversified Investment Company Limited – as plaintiffs, said this in its response to Jho Low’s defence statement filed by Messrs Skrine at High Court here on Feb 23.

1MDB claimed Jho Low owed the plaintiffs fiduciary duties and was at all material times a trustee of the plaintiffs’ assets.

“The defence claimed by the first defendant (Jho Low) that he never admitted the liability in the proceedings filed by the US Department of Justice is entirely irrelevant,” 1MDB said in its statement of defence in reply to Jho Low’s statement of defence last month.

1MDB claimed Jho Low had procured his proxies to work at 1MDB, including former 1MDB finance director Terrence Geh Choh Heng, former 1MDB lawyer Jasmine Loo Ai Swan, former 1MDB executive director Casey Tang Keng Cheem, and former SRC International CEO Nik Faisal Ariff Kamil.

“The proxies occupied key senior management positions in 1MDB, among others, to monitor the management and board, implement major decisions in accordance with Jho Low and Najib’s wishes to facilitate the utilisation of 1MDB’s funds in accordance with Low and Najib’s fraudulent intentions,” it said, adding that Najib was also a “shadow director” of 1MDB.

According to 1MDB, Jho Low had received funds belonging to it and its subsidiaries when he knew or ought to have known that the said funds belonged to the companies and were diverted to him in breach of trust and fiduciary duties.

“The lawsuit is against Jho Low, among others for the recovery of trust monies belonging to all plaintiffs which had been received by Jho Low where he knew that the money had been transferred to him in breach of trust, among others by Najib.

“Hence, the first defendant (Jho Low) is also the constructive trustee of the plaintiffs in respect of the money received by him,” 1MDB said.

1MDB also claimed that after being informed of the Ernst & Young Memorandum dated March 26, 2010, Najib, as the sole shareholder of 1MDB then, the Minister of Finance (Incorporated) together with the involvement of Jho Low, had ordered the removal of Ernst & Young as an auditor for 1MDB in a letter dated Aug 16, 2020.

1MDB claimed that the move was to hide the company’s losses due to the fraudulent misappropriation of funds and to prevent the investigation, as well as the discovery of facts and material evidence regarding the fund.

“Apart from the US$700 million received by Jho Low in 2009 and all monies that were paid to Jho Low after March 2010, therefore, it is inconceivable that the causes of action only accrued in March 2010, as alleged.”

On May 7 last year, 1MDB and its four subsidiaries filed a suit against Jho Low, his parents Larry Low Hock Peng and Goh Gaik Ewe, his elder sister May Lin, his younger brother Taek Szen and his associate Eric Tan Kim Loong.

Based on the writ, 1MDB claimed US$661 million from Jho Low and US$41 million, US$397 million, US$608 million, and US$1.9 billion from Jho Low and Tan, and US$325 million from Jho Low and his father, respectively.

1MDB Global Investments Limited also claimed US$630 million from Hock Peng, Jho Low and Tan, as well as US$2 million from Taek Szen, Jho Low and Tan.

The plaintiffs also claimed US$3.5 million from May Lin and Jho Low, US$1.695 million from Goh, Jho Low and Tan in connection with the purchase of jewellery and secret profits, and US$25.5 million from Jho Low, Tan, Hock Peng and Taek Szen.

In his statement of defence, Jho Low said he did not hold any official positions or fiduciary responsibilities in 1MDB or its four subsidiaries.

He said the lawsuit should be dismissed as it failed to disclose a reasonable cause of action over the allegation of breach of trust or fiduciary duty.

Jho Low further claimed that he was never a director or shareholder in 1MDB, its four subsidiaries, or even a member of its board of advisors or part of the management team of any of the five plaintiffs.