The United States’ Department of Justice (DoJ) has leveled election conspiracy charges against a fugitive Malaysian financier and an American rapper, the latest twist in the globe-spanning multi-billion dollar 1Malaysia Development Berhad (1MDB) corruption scandal.
Unsealed on May 10, the indictment claims Malaysian businessman Low Taek Jho, also known as Jho Low, directed the transfer of approximately US$21.6 million into accounts controlled by music mogul Prakazrel “Pras” Michel, some of which allegedly went to campaign contributions for the 2012 US presidential election in violation of US law.
Low, a close associate of then Malaysian prime minister Najib Razak, and Michel, a founding member of the 1990’s Fugees hip hop group, both face charges of conspiracy to defraud the US government by making and channeling illegal foreign campaign contributions.
Michel has also been charged with scheming to conceal material facts and making a false entry in a record in connection with the alleged conspiracy.
The pair reputedly masked the source of foreign money by funneling it through more than a dozen “straw donors” who made legal contributions in their own names, according to the indictment, which said Michel and Low hoped to “buy access to, and potentially influence with a candidate, the candidate’s campaign and the candidate’s administration.”
Though the identity of the presidential candidate was not named in the indictment, DoJ prosecutors contend that Michel – a vocal supporter of former president Barack Obama – gave $865,000 to a network of individuals he recruited to make donations to political committees supportive of the then-incumbent’s 2012 re-election campaign.
A spokesperson for Low issued a statement through his attorneys saying that the latest charges “have no basis in fact.” Barry Pollack, Michel’s lawyer, said his client was innocent and “extremely disappointed that so many years after the fact the government would bring charges related to 2012 campaign contributions.”
After pleading not guilty last week, Michel was released and is slated to appear in court on May 16. It is unclear how much prison time he could face if convicted of the charges. US laws regulating election campaign finance punish offenders with fines, while material fact concealment charges carry a maximum penalty of eight years in jail.
The indictment appears to merely scratch the surface of a multi-million dollar lobbying effort that aimed to help then Malaysian prime minister Najib Razak win influence in Washington, a campaign that spanned two US administrations and ultimately faltered in its objective of persuading US investigators to drop their probe into 1MDB.
Though Jho Low held no formal position with 1MDB, he is accused of exercising significant control over its dealings and embezzling $4.5 billion from the fund between 2009 to 2014 with the tacit approval of Najib, whose family members were allegedly among the corrupt scheme’s major beneficiaries. He has consistently denied any and all wrongdoing.
Low has been on the run since 2016 and his whereabouts are currently unknown, though some speculate that the 37-year-old has found safe haven in China. Najib, who was toppled in elections last May and is now facing trial in Malaysia on 1MDB-related corruption charges, has claimed to be the victim of a conspiracy by Low, according to his lawyers.
Seeking to balance the rising influence of China, US-Malaysia relations improved markedly under Obama, who in 2014 was the first sitting US president to visit the Southeast Asian nation in nearly half a century. On Christmas Eve of that same year, two years after Obama’s re-election, Najib was photographed golfing in Hawaii with his American counterpart.
Behind the scenes, Low reputedly sought to woo the US government on behalf of his powerful patron, Najib. Michel is believed to have introduced Low to Frank White, a prominent Obama campaign fundraiser recruited by the Malaysian businessman to scout for projects and champion Najib’s administration in Washington.
White was paid $10 million to lobby the US government and secured an invitation for Low to attend a holiday party at the White House, according to a Wall Street Journal report. Michel was named as one of the executives of an investment fund, DuSable Capital Management, set up by White in 2013 that earned $69 million from 1MDB when it sold off shares in a botched solar power initiative.
Ties between Washington and Putrajaya soured in 2015 after investigations into 1MDB were launched and global media reports highlighted Najib’s alleged complicity in the plunder. Low’s lobbying efforts continued, though, accelerating under the Donald Trump administration, with Michel – despite apparent Democratic party leanings – allegedly playing a sustained role in the distribution of funds used to lobby US officials.
Seeking to reset relations, Najib controversially visited Trump’s Oval Office in September 2017 while the DoJ’s probe was ongoing. The Malaysian leader pledged billions in Boeing aircraft purchases and investments into US infrastructure, while he and his entourage lodged at the Trump International Hotel in Washington during the three-day visit.
Just as Low had partnered with White, a Democrat fundraiser, during the Obama administration, he proceeded to engage Elliot Broidy, a top Republican Party donor and Trump ally, and his wife, attorney Robin Rosenzweig, whose California-based law firm he was prepared to award $75 million in fees if it could successfully persuade the DoJ to drop its 1MDB-linked civil asset forfeiture lawsuits within 180 days, the Wall Street Journal reported.
Among the lobbyists recruited by Broidy to push the argument that the DoJ’s probe was damaging relations with Malaysia was George Higginbotham, a senior congressional affairs specialist and Justice Department employee who had no official role in the 1MDB investigation and ultimately failed to influence the probe.
Higginbotham pled guilty to one felony count of conspiracy to make false statements in November 2018 after the DoJ accused him and Michel of opening multiple bank accounts to “receive tens of millions of dollars in funds from overseas accounts” controlled by Low. No charges have been publicly filed against Michel in connection with the complaint.
“Michel and Higginbotham defrauded US financial institutions and laundered millions of dollars into the United States as part of an effort to improperly influence the Department’s investigation into the massive embezzlement and bribery scheme involving 1MDB,” Assistant Attorney General Brian Benczkowski said in a statement after the guilty plea.
According to investigative journalist Clare Rewcastle-Brown, editor of whistleblower website Sarawak Report, the money trail uncovered by the DoJ’s investigation “sheds fascinating light on how corrupt regimes set about influencing the body politic of the United States by accessing individuals who are trusted by top decision makers.”
Sarawak Report, which played an instrumental role in exposing corruption by publishing numerous leaked documents and communications pertaining to 1MDB, made public emails sent by Broidy between 2017 and 2018, including one to top Trump campaign adviser and political consultant Rick Gates, who was instructed to relay a message to Najib.
“We are working with the DoJ to counter the previous administration’s case against 1MDB in Malaysia,” Broidy wrote in the email dated January 5, 2018. “The President very much wants to see you re-elected and wants this issue to be resolved. He has reiterated that to me,” the email went on to say.
The leaked emails “cited not only Rachel Brand as a Trump appointee over whom Broidy apparently reckoned he could bring influence to bear as the DoJ senior person responsible for the 1MDB investigation, it cited John Demers from Boeing, whom Trump appointed to the National Security Division (NSD) of the DoJ,” Rewcastle-Brown told Asia Times.
In an email dated May 17, 2017, Broidy described then-Associate Attorney General Brand, who resigned in February 2018, as “the only true Trump appointee currently at the DoJ” and said Demers would be an “instrumental figure in the resolution of the Malaysia issues,” adding that “slowly the DoJ is moving away from the old guard of Obama attorney[s] at DoJ.”
Rewcastle-Brown wrote at the time that the statements showed “a clear and improper attempt to politicize the action against Malaysia within the DoJ in order to influence a criminal investigation, on the grounds that it was started under Trump’s predecessor, President Obama.”
“Broidy reckoned he could get Demers on board to ‘resolve’ the 1MDB issue. Intriguingly, when Najib came to Washington to see Trump the following September he publicly pledged in the meeting to buy dozens of Boeing jets in order, he claimed, to help the US economy,” the Sarawak Report editor said.
When ties with Washington cooled over the 1MDB scandal, Najib turned to Beijing, deepening security ties and becoming one of China’s top investment destinations. Perceptions of China-led projects as lopsided and containing elements of corruption charged public opinion and contributed to Najib’s defeat in the 2018 election.
When asked about Low’s whereabouts, Rewcastle-Brown said she believed he was hiding in China, a claim that officials in Beijing have repeatedly denied. Low, she claimed, “has a special position owing to his clear role representing Najib in the dodgy deals cut with Chinese state companies to hide 1MDB repayments in major contracts,” she claimed.
Analysts and investigators believe that multi-billion dollar rail, pipeline and other deals negotiated between Najib’s administration and Chinese state companies were financed at above-market values to generate excess cash used to cover 1MDB’s maturing debts and finance political activities, allegations denied by the Chinese government.
Rewcastle-Brown has pointed to China’s “unwillingness for further light to be shed over its dealings with Najib,” but noted that, “the story continues to unravel and each time someone pleads guilty and cuts a deal, the net widens.”
While it remains to be seen if Michel’s trial leads to a plea deal or conviction, authorities have yet to track down the elusive Malaysian financier. Asked whether Low could soon find himself caught in the dragnet, Rewcastle-Brown replied: “Don’t hold your breath.”