US officials announced this week that they have struck a deal with the former general counsel of Malaysia’s scandalised sovereign investment development fund in order to recover a $1.2m drawing by Pablo Picasso that was allegedly purchased with misappropriated money.
The 1Malaysia Development Berhad (1MDB) fund was created by the Malaysian government in 2009 to promote economic development in the country through foreign investment. But a group of high-ranking officials, including Malaysia’s then-Prime Minister Najib Razak, allegedly systematically embezzled more than $4.5bn from the fund instead of using it to “improve the well-being of the Malaysian people”, as intended, according to the US Justice Department. The mastermind behind the money-laundering scheme is alleged to be the Malaysian financier and art collector Low Taek Jho, known as Jho Low.
This week, the Justice Department announced that it had made an agreement with Jasmine Loo Ai Swan, the former general counsel for the 1MDB fund, to recover Trois femmes nues et buste d’homme (1969), a Picasso drawing on paper that sold for $1.2m with fees during a 2014 evening sale at Christie’s New York. The pencil sketch shows a man observing three nude women in what Christie’s describes as “a scene of voyeuristic contemplation”, and came from Edwin and Lindy Bergman, major collectors based in Chicago. The sale totaled $744.9m, at the time the highest sum for a single auction in art-market history, according to the auction house.
Along with the work on paper, Loo controlled a Swiss bank account tied to funds embezzled from 1MDB. The two assets are collectively valued at about $1.8m, the Justice Department says. The US government’s deal with Loo resolves the civil forfeiture action against the Picasso artwork and the Swiss bank account under her control, but it does not settle any criminal claims against her.
Trois femmes nues et buste d’homme, the 1969 sketch by Pablo Picasso allegedly purchased by Jasmine Loo Ai Swan using misappropriated funds Courtesy Christie’s
The Justice Department has also obtained forfeiture orders for works by artists including Vincent van Gogh, Claude Monet, Jean-Michel Basquiat and Diane Arbus, which were allegedly purchased with money from the fund by Low. Low also allegedly acquired diamond jewellery. The value of those items, together with the Loo assets, is estimated by the Justice Department to be worth nearly $85m.
The Justice Department previously brought numerous civil forfeiture cases against assets it says were purchased using embezzled funds from the 1MDB by Low and his co-conspirators. From 2009 through 2015, more than $4.5bn from the fund was allegedly misappropriated through a criminal conspiracy, according to the civil forfeiture complaints. Prior to this week’s settlement, US authorities have returned or assisted in the return of more than $1.4bn in assets with the 1MDB scheme, according to the Justice Department.
In 2016, the actor and collector Leonardo DiCaprio reportedly offered to turn over a $9m collage by Basquiat and a $3.2m Picasso painting to the FBI after hearing of the investigation. These had been purchased by individuals involved in the investigation and given to DiCaprio as gifts (1MDB had partially funded the production company behind the actor’s 2013 film The Wolf of Wall Street, fittingly about a corrupt stockbroker committing fraud).
Separately from the deal with the Justice Department, Low is facing criminal charges in the Eastern District of New York for allegedly conspiring to launder billions of dollars embezzled from the fund, and for conspiring to violate the Foreign Corrupt Practices Act by allegedly paying bribes to foreign officials from Malaysia and the United Arab Emirates. He is also facing charges in Washington, DC, for allegedly conspiring to make and conceal foreign campaign contributions during the US presidential elections in 2012.
