Ex-US justice official pleads guilty in 1MDB lobbying scandal

Ex-US Department of Justice official admits role in multimillion-dollar effort to shut down US probe into 1MDB scandal.

    Money from 1MDB was gambled in Las Vegas, spent on a luxury yacht and used to finance Hollywood productions [File: Sadiq Asyraf/ AP]
    Money from 1MDB was gambled in Las Vegas, spent on a luxury yacht and used to finance Hollywood productions [File: Sadiq Asyraf/ AP]

    A former US Department of Justice official has pleaded guilty to banking violations as part of an attempt to lobby Washington to drop an investigation into a money laundering and bribery scheme that pilfered billions from Malaysia's 1MDB investment fund.

    George Higginbotham, 46, admitted on Friday to lying to US banks while transferring tens of millions of dollars to fund a lobbying campaign on behalf of Low Taek Jho - the 1MDB affair's alleged mastermind.

    The massive corruption investigation, which upended Malaysian politics, spanned the globe, with the money from the state fund gambled in Las Vegas, spent on diamond jewellery and a luxury yacht and used to finance the Wolf of Wall Street and other Hollywood productions.

    The long-ruling coalition in Malaysia was overthrown in a May election, and then-Prime Minister Najib Razak, who set up the fund, now faces criminal charges there.

    In August, US prosecutors charged Low, who is at large, with eight counts of money laundering. 

    Low, who has maintained his innocence through a spokesman, is accused of helping orchestrate the theft of $4.5bn from the government-backed investment fund. 

    Higginbotham's guilty plea in a federal court in Washington marked the first public acknowledgement of a secret attempt to pressure US officials to shut down their investigation into the 1MDB scheme.

    Prosecutors said Higginbotham, who worked on the congressional affairs staff in the Department of Justice's Office of Justice Programs, helped open bank accounts and created false loan documents for shell companies to pay an influential person to pressure officials to drop their probe.

    That person's identity wasn't revealed in court.

    Higginbotham falsely claimed in emails to banks that the money was being used to fund entertainment ventures and failed to disclose that it was, in fact, being used to finance the lobbying effort to shut down the 1MDB investigation, prosecutors said.

    Higginbotham "did not play a role" in the Justice Department's investigation and failed to influence any aspect of it, the agency said in a statement.

    US District Judge Colleen Kollar-Kotelly said Higginbotham likely faced a sentence of up to 16 months in federal prison but said he could also face no jail time.

    As part of a plea deal, Higginbotham has agreed to testify before grand juries and speak to federal investigators.

    Higginbotham pleaded guilty to a charge of conspiracy to make false statements to a bank and was released without bail on Friday. He is due back in court in March.

    The Justice Department separately announced Friday it was seeking to recover $73m held in American bank accounts that Higginbotham and Prakazrel "Pras" Michel opened last year on Low's behalf. 

    Earlier in November, US prosecutors unveiled criminal charges against Low and two former Goldman Sachs bankers tied to the massive theft.

    SOURCE: News agencies