KUALA LUMPUR: The High Court has ordered 1Malaysia Development Bhd (1MDB) to pay RM225,000 in costs to Riza Shahriz Abdul Aziz after the state-owned fund withdrew its US$248 million (RM1.25 billion) lawsuit against him.
In his ruling, High Court judge Datuk Raja Ahmad Mohzanuddin Shah Raja Mohzan said that 1MDB failed to properly investigate claims of a global settlement before filing the suit. He noted that defence witness Datuk Mohamad Zamri Zainul Abidin, a special operations director at the Malaysian Anti-Corruption Commission (MACC), had proven the existence of such a settlement, as asserted by Riza Aziz’s legal team.
1MDB’s Failure to Verify Settlement Claims
Riza Aziz, who had sought legal costs following the withdrawal of the case, argued that a global settlement had already been reached regarding the disputed US$248 million.
During the trial, Zamri testified that Riza Aziz and his lawyers had communicated with the Attorney General’s Chambers (AGC) about a settlement plan for the recovery of funds. However, 1MDB’s lawyers contended that the defendants had not provided sufficient details of this agreement.
Justice Raja Ahmad, however, ruled that it was 1MDB’s responsibility to investigate the claim independently rather than relying on the defendants for confirmation. He emphasized that had the fund conducted proper due diligence, the lawsuit could have been avoided.
“If the plaintiffs [1MDB] had done this at the earliest opportunity, this action would not have been filed or would have been withdrawn at the earliest possible instance,” said Raja Ahmad.
Given that 1MDB is wholly owned by the Ministry of Finance Incorporated (MOF Inc), the judge also pointed out that the agency should have been able to coordinate better with other government bodies to verify the existence of the settlement.
Trial Drama and Last-Minute Withdrawal
Riza Aziz and his company, Red Granite Pictures, had consistently maintained that a global settlement had been reached. In fact, his legal team even requested to open the trial by presenting this evidence first. However, 1MDB objected, and the court ruled against the unconventional request.
The trial, which began in October 2024, saw testimony from former 1MDB CEO Datuk Shahrol Azral Ibrahim Halmi and ex-1MDB general counsel Jasmine Loo Ai Swan. Yet, on February 24, 2025, the plaintiffs abruptly withdrew the case on the final day of trial, just as the defendants were set to close their arguments.
Following this, 1MDB argued that no costs should be awarded since the case was withdrawn. However, Raja Ahmad ruled otherwise, ordering the fund to pay RM225,000 in legal costs to Riza Aziz and his two companies.
No Impact on Riza Aziz’s Liability
The judge clarified that this ruling does not determine any liability on Riza Aziz’s part regarding the US$248 million allegations.
“The issue of costs does not in any way determine the liability of the defendants (Riza Aziz and Red Granite) or the merits of the plaintiff’s (1MDB) claim,” he said.
The payment was solely a consequence of 1MDB’s late withdrawal of the suit. Moreover, the court ruled that 1MDB cannot refile the case in the future.
Riza Aziz’s Ties to the 1MDB Scandal
Riza Aziz, the stepson of former Prime Minister Datuk Seri Najib Razak, had previously faced five counts of money laundering involving the same US$248 million. However, he received a discharge not amounting to an acquittal (DNAA) in May 2020.
Red Granite Pictures, which he co-founded with American producer Joey McFarland, used 1MDB-linked funds to finance Hollywood films, including the Oscar-nominated The Wolf of Wall Street, starring Leonardo DiCaprio.
1MDB had alleged that Riza Aziz misappropriated the funds via fugitive businessman Low Taek Jho (Jho Low) or was reckless in failing to verify their source.
The fund claimed that:
- Over US$10 million paid to Riza Aziz came from Good Star Ltd, a company controlled by Jho Low.
- US$238 million received by Red Granite Capital originated from 1MDB’s bond issuances, which were meant to fund power plant acquisitions.
In response, Riza Aziz insisted that the US$10 million was a loan from the Saudi royal family, which he claimed to have fully repaid. Meanwhile, he argued that the US$238 million came from Abu Dhabi’s International Petroleum Investment Company (IPIC) as part of a legitimate business deal.
Final Blow to 1MDB’s Case
With 1MDB withdrawing its lawsuit and the court ordering the fund to pay RM225,000, this marks yet another legal setback for the embattled sovereign wealth fund.
Meanwhile, questions remain on whether 1MDB will pursue other legal avenues to recover funds allegedly siphoned through the scandal.
