Najib’s Stepson Used 1MDB Funds to Buy U.S. Properties, WSJ Says

  • U.S. authorities said to be investigating financing of homes
  • 1MDB at center of global probes of alleged money laundering

The stepson of Malaysian Prime Minister Najib Razak allegedly used funds diverted from a state investment company to buy properties in the U.S., the Wall Street Journal reported.

LONDON, ENGLAND - DECEMBER 09:  Riza Aziz attends the UK Film Premiere of
Riza Aziz.
Photographer: Karwai Tang/WireImage via Getty Images

Riza Aziz spent about $50 million on two properties in New York and Los Angeles, deals the U.S. Federal Bureau of Investigation is investigating, the paper reported, citing documents and people it didn’t identify. The money was part of at least $238 million allegedly transferred via an intermediary to a company wholly-owned by Riza, it said.

The funds that went to Riza’s Red Granite Capital originated from 1Malaysia Development Bhd., the Wall Street Journal said. The troubled Malaysian investment company remains at the center of multiple global probes amid claims of money laundering and embezzlement. Its advisory board has been chaired by Najib.

Najib’s family has been entangled in various alleged links to 1MDB funds, alongside a separate donation scandal that has caused nearly a year of political tension in Malaysia. While Najib has so far retained the support of powerful divisional chiefs in his ruling party, the protracted investigations are a distraction as economic growth slows and voters -- including his key support base of ethnic Malays -- face increased living costs.

Malaysian Financier

The New York Times reported in February 2015 on the same property purchases that took place through a shell company Riza controlled. The homes were bought from a company connected to Malaysian financier Jho Low, the paper said. Low has had ties to 1MDB, describing his role to the media as informal consulting work that didn’t break any law. 

An investigation by the U.S. Justice Department is focused on properties purchased by the shell companies, the New York Times further reported in September.

Investigators believe that Red Granite Pictures, a Hollywood production company that backed “The Wolf of Wall Street” and is partly owned by Riza, received funds from Red Granite Capital, the Wall Street Journal said on Thursday. A spokesman for the film company told the paper “there has never been anything inappropriate about any of Red Granite Pictures or Riza Aziz’s business activities.”

Calls by Bloomberg to the office of Red Granite Pictures in Los Angeles after working hours were unanswered, and the company didn’t immediately reply to e-mails. An attempt to reach Riza directly was unsuccessful.

1MDB didn’t immediately reply to an e-mail and call seeking comment. It said on April 3 it had “never invested in nor transferred funds to Red Granite Pictures, whether directly or via intermediaries,” and has denied wrongdoing more broadly over its finances. Najib’s office didn’t immediately reply to an e-mail and call.

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