KUALA LUMPUR: Riza Aziz, the Hollywood producer stepson of former prime minister Datuk Seri Najib Razak, spent US$248 million in siphoned 1Malaysia Development Bhd (1MBD) funds on gambling expenses, real estate purchase, and movie memorabilia.
The money was also used to fund films by Red Granite Pictures, which Riza had co-founded, said the sovereign wealth fund.
1MDB said this in its opening statement in the civil suit against Riza, whose real name is Riza Shahriz Abdul Aziz, Red Granite Pictures Inc and Red Granite Capital Ltd as defendants before judicial commissioner Datuk Raja Ahmad Mohzanuddin Shah Raja Mohzan.
According to the statement, the defendants had knowingly received funds in circumstances that the funds had been misappropriated from 1MDB and dishonestly assisted in the breaches of fiduciary duty and or breaches of trust by fugitive financier Low Taek Jho, better known as Jho Low.
1MDB said the misappropriation of funds was made without the board's knowledge or approval, did not benefit the company in any way, and was in breach of fiduciary duties owed by Low to the company.
It said Low was a good friend of Riza Aziz, having met while in school in the United Kingdom.
It said that Riza had introduced Najib to Low in 2009 and the latter became an associate of the former Pekan member of parliament.
"The plaintiffs contend that the funds received by the defendants between 2010 and 2012, amounting to US$248 million were used for the personal benefit of Riza and his associates.
"The defendants knowingly and dishonestly assisted the breaches of fiduciary duties. Riza did not act as an honest person, he knew that the transactions involving the receipt of each of the various fund transfers during the material period of 2010 and 2012 were transactions in which one could not honestly participate.
"Alternatively, Riza had sufficient basis to hold a suspicion about the propriety of the said transfers and made a conscious decision not to make inquiries which resulted in actual knowledge.
"Alternatively, Riza wilfully shut his eyes to the obvious. Riza recklessly, consciously and wilfully failed and refrained from making such inquiries as an honest and reasonable person would have made.
"Riza's state of mind made it unconscionable for him, and the other defendants by extension, to retain the funds. It is to be inferred that Riza had actual knowledge that the funds received were misappropriated from 1MDB," the document said.
1MDB said it will call three witnesses - former 1MDB chief executive officer Datuk Shahrol Azral Ibrahim Halmi, former 1MDB general counsel Jasmine Loo Ai Swan, and financial fraud investigator Richard Templeman.
Shahrol Azral is currently testifying in the trial, which began yesterday.
On May 7, 2021, 1MDB and its three subsidiaries sued Riza and his two companies for allegedly receiving around US$248 million in funds they misused for personal gain, including financing a film and purchasing various properties.
1MDB and three subsidiaries - 1MDB Energy Holdings Limited, 1MDB Energy Limited and 1MDB Energy (Langat) Limited — filed the suit.
They are seeking a declaration that Riza is responsible for the misappropriated funds and demand repayment.
Riza and his two companies, in a statement of defence filed on Oct 25, 2021, claimed to have obtained the loan from the Saudi royal family or the International Petroleum Investment Company to produce several films in the United States.
He claimed that it was difficult for an unknown film producer to obtain bank loans and that had compelled him to seek funds from individuals or companies.