The Indonesian police's seizure of a luxury yacht at the request of the FBI was unlawful, a Jakarta court said Tuesday, in a blow to the U.S. probe into an alleged multibillion-dollar theft of funds from a Malaysian state investment company.
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At the South Jakarta District Court, Judge Ratmoho, who uses one name, ordered the return of the yacht to its owner.
Indonesian police seized the $250 million Equanimity off Bali on Feb. 28 in cooperation with the FBI but were prevented from handing it over to the U.S. after a legal challenge from the yacht's Cayman Islands-registered holding company.
The Equanimity is among assets the U.S. Department of Justice alleges were bought by Malaysian national Jho Low using money stolen from 1MDB, the Malaysian fund, and laundered through Singapore, Switzerland, Luxembourg and the U.S.
Malaysian Prime Minister Najib Razak was embroiled in the scandal when it emerged that some $700 million had passed through his personal bank accounts. He denied any wrongdoing and said the money was a political donation from the Saudi royal family that was later returned.
Ratmoho said the U.S. request for cooperation should have been through Indonesia's Ministry of Law under a 2006 law governing mutual legal assistance. Police should have advised the FBI to follow that process, he said.
"Police should only conduct joint operations after mutual legal assistance is agreed by the Ministry of Law and Human Rights," he said.
The Department of Justice filed a civil case in June seeking recovery of assets worth several hundred million dollars it says were bought with laundered 1MDB money, including Equanimity. Overall, it says more than $4.5 billion was stolen between 2009 and 2014 from 1MDB, which was set up by Najib to promote economic development.
Low, an associate of Najib, had no formal role at the fund but considerable influence over it, according to the U.S. court documents.
Andi Simangunsong, a lawyer for Equanimity's holding company, welcomed the ruling and said the court had provided clear guidance to police on dealing with foreign requests for legal cooperation.
"There are procedures to be followed under the mutual legal assistance law," he said. "We hope our law enforcers will pay attention to these procedures."
Lawyers for police declined to comment.
National Police deputy director of economic crimes Daniel Silitonga, who headed the seizure operation, said police would review the court ruling to determine their next steps.
"We are now closely coordinating with the FBI to respond to it."
Equanimity's lavish amenities include a helicopter landing pad, plunge pool, gymnasium and a cinema. It was built in 2014 by Netherlands yacht manufacturer Oceano, which received detailed instructions from Low about its outfitting, according to the U.S. civil case documents.
This story has been corrected to show acronym of Malaysian fund, 1MDB, not 1MBD.