Malaysia Seeks Quick Sale of Jho Low's Yacht as Costs Mount

(Bloomberg) -- Malaysia is seeking to quickly sell Low Taek Jho’s $250 million super yacht just weeks after taking possession of the vessel that investigators allege was bought with funds embezzled from a state investment company.

The government and state fund 1Malaysia Development Bhd. filed an application for permission to dispose of the 300-foot boat that’s costing "substantial and escalating expenses" in maintenance, according to legal documents seen by Bloomberg News. Joseph & Partners, which is representing 1MDB and Malaysia, confirmed the order was filed. A hearing is set for Friday.

Malaysia Seeks Quick Sale of Jho Low's Yacht as Costs Mount

Equanimity is "physically deteriorating, being exposed to the elements of the sea and weather," according to the filing. "She is therefore a wasting asset, and it is in the interests of all parties that the vessel is sold as soon as possible to avoid further diminution of the value of the vessel."

The yacht is among more than $1.7 billion in assets that the U.S. claims were acquired by Low, commonly known as Jho Low, and his accomplices with money they allegedly siphoned from 1MDB. A U.S. district judge in May ordered Low’s companies to hand over the vessel to the U.S. so it could be sailed from Indonesia -- where it was seized in February -- and sold.

Instead, it ended up in Malaysia, arriving at a port in the outskirts of Kuala Lumpur on Aug. 7. It’s unclear how Prime Minister Mahathir Mohamad secured the Indonesian authorities’ agreement to relinquish possession of Equanimity to it.

No Notice

Equanimity Cayman Ltd., the company that owns the yacht , said on Thursday that it hadn’t received any "legally valid notice" of the court filing or a hearing on the expedited sale of the vessel.

"For Malaysia to act unilaterally while there are pending court requests in the U.S. would be an affront to the international rule of law," according to the statement. "In fact, Malaysia’s seizure of the vessel is already contrary to a U.S. court order appointing the U.S. government as custodian of the yacht."

Mahathir is seeking to reclaim $4.5 billion of funds potentially lost through 1MDB. He has called on the yacht’s owner to prove that it wasn’t bought using money from the scandal-ridden fund, at the center of global probes linked to embezzlement and money laundering, while Low had said Malaysia’s move to acquire the vessel was “illegitimate.”

Joseph & Partners said questions relating to the case will be answered at a press conference on Friday. 1MDB falls under the purview of the finance ministry, where a spokeswoman said she couldn’t immediately comment.

Recovery Amount

Malaysia is requesting for the sale of Equanimity to be conducted through public tender or private treaty, according to the court documents.

The diminution of Equanimity "will cause hardship on the plaintiffs as the value of the vessel has already depreciated and the continuing costs of maintaining her arrest will only reduce the amount to be recovered," according to the filing.

Malaysia’s actions in seizing the vessel, docking it in a "hazardous environment" and not spending the necessary funds for maintenance will "drastically reduce" the potential sale value, Equanimity Cayman said in the statement. Malaysia has instead proposed a “fire sale” in which the yacht is to be sold for a fraction of its true value, it said.

"To move for a sale in Malaysia immediately would be a remarkable violation of due process and international legal comity, and would call into question the actual ownership of the yacht for any potential buyer," it said. "These misguided actions would create a cloud on the Equanimity’s ownership that could easily take years to resolve in several courts around the world."

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