This article first appeared in The Edge Malaysia Weekly on May 10, 2021 - May 16, 2021

THREE central figures in the 1Malaysia Development Bhd (1MDB) scandal were ordered by the High Court last week to pay a cumulative amount of RM77.1 million in unpaid taxes. However, the three figures, who were all close associates of another fugitive Low Taek Jho, or Jho Low, have been in absentia since 2018, prompting questions as to how the amounts will be collected. The trio had fled Malaysia before the authorities kick-started investigations into the failed state development arm.

Eric Tan Kim Loong, also known as “Fat Eric”, was ordered by the court to pay almost RM68 million in tax arrears for 2010 to 2013, while Casey Tang Keng Chee and Jasmine Loo Ai Swan were ordered to pay RM6.7 million and RM2.4 million respectively for tax evasion over several years.

The court handed down a judgment in default (JID) of appearance, as the three had put in no representation against the actions sought against them by the Malaysian government via the Inland Revenue Board (IRB).

Under the law, a judgment in default of appearance or representation is when a defendant fails to appear in court and fails to send legal representation despite being served with court orders.

The big question on everyone’s mind now is what happens next since the trio is not in the country.

According to a lawyer familiar with taxation cases who declined to be named, the next step is for the IRB lawyers to execute the JID and there are several ways to do this.

The first is to identify assets or property under their names and to seize them.

“The government will then seek action from the court to foreclose [them] and auction [them] off to recoup the tax arrears owed,” he says.

The next step would be for IRB to obtain a “garnishee order” via court proceedings.

A garnishee order is the enforcement of a judgment debt against a creditor to recover money. In simple terms, the court directs a third party, called a “garnishee”, who owes money to the judgement debtor to pay the judgment creditor instead. A garnishee order is a legal notice issued by the court that allows the creditor to collect money owed from either the debtor’s wages, the debtor’s bank account or others who owe the debtor money.

Another lawyer, Lee Shih Lim from Lim Chee Wee partnership, tells The Edge that, with this order, IRB can go into the trio’s bank accounts and seize the amount that they owe.

“If IRB is confident about locating specific assets of these individuals in Malaysia, [it] can also get court orders for execution — for example, [a] garnishee order to transfer monies out of the individuals’ bank accounts,” he says, adding that other options are writ of seizure and sale to seize landed property or other physical assets. “But these are normally more drawn out.”

Lee says IRB can also start bankruptcy proceedings against the trio because, once they are made bankrupt in absentia, seizing their assets will be easier.

“This is the easiest step to take. Once made bankrupt, all their assets in Malaysia comes under the control of the Director General of Insolvency,” he explains.

The trio has been evading taxes for several years, it would appear, as Tang has taxes due for the nine-year assessment period from 2009 to 2017, whereas Loo’s covers the seven years from 2012 to 2018.

IRB’s case against Tan is for the period 2010 to 2013: RM2.706 million in 2010; RM22.09 million in 2011; RM35.479 million in 2012; and RM1.538 million in 2013.

Eric Tan Kim Loong

Tan, 41, is said to have been instrumental in Low’s banking transactions and represented him at Affinity International Equity Partners and Tanore Finance Corp, both British Virgin Islands-registered companies. He owns companies in Malaysia and Singapore.

“He was not just an ordinary runner and trusted aide to Low. Apart from taking instructions, he also provided legal opinion and advice to Jho Low,” according to a report on The Star Online.

On May 22, 2012, US$295 million was paid by Aabar to Blackstone Asia, a company controlled by Low, through his associate Tan.

Tan and Low have been charged in absentia over the laundering of US$125.97 million. Tan is said to have left Malaysia before Low did in 2015, and is still at large.

Jasmine Loo Ai Swan

Loo was 1MDB’s legal officer at the relevant time in question. Prior to her move to 1MDB, she had worked with Low at the Utama Banking Group as its legal executive.

Loo, 46, read law in the UK. According to former 1MDB CEO Datuk Shahrol Azral Ibrahim Halmi’s testimony, she proposed the disposal of 1MDB’s 100% equity interest in PetroSaudi Oil Service Ltd to Bridge Partners International Investment Ltd.

In the US Department of Justice (DoJ) documents, Loo is described as “1MDB officer 3”. She is also a signatory of a bank account under the name of Tanore Finance Corporation, which purportedly transferred US$681 million into Najib’s bank accounts in Ambank.

She is said to have left the country on April 28, 2018, and is now in hiding.

Casey Tang Keng Chee

Tang, 54, is a former director of 1MDB. According to Shahrol’s testi­mony, Tang advised the former 1MDB CEO to sign a purported joint-venture agreement between 1MDB and an imposter JV company PetroSaudi Holdings (Cayman) Ltd to form 1MDB Petrosaudi Ltd.

Described as “1MDB officer 1” in the DoJ document, Tang played a role in misleading banks in the transfer of US$700 million to Good Star Ltd, a company controlled by Low.

He left Malaysia a day before the 14th general election in May 2018, and is now on the run from the law.

About the same time, the taxman has also pursued former prime minister Datuk Seri Najib Razak and his children Datuk Mohd Nizar Najib, Datuk Mohd Nazifuddin Najib and Nooryana Najwa Najib over a total of RM1.75 billion in income tax arrears for the period 2011 to 2017.

Asked how the individuals had managed to evade taxes for such a long period, the lawyer who wanted to remain anonymous says it is plausible that IRB had waited as a matter of strategy. “Sometimes, IRB waits, as a matter of tactic, to see whether they pay their taxes. If they do not, the sum gets bigger, which means it collects more tax.”

In all but Nooryana’s case, IRB managed to obtain summary judgments from the respective High Courts for the board to proceed to recover the unpaid taxes.

A summary judgment is a decision entered into by the court based on the facts of the case and written submissions alone, without going into a full trial, where witnesses can be called to testify and cross-examined. It is typically sought by plaintiffs when they believe it is a clear-cut case and whatever defence raised by the defendant would merely have the effect of delaying judgment.

IRB failed in its bid for summary judgment to recover RM10.3 million in unpaid income tax from Nooryana, as the presiding High Court judge ruled that the IRB officer who had deposed the affidavit in support of the government’s application did not state in the affidavit her belief that Nooryana had “no defence” to the government’s claim for tax due and payable.

In the other cases, IRB sought to retrieve RM1.69 billion in additional tax arrears from Najib, RM37.6 million from Nazifuddin and RM13.16 million from Nizar. The orders against Najib and Nazifuddin were issued by the Kuala Lumpur High Court on July 22 and July 6 respectively, while the order by the Shah Alam High Court against Nizar was made on Sept 25.

Court documents sighted by The Edge showed that a bankruptcy notice was issued by the High Court against Najib on Feb 4, following a request by IRB on the same date.

Although a bankruptcy notice was issued against Najib, the High Court ruled last week that no act of bankruptcy by him had occurred yet in IRB’s bankruptcy claim against him.

Najib is filing several applications in the case, one of which is an application to stay the proceedings and another to set aside the bankruptcy notice on the grounds of abuse of process.

A bankruptcy declaration, if approved, will disqualify Najib from being a Member of Parliament, in accordance with Article 48 of the Federal Constitution. He holds the seat for Pekan constituency in Pahang.

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