Najib's stepson sued for allegedly misappropriating 1MDB funds to finance movie productions, purchase real estate

The companies also named New York-based law firm Shearman and Sterling as the fourth defendant.

The companies in their writ of summons, said in 2011 and 2012, Riza Shahriz and his two companies received approximately US$250 million in funds from 1MDB and its three subsidiaries, which were allegedly misappropriated for their personal benefit and for the benefit of their associates, including for financing movie productions and purchasing various real estate.

The companies claimed that Riza Shahriz, who controlled the two Red Granite companies, ought to have known that the monies that originated from 1MDB were misappropriated to them for their benefit.

"The law firm Shearman and Sterling (fourth defendant) permitted Riza Shahriz and Low Taek Jho or Jho Low, an associate of the first defendant (Riza Shahriz) who was directly involved in the misappropriations, to use the law firm's interest on lawyer accounts to launder a substantial portion of the misappropriated funds received by the first to third defendants, as well as misappropriated funds received by Jho Low from the plaintiffs into the United States and represented Riza Shahriz and Jho Low in connection with various purchases and transactions involving the misappropriated funds.

"The fourth defendant had knowledge, being either actual knowledge or knowledge which is to be inferred from wilful blindness or reckless indifference and had failed to make the necessary enquiries, that the funds in question were the proceeds of crime," the writ claimed.

Hence, the plaintiffs are seeking a declaration that Riza Shahriz is liable to account for the misappropriated funds and unjust use of the funds, and are also seeking the repayment of the misappropriated funds.

The case was today called up for case management before senior assistant registrar Noordura Mohamed Din, who fixed Aug 17 for further case management via e-review.

On May 10, the Ministry of Finance confirmed that 1MDB and its subsidiary SRC International Sdn Bhd had filed a total of 22 civil suits to recover assets worth over RM96.6 billion, including about RM300 million against various local parties. The ministry said the writs filed on May 7 comprised six by 1MDB and 16 by SRC.

The writs filed by 1MDB are against nine entities, including two foreign financial institutions and 25 individuals, while those filed by SRC are against eight entities and 15 individuals for various wrongdoings.