Owners react to Malaysian government’s detention of 'Equanimity'

In March this year, SuperyachtNews reported that 91.5m M/Y Equanimity had been seized in Bali following links to an ongoing fraud investigation. Since 2015, the United States’ Department of Justice (USDOJ) has been investigating alleged illicit behaviour of 1Malaysia Development Berhad (1MDB) and various business associates, and the alleged of owner of Equanimity had been named as a key figure in the US lawsuits.

In April, however, a South Jakarta district court then ruled that the yacht had no link with 1MDB and that the vessel could be returned to its owner. However, a recent Claimants’ Notice of New Factual Development filed to the United States District Court of the Central District of California on behalf of the owners of Equanimity sheds further light on the situation that has been developing since our last coverage of the story.

The Claimants' Notice states that, in May 2018, a US Court held that, “the yacht should be brought to the United States and the government is competent to do so,” and ordered Equanimity’s owners to “tender all custody and control of the Equanimity to the United States”. Shortly thereafter, having been given control of and responsibility for the yacht, the US government replaced the existing crew with its own crew, began overseeing day-to-day operations of the yacht, and assumed full financial responsibility for its safety, care and maintenance. 

Despite this, on 4 August, 2018, The Indonesian National Police (INP) publicly announced that it had commandeered the yacht for the express purpose of transporting the asset from Indonesian waters to the free trade zone of Batam Island, where the yacht would be formally handed over to the government of Malaysia.

The Claimants’ Notice continues to explain that, “By forcibly commandeering the US government’s appointed crew and transporting the US government-controlled yacht from Indonesian waters, the Malaysian government and various INP officials have defied the express judgment of the South Jakarta District Court, which on April 17, 2018 found that the INP’s prior efforts to seize the yacht violated Indonesian law, and ordered the return of the yacht to its rightful owner, Claimant Equanimity (Cayman) Ltd.”

Having not only acted in contravention of the order of the Indonesian judiciary, the Claimants' Notice further claims that the Malaysian Government and INP officials have directly interfered with the judgements of the US District Court. Although the merits of the US Court's order are contested and currently on appeal, the Claimants nonetheless recognise that the Court issued an order in May granting the US government’s motion for a protective order over the yacht. 

In light of these latest developments, a spokesperson for Equanimity (Cayman) Ltd has issued the following statement to purportedly set a few facts straight:

As far as we are aware, this seizure by the Malaysian Prime Minister and the Malaysian government was not coordinated with the USDOJ in any way, but instead was done in opposition to the USDOJ, which had repeatedly asked that the Equanimity be handed over for return to US territory and had argued to the US Court that it, and only it, is capable of acting as a proper custodian of the yacht and preserving its value. The [US] Court had accepted this argument by granting the USDOJ custody of the yacht.   

Moreover, an Indonesian court ruled on 17 April, 2018 that the yacht should be returned to Equanimity (Cayman) Ltd. – its rightful owners – not handed over to anyone else. Following this ruling, the INP acknowledged that “as a legal responsibility... the Indonesian National Police shall obey the order of the South Jakarta District Court to immediately return the Equanimityto its owner,” and that, “[p]ursuant to the facts disclosed in the court hearings, it can be concluded that the legal owner of the Equanimity... is Equanimity (Cayman) Ltd. and there is no relations between the Equanimity yacht with the 1Malaysian Development Berhad.”

The Malaysian government ignored all this and took the asset in direct violation of an existing Indonesian court decision and an order of the US court. This is apparently why more than a dozen armed Indonesian police and Malaysian officials boarded the yacht last week without prior notice and forced it to sail to Malaysia. Presumably, had they been cooperating with the USDOJ or intending to abide by either of the court orders in effect, this would not have been necessary.

Major news sources have reported that the Malaysian Prime Minister intervened personally with the Indonesian President through a phone call and/or in person, thereby injecting politics into ongoing legal proceedings in two sovereign nations. 

Although the Indonesian and US court proceedings had led to conflicting decisions regarding the status of the yacht, both proceedings at least had been open and transparent, with Equanimity (Cayman) Ltd. being given a fair opportunity to present its positions and arguments. Unfortunately, the same cannot be said for whatever actions were undertaken by the Government of Malaysia to seize the yacht.

As well as wanting to ensure the lawful custody of the yacht, Equanimity’s owners will be equally concerned with ensuring that the vessel is maintained in a manner that best preserves its value, which they appear to believe would be most likely in the hands of the US government. The aforementioned Claimants' Notice concludes with the request that the US Court orders the US government to file a status report by 17 August, 2018, concerning the new factual development and detailing its knowledge regarding the transfer of the asset to Malaysia and what efforts it has made, if any, to secure the yacht.

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