KUALA LUMPUR, Mar 25 — A US District Court judge has ruled against the US Department of Justice (DoJ) that was seeking to forfeit US$325 million (RM1.3 billion) in suspected 1MDB funds from Petrosaudi Oil Services (Venezuela) Limited.

Bloomberg reported today that the ruling by judge Dale Fischer in Los Angeles emerged at a court in London, UK, where the DoJ’s case against Petrosaudi is being heard. Fischer ruled that the US government has not provided an adequate link between the money and any criminal offence.

"It appears that the government would like to take advantage of an inference that one or more PetroSaudi entities were knowingly involved in the theft of the US$700 million and the subsequent laundering and cover-up without actually making any allegations to that effect,” Fischer was quoted saying by Bloomberg in her March 9 ruling.

PetroSaudi Venezuela is a subsidiary of PetroSaudi International (PSI), which entered an abortive US$2.5 billion joint venture with 1MDB in 2012 for which the Malaysian investment firm still "paid” the former US$700 million, except that the sum went to Good Star Ltd, an unrelated firm.

The DoJ has till March 29 to file an amended complaint in response to the ruling.

In February, the DoJ issued an arrest warrant to a law firm in London for the seizure of US$330 million allegedly misappropriated from 1MDB and held on behalf of a client.

The in rem warrant issued on October 29 to Clyde & Co on behalf of the DoJ, targeted the funds held in the National Westminster Bank.

An in rem warrant is issued by a court over possessions or persons in legal jurisdictions outside its authority.

According to the DoJ’s filing, it alleged the funds to be the result of the embezzlement of over US$4 billion at Malaysia’s 1MDB, which the perpetrators laundered for bribe payments or to fund their lavish personal lifestyles.

On a related matter, Bloomberg reported that a Swiss Federal Criminal Court has ruled that documents admitted in a criminal investigation of two PSI executives were admissible.

The documents alleged to have been stolen by former PSI employee turned whistleblower Xavier Andre Justo was allowed to be used in the prosecution of the executives in January this year.

The 1MDB scandal has resulted in prosecution of former prime minister Datuk Seri Najib Razak, who faces four charges of abusing his position to obtain bribes totalling RM2.3 billion from 1MDB and 21 charges of money laundering involving the same amount.

He was sentenced to 12 years’ imprisonment and fined RM210 million after he was found guilty of all seven charges over the misappropriation of RM42 million of SRC International Sdn Bhd’s funds, a former subsidiary of 1MDB.