Controversial Malaysian financier Jho Low has been given the green light by a New Zealand judge to challenge efforts by the United States Department of Justice to seize allegedly fraudulently-obtained assets worth more than $360 million.

The tussle at the High Court at Auckland today saw control of New Zealand trusts said to own assets worth $363m - including a private jet, Manhattan penthouses and a Los Angeles mansion - handed from Swiss-based Rothschild to the Caymans Island-based FFP.

Justice Kit Toogood acknowledged his decision would likely trigger a "waterfall" of legal action as FFP is expected to adopt a much more aggressive posture against the Departments' seizure action than its predecessors.

The case, brought by Low, two siblings and their parents as beneficiaries of the trusts, is one tendril of sprawling legal action being taken globally following alleged multi-billion dollar fraud at Malaysian sovereign wealth fund 1MDB.


Today's hearing, with a Queen's Counsel representing each side, began with Justice Toogood saying his court need not express any opinion on the merits of the allegations swirling around 1MDB, except for noting the background to the case.

"It is contented that the assets are traceable to an international conspiracy, said by the [US] Government to involve Jho Low in particular, to launder money misappropriated from 1MDB."

Of today's hearing he said: "The central issue here is whether or not the beneficiaries are entitled to seek replacement of trustees."

The relatives efforts to contest the civil seizure order was complicated by current trustees - Swiss-based Rothschild - being unwilling to challenge the forfeiture orders, hence the application to the High Court to replace them.

Submissions by the relatives' lawyers stressed the need for their clients to challenge the Department of Justice.

"In the event that the forfeiture proceeding are not contested, plaintiffs will lose their entitlements to trust assets worth approximately US$265 million," their submissions said.

The New Zealand trusts' assets alleged to be the proceeds of fraud, as previously reported by the Herald, comprise: The Viceroy L'Emritage Hotel in Beverley Hills; Los Angeles' Oriole Mansion; a Bombardier Global Express 5000 jet; a penthouse in the Time Warner Building in New York, and a condo in Manhattan.

Submissions for Low said Rothschild had concerns about their legal position, particularly over exposure to anti-money laundering laws, if they opposed the seizure action or agreed to being replaced without a court order.

"The defendants no doubt have concerns about potential criminal or other liability if they file claims, and the United States government has done nothing to disabuse the Rothschild Entities of that notion," they told the court in their submissions.

The hearing gained an international flavour with news that the Grand Court of the Caymans had recently granted a similar request, replacing trustees who owned a slice of New York's Park Lane Hotel and EMI Music's back catalogue worth some $400m.

The hearing replaced Rothschild as trustee of all of Low Family entities, including a tranche of trusts said to own property in Singapore, Hong Kong and the United Kingdom.

Justice Toogood said of these and other assets that "the beneficiaries perceive [them] to be under potential threat of similar forfeiture proceedings".

Justice Toogood concluded by quoting the arguments of Queen's Counsel Noel Ingram acting for the Low family.

"I accept, as Mr Ingram QC said it crisply in his submissions, it is not the intention of the new trustees to frustrate the United States proceeding but simply 'to enable a fair fight on the merits of the case and prevent the loss of assets worth hundreds of millions of US dollars by default'," the judge said.