Malaysian Prime Minister Mahathir Mohamad says Indonesia is handing over a luxury yacht allegedly bought with money stolen from a multi-billion-dollar state investment fund.
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In a Facebook video, Mahathir thanked Indonesia's government and President Joko Widodo for returning the $US250 million ($A338 million) yacht, Equanimity, which was seized by Indonesia off Bali in February in cooperation with the US FBI.
An aide said the yacht will sail from the Indonesian island of Batam near Singapore and is expected to arrive in Malaysia's Port Klang within 48 hours.
"We believe that this yacht belongs to the Malaysian government because it was bought with Malaysia's money that was stolen," Mahathir said, citing investigations by the US Justice Department.
The Justice Department, one of several foreign agencies investigating the alleged looting of the 1MDB fund by associates of former Malaysian Prime Minister Najib Razak, had listed the yacht among the assets it could seize and sell to recover stolen funds.
Najib set up 1MDB when he took power in 2009 but it accumulated billions in debts. The 1MDB scandal led to his shocking electoral defeat in May and Najib is now facing charges.
Malaysian and international authorities want to question Malaysian financier Jho Low, who the Justice Department alleges was a key figure in the theft and international laundering of $US4.5 billion from 1MDB. US investigators said Low bought the yacht.
Low, who has so far evaded investigators, issued a statement through his US lawyer on Sunday protesting the handover of the yacht.
Mahathir said anyone who wants to claim ownership of the yacht must show proof that the vessel was not bought with stolen funds.
"We want to know where they obtained so much money to buy such an expensive yacht," he said.
The Equanimity's lavish amenities include a helicopter landing pad, plunge pool, gymnasium and a cinema.
It was built in 2014 by the Dutch yacht manufacturer Oceano, which received detailed instructions from Low about its outfitting, according to the Justice Department's asset recovery case.
Australian Associated Press