Indonesia has agreed to hand over to Malaysia a $250 million luxury yacht linked to a corruption scandal at a Malaysian state fund that it impounded in Bali earlier this year, Indonesian authorities said on Saturday.
The Cayman Islands-flagged Equanimity was seized in February at the request of U.S. authorities as part of a multi-billion dollar corruption investigation launched by the Department of Justice (DOJ) related to 1Malaysia Development Berhad (1MDB).
An Indonesian court ruling in April declared that the yacht was wrongfully impounded and should be released to its owners.
Indonesian police seized the boat again in July following a formal request for legal assistance from the United States. Indonesian police said they would hand the yacht over to Malaysia but did not specify when.
"The yacht will be handed over at the border between Indonesia and Malaysia's waters," Daniel Silitonga, the deputy for economic and special crimes, told Reuters over a text message.
"We have to maintain the good relations between the two countries," he said, adding that the yacht is currently on the waters close to the border of Singapore and the Indonesian island of Batam.
A source had also told Reuters on Friday that the decision to hand the yacht to Malaysia was reached following a personal request made by new Malaysian Prime Minister Mahathir Mohamad.
Mahathir's office did not reply to a Reuters request for comment.
Mahathir, 93, visited Indonesia in June, his first official visit in the region after returning to power in a surprise election win over Najib Razak.
1MDB, founded by Najib, is at the centre of money-laundering probes in at least six countries, including the United States, Switzerland and Singapore. A total of $4.5 billion was misappropriated from 1MDB by high-level officials of the fund and their associates, according to civil lawsuits filed by the DOJ. Najib has denied wrongdoing.
Malaysian financier Low Taek Jho is seen as a central figure in the scandal. According to the lawsuits, Low used proceeds diverted from 1MDB to procure Equanimity, a 300-ft (91-m) yacht registered in the Cayman Islands.
The $250 million vessels are said to have an interior clad in marble and gold leaf, a spa and sauna, a 20-metre swimming pool on deck, a movie theatre, a lift and a helipad.
Malaysian authorities are seeking to arrest Low, whose whereabouts are unknown. His Malaysian passport was revoked and an arrest warrant has been issued against him.