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  World   Asia  26 Jul 2020  1MDB: Malaysia's extraordinary financial scandal

1MDB: Malaysia's extraordinary financial scandal

AFP
Published : Jul 26, 2020, 11:48 am IST
Updated : Jul 26, 2020, 11:48 am IST

The scandal alleges top Malaysian officials looted billions and then went on a spending spree - including financing a H'wood blockbuster

Malaysia's former prime minister Najib Razak waves after a court appearance in Kuala Lumpur. - A Malaysian court on July 28, 2020 will hand down its verdict in Najib Razak's first corruption trial, nearly 16 months after it began probing the former prime minister's role in the multi-billion-dollar 1MDB scandal. (AFP)
 Malaysia's former prime minister Najib Razak waves after a court appearance in Kuala Lumpur. - A Malaysian court on July 28, 2020 will hand down its verdict in Najib Razak's first corruption trial, nearly 16 months after it began probing the former prime minister's role in the multi-billion-dollar 1MDB scandal. (AFP)

Kuala Lumpur: Malaysia's extraordinary 1MDB corruption scandal allegedly saw top officials loot billions from state coffers and go on a worldwide spending spree -- buying a $250 million yacht and a painting by Van Gogh, and financing a Hollywood blockbuster.

Najib Razak, the then-prime minister, was accused of involvement in plundering the fund and the controversy helped sweep his long-ruling coalition from power in 2018.

 

He is currently facing three court cases over the scandal. The verdict in his first trial, over allegations he pocketed around $10 million, will be handed down on Tuesday.

Here is a look back at the saga:

What was 1MDB?

1Malaysia Development Berhad (1MDB) was a state investment fund which Najib launched in 2009 shortly after becoming prime minister.

Its portfolio included power plants and other energy assets in Malaysia and the Middle East, as well as real estate in Kuala Lumpur.

The fund was closely overseen by Najib.

Whistleblowers say Low Taek Jho, a jet-setting Malaysian financier close to Najib but with no official position, helped set up 1MDB and made key financial decisions.

 

Concerns escalated in 2014 as 1MDB slid into an $11-billion debt hole, and intensifying public scrutiny revealed missing funds.

The scandal first came to light through the Sarawak Report news portal, and gained further traction in 2015 when The Wall Street Journal published documents showing Najib received at least $681 million in payments to his personal bank accounts.

Rich living

The US Justice Department launched its own probe after claims that stolen Malaysian public money was laundered through the US financial system, and has filed lawsuits seeking some $1.8 billion in assets allegedly purchased with the cash.

The department said more than $4.5 billion was stolen from 1MDB between 2009 and 2015 by high-level officials at the fund and their associates.

 

Tens of millions of dollars were used in 2012 by Najib's stepson Riza Aziz, an aspiring film producer, to fund the Hollywood film "The Wolf of Wall Street", starring Leonardo DiCaprio.

Hundreds of millions were also used, mainly by Riza and Low, to purchase high-end real estate in Beverly Hills, New York and London.

A Monet painting bought for $35 million, a Van Gogh for $5.5 million, a $35-million Bombardier jet, a $100-million stake in EMI Music Publishing, and a $250 million yacht were also ticked off the shopping list.

Political turbulence

Najib desperately sought to contain the scandal, targeting critics and introducing repressive laws, but the allegations hit the popularity of his long-ruling coalition and contributed to a shock election defeat in 2018.

 

A new government headed by veteran politician Mahathir Mohamad, now aged 95, came to office on a wave of public anger, and re-opened investigations.

Najib was hit with dozens of charges, and his first trial over the scandal finally started in April last year.

But in February, the reformist alliance collapsed after bitter infighting, and a new coalition that included Najib's scandal-plagued party seized power.

Some have raised concerns that the change of power could impact Najib's trials.

Charges against Riza were unexpectedly dropped in May after he agreed to return assets to Malaysia.

A month later, corruption and money-laundering charges against a key Najib ally, Musa Aman, were also dropped.

 

The trial

Najib's first trial linked to the 1MDB scandal centres on allegations that 42 million ringgit ($9.9 million) was transferred to his bank accounts from SRC International, a former unit of the fund.

He is facing four charges of corruption and three of money-laundering in the case, and denies wrongdoing.

His lawyers insist he had no knowledge of the transfers and have claimed that Low was the true mastermind behind the scam.

It is not the most significant of the trials he is facing. That one began in August last year, with Najib accused of illicitly obtaining 2.28 billion ringgit ($535 million) from 1MDB.

Tags: 1mdb scandal, malaysian financial corruption, malaysian ex-pm, najib razak, 1malaysia development berhad, low taek jho, the wolf of wall street, riza aziz