What is 1MDB?
1 Malaysia Development Berhad (1MDB) is a state investment fund founded by Malaysia’s former prime minister; Datuk Seri Najib, in 2009. The purpose of this fund was to promote development through partnerships and foreign investments. It also aimed to drive economic growth with focus on fields of energy, real estate, tourism and agribusiness. 1MDB claimed that it had received a donation of RM 1 million from the government upon establishment. Now, 1MDB is said to be $10 billion (approximately RM41 billion) in debt.
How the 1MDB scandal all started
Malaysians are no strangers to the infamous 1MDB scandal. In July 2015, 1MDB was investigated for alleged misconduct and fraudulent behaviour. It had started when the Wall Street Journal reported an estimate of US$700 million traced back to Datuk Seri Najib’s (the former prime minister) personal bank account via various companies that had been linked to the fund. Since then, the fund has become one of the largest corruptions and financial scandals in the world. The alleged embezzlement was uncovered when a British reporter—Clare Rewcastle-Brown—who ran the Sarawak report was handed 227,000 leaked documents with detailed information about the depth of the fraud. According the US justice department, more than US$4.5 billion had been stolen from the fund. The findings of the investigation brought to the fall of the previous political party that had governed Malaysia for all of history since it had gained independence, the arrest of the former prime minister, his wife and associates that had been closely linked to the corruption.
Who is involved in the scandal?
- Datuk Seri Najib Tun Razak:
Formerly, Malaysia’s 6th prime minister, he is the centre of this whole scandal. In 2015, payments worth US$11 billion were not made to banks and bondholders which raised suspicion. Then-US Attorney General Loretta Lynch said, “A number of corrupt public officials treat this public trust as a personal bank account.”
- Rosmah Mansor:
The ex-prime minister’s wife who has been formally charged with money laundering, tax evasion, to both which she has pleaded not guilty. In 2018, a very public raid had uncovered more than 500 luxury handbags, hundreds of watches and 12,000 items of jewellery said to worth up to US$273 billion.
- Jho Low:
Portrayed by Malaysian and US investigators as the “mastermind of the scandal”, Low Taek Jho, or more commonly known as Jho Low is a Chinese-Malaysian financer from Penang. Despite never holding a formal position with the fund, he leveraged his powerful political connections to win business for 1MDB. All of these were done with payment in bribes, billions of US dollars, which were laundered through the US financial system. They were used to buy some of the world’s most expensive real estate, coveted artwork, and finance Hollywood films. Jho Low’s current location remains unknown, but he still maintains his innocence through statements on his official website.
Where all the money went:
- A French submarine deal worth US$130 million
- US$4.5 billion was missing.
- Stolen funds worth US$681 million.
- Luxury goods and cash worth US$28.6 million.
- Seized tiaras, cash, jewellery and Hermes bags worth US$273 million.
- Billions of dollars were laundered through the US financial system.
- US$250 million was used in producing the movie The Wolf of Wall Street.
- Millions of dollars were used to purchase lavish goods for other celebrities.
Written by Asha Ganesh