A Tale of missing billions – the 1MDB scam
1MDB the abbreviation for 1Malaysia Development Berhad was a state fund set up in 2009 by the Malaysian government to promote development of the country by increasing foreign investments and striking new foreign partnerships. The fund was chaired by Najib Razak the then prime minister of Malaysia.
BY RATTANDEEP SINGH | 3 Mins Read
Since then this fund has been recognized as the largest political scandals in Malaysia and one of the largest corruption scandals of the world. It has been responsible for toppling the government of Najib Razak with the justice department saying that over 4.5 billions of money were stolen from the fund.
How was the scam uncovered?
The scam went on unchallenged until 2015. That year a retired Swiss banker leaked 227000 files to a British journalist and the wall street journal. The Malaysian anti-corruption agency then began investigating the scam. Following this the week of long knives endured, where the prime minister Razak fired the attorney general Abdul Gani who was leading the investigation and sacked a number of officials which included the deputy prime minister and long-time 1MDB critic Muhyiddin Yassin along with four other ministers. The MACC offices were raided and four officials were subsequently arrested.
Najib’s government was then cleared of all wrongdoing by the newly appointed attorney general. The government refused to cooperate with foreign investigative agencies from the US, Switzerland and Singapore.
Where was the money spent?
The leaked financial documents show that vast sums of money were borrowed from foreign institutions and then siphoned off with the help of bank accounts in the US, Switzerland and Singapore. Coincidentally a sum of about 731 million dollars appeared mysteriously in the bank accounts linked to the PM Razak just before the 2013 elections. It is alleged that this money was used to fund the credit card bills of the PM, the lavish shopping habits of his wife and to pay bribes to officials and politicians. The PM meanwhile says that money was a donation from a Saudi prince.
It was also speculated that one of the main conspirators of the scam was Jho Low, a consultant who was hired to oversee 1mdb. Under Jho, the fund bankrolled purchases of property in places including the Beverly hills and Manhattan, running into tens of billions of dollars
Apart from this the money was used to buy a private jet and a yatch, a 3.2 million dollar Picasso given to Leonardo diCaprio, 85 million dollars in vegas gambling debts along with a lavish birthday party with star performers including Jamie Foxx, Chris Brown, Ludacris, Busta Rhymes and Pharell Williams. Tens of million of dollars also went towards funding the movie the wolf of the wall street.
What now?
Mahatir Mohammed, a veteran Malaysian politician, came back from retirement and defeated Razak in the 2018 Malaysian elections. Within days properties linked to Najib were raided and searched. About 1400 necklaces, 567 handbags, 423 watches, 2200 rings, 1600 broches and 14 tiaras belonging to Najib’s wife were seized.
In July 2018 Najib was arrested on 3 counts of criminal breaches of trust and one of corruption, to whom he pleaded not guilty. He was arrested once again on 25 September, this time on 25 charges, which cumulatively carry jail sentences of 100 years.
The case has a wall street angle to it as well. Goldman Sachs helped raise over 6.5billion dollars in funds through bond sales for 1MDB for which it raked in 600 million in fees. It has been alleged that Goldman was aware of this scam and few of its ex-employees were actively involved. In December last year, it was speculated that Goldman would plead guilty to the charges and pay 2 billion dollars in fines to the US justice department. But last week Goldman pleaded not guilty in a Malaysian court. The Malaysian government is seeking over 7.5 billion in repatriations from Goldman over its alleged role in the scandal.