1MDB: Malaysia’s ex­tra­or­di­nary fi­nan­cial scandal

Kuwait Times - - INTERNATIONAL -

Malaysian Prime Min­is­ter Na­jib Razak has been un­der fire since 2014 over al­le­ga­tions that bil­lions of dol­lars were looted from state in­vest­ment fund 1MDB in an au­da­cious cam­paign of fraud and money-laun­der­ing. On Satur­day, an in­flu­en­tial pro-re­form group is planning a rally in down­town Kuala Lumpur to de­mand Na­jib’s ouster over the affair. Here are some an­swers to key ques­tions in the saga.

What is 1MDB?

1Malaysia De­vel­op­ment Ber­had (1MDB) is a state in­vest­ment fund Na­jib launched in 2009 shortly af­ter as­sum­ing of­fice. Its port­fo­lio has in­cluded power plants and other en­ergy as­sets in Malaysia and the Mid­dle East, and real es­tate in Kuala Lumpur. The fund has been closely over­seen by Na­jib. Whis­tle-blow­ers say Low Taek Jho, or “Jho Low”, a shad­owy, jet­set­ting Malaysian fi­nancier close to Na­jib but who has no of­fi­cial po­si­tions, helped set up 1MDB and made key fi­nan­cial de­ci­sions.

How did the scandal emerge?

Con­cerns es­ca­lated in 2014 as 1MDB slid into an $11 bil­lion debt hole, and the in­ten­si­fy­ing pub­lic scru­tiny led to a string of rev­e­la­tions con­cern­ing miss­ing funds. The is­sue ex­ploded in July 2015 when the Wall Street Jour­nal pub­lished doc­u­ments show­ing Na­jib re­ceived at least $681 mil­lion in pay­ments to his per­sonal bank ac­counts. The US Jus­tice Depart­ment piled on the pres­sure this year by fil­ing law­suits to seize more than $1 bil­lion in as­sets it said were pur­chased with stolen 1MDB money.

Some key al­le­ga­tions

US au­thor­i­ties said a fig­ure it calls “Malaysian Of­fi­cial 1” know­ingly re­ceived huge sums of 1MDB money. A Malaysian Cab­i­net min­is­ter has since con­firmed that of­fi­cial was Na­jib. From 2009-11, at least $1 bil­lion was se­cretly di­verted from a 1MDB joint ven­ture with a Saudi en­ergy firm to bank ac­counts con­trolled by Low, who has been pho­tographed par­ty­ing with the likes of Paris Hilton and Leonardo DiCaprio. $1.37 bil­lion was di­verted from a pair of 2012 bond of­fer­ings to ac­counts in the Bri­tish Vir­gin Is­lands and Sin­ga­pore, be­lieved con­trolled by Low, as was $1.26 bil­lion raised in a 2013 bond sale. Tens of mil­lions of dol­lars in stolen money 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 DiCaprio. Hun­dreds of mil­lions were used, mainly by Riza and Low, to pur­chase high-end real es­tate in Bev­erly Hills, New York, and Lon­don, a Monet paint­ing for $35 mil­lion, a Van Gogh for $5.5 mil­lion, a $35 mil­lion Bom­bardier jet and a $100 mil­lion stake in EMI Mu­sic Pub­lish­ing.

Has any­one faced jus­tice?

A Sin­ga­porean pri­vate banker was sen­tenced last week to 18 weeks in jail for fa­cil­i­tat­ing il­licit money flows, and another banker in the city-state has been hit with sim­i­lar charges. Sin­ga­pore has also shut down the lo­cal op­er­a­tions of two Swiss-based banks in­volved in the scheme. But so far no big fish have been hooked. Na­jib shut down do­mes­tic Malaysian in­ves­ti­ga­tions last year, deny­ing wrong­do­ing and say­ing the scandal was con­cocted by his po­lit­i­cal en­e­mies. The US law­suits do not tar­get any in­di­vid­ual for pros­e­cu­tion, but in­ves­ti­ga­tions in sev­eral coun­tries are con­tin­u­ing.

What is the im­pact?

Since the scandal emerged, Na­jib has purged 1MDB crit­ics from his govern­ment, curbed do­mes­tic in­ves­ti­ga­tions, en­acted a tough new se­cu­rity law and gen­er­ally lurched to the right. Po­lit­i­cal an­a­lysts say Na­jib’s strength­ened hold makes it un­likely he will come clean, but crit­ics ac­cuse him of im­per­il­ing Malaysia’s al­ready frag­ile democ­racy just to save his skin. Ten­sion over 1MDB sim­mers, with the pro-re­form group Ber­sih say­ing it will pro­ceed with its rally in Kuala Lumpur on Satur­day de­spite au­thor­i­ties declar­ing it il­le­gal. Past Ber­sih protests have ended in clashes with police. But pro-govern­ment right­ists are threat­en­ing to dis­rupt the demon­stra­tion, rais­ing fears of vi­o­lence.—

— AP

KUALA LUMPUR: Malaysian Prime Min­is­ter and Fi­nance Min­is­ter Na­jib Razak (right) speaks as he un­veils the Malaysia’s 2017 bud­get at Par­lia­ment in Kuala Lumpur, Malaysia.

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