1MDB: Malaysia’s extraordinary financial scandal
KUALA LUMPUR: Malaysia’s extraordinary 1MDB corruption scandal allegedly saw top officials loot billions from a state fund and go on a worldwide spending spree -- buying up super-yachts, paintings by Van Gogh and Monet, and financing a Hollywood blockbuster.
The controversy has had a huge impact in Malaysia, contributing to the downfall of a coalition that had ruled the country since its independence from Britain in 1957.
Goldman Sachs’s role in the scandal is under growing scrutiny -- Malaysia’s new government this week filed criminal charges, accusing the Wall Street firm and former employees of stealing billions, bribery and lying. Goldman says it will fight the accusations.
1Malaysia Development Berhad (1MDB) is a state investment fund which Najib Razak launched in 2009 shortly after becoming Malaysia’s prime minister.
Its portfolio has included power plants and other energy assets in Malaysia and the Middle East, and real estate in Kuala Lumpur.
The fund was closely overseen by Najib. Whistle-blowers say Low Taek Jho -- commonly known as Jho Low, a jet-setting Malaysian financier close to Najib but with no official positions -helped set up 1MDB and made key financial decisions.
Revelations
Concerns escalated in 2014 as 1MDB slid into an $11-billion debt hole, and 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 Department of Justice launched a probe due to claims that stolen Malaysian public money was laundered through the US financial system, and filed lawsuits seeking some $1.7 billion in assets allegedly purchased with the cash.
In its civil suits, the department said more than $4.5 billion was stolen from 1MDB by high-level officials at the fund and their associates between 2009 and 2015.
Tens of millions of dollars in stolen money was 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 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, a $100-million stake in EMI Music Publishing, and a $250 million yacht.
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 its shock election loss in May.
A new government headed by veteran politician Mahathir Mohamad, who is 93 and in his second stint as premier, came to office and has reopened investigations. Najib has been arrested and hit with dozens of charges, most linked to the alleged looting of 1MDB, and will go on trial next year. He denies any wrongdoing.
Goldman Sachs faces mounting questions about its role in the scandal as the bank helped 1MDB raise $6.5 billion through three bond issues in 2012 and 2013.
Full story @ timesofoman.com/world