Opaque fund faces default, uncertain future

Scandal-hit Malaysian government-owned fund 1Malaysia Development Berhad (1MDB) began as Terengganu Investment Authority (TIA) in 2008, a sovereign wealth fund aimed at ensuring economic development for the state of Terengganu. It was renamed 1Malaysia Development Berhad on January 2009 and made a federal sovereign fund in 2009.

The entity focuses on strategic development projects in the areas of energy, real estate, tourism and agribusiness.

The 1MDB fund was founded to invest in new industries and attract foreign investment. While little of that investment occurred, the fund rolled up almost $13 billion (Dh47 billion) in debt, a big chunk from dollar-bond issuances, which today it is having trouble repaying.

While the company faced allegations of lack of transparency in its dealings there have been allegations that Malaysian Prime Minister Najib Razak and his associates benefited from various international and domestic deals.

In a report the Wall Street Journal said that 1MDB made overpriced purchases of power assets in Malaysia through Genting Group in 2012.

Genting then allegedly donated this money to a foundation controlled by Razak, who used these funds for campaign purposes during the 2013 general elections.