This Is How Malaysia’s 1MDB Scandal Disturbed the Financial World

From former prime minister to prisoner, Najib Razak will now spend 12 years in jail for graft after charges related to a multi-billion-dollar graft scandal at state fund 1Malaysia Development Berhad (1MDB).

After being ousted, Najib was charged with breach of trust and money laundering.

He governed Malaysia four years ago with an iron grip and quelled investigations of the 1MDB scandal where International financial institutions and high-ranking officials were implicated.

 

Biggest 1MDB Corruption Trial

He once played golf with Donald Trump and Barack Obama. The former Malaysian prime minister Najib Razak will now sleep next to murderers and drug traffickers.

Najib faced on Tuesday, August 23, 12 years of prison for the biggest 1MDB corruption trial he was quelling for years.

Dressed perfectly in a dark suit and gray tie, the former PM was taken directly to jail from the courthouse after his final appeal failed to save him.

It was a dramatic shift of events for him after holding on to power when 1MDB accusations were at their peak.

The former leader tightly suppressed local probes and fired investigators despite the opening of international investigations into the scandal.

Malaysian people, outraged over corruption and the lavishness his family was enjoying, elected him in 2018.

Najib tried to flee the country afterward, but he was arrested and all cards were revealed, even the son of the nation's well-respected second prime minister, Abdul Razak Hussein was involved in the wide-ranging scandal.

Najib Razak was convicted in July 2020 in the first corruption trial linked to financial fraud, and sentenced to prison, and last December, the court rejected his appeal, which prompted him to submit a final appeal to the Federal Court.

A five-judge federal court confirmed his conviction on Tuesday, saying it considered Najib's appeal as pointless and ruled that the conviction and sentence were confirmed.

“Based on the foregoing, we unanimously believe that the evidence presented during the trial irrefutably indicates that he is guilty on all seven counts,” Judge Maimun said.

Court files show that Najib still faces more than 30 other corruption charges related to 1MDB.

 

Where is the Money?

1MDB, the government-owned investment company, was supposed to boost Malaysia's economy.

What happened was far from providing development, the fund has rather impelled investigations around the world into deal-making, political sponsorship, and lavishness under former premier, Najib Razak.

The US said more than half of the $8 billion that 1MDB raised via bond sales was "stolen".

"Goldman Group Inc. has agreed to pay more than $5 billion, including a record $2.3 billion fine in the U.S., and enter its first-ever guilty plea for its role in the scandal," Washington Post read.

Among 1MBD's early initiatives were buying privately owned power plants and planning a new financial district in Kuala Lumpur.

Goldman helped raise $6.5 billion for 1MDB, but around 2.7 billion of them were embezzled by people associated with Najib, as revealed by the American Justice Department.

The stolen billions were diverted for bribes, a luxury yacht, fine art, and even funding for the Martin Scorsese movie The Wolf of Wall Street

A small group of Malaysians, led by businessman Low Taek Jho, who was known as Jho Low, transferred money from 1MDB into personal accounts set to look like legitimate businesses.

Malaysia dismissed all charges against Goldman for a $2.5 billion cash payment and at least $1.4 billion from seized 1MDB assets being returned with U.S. prosecutors' assistance and it was Under a July 2020 settlement.

Goldman's settlement with the American Justice Department had the largest-ever penalty for foreign bribery.

According to the Washington Post, Goldman gave $350 million to Hong Kong’s financial regulator, $122 million to Singapore’s government, and 96.6 million pounds ($126 million at the time) to the U.K.’s Financial Conduct Authority.

The prosecutors in the US made a deal in 2020 with Jho Low to get back nearly $700 million worth of assets, including a Beverly Hills hotel in addition to $260 million of assets. A $60 million settlement with the producers of “The Wolf of Wall Street," was reached. Singapore also was ready to return S$35 million the former Goldman banker, Roger Ng, had lost, and it has banned at least 8 financial professionals having a connection with 1MDB.

Malaysia moved to regain $340 million in PetroSaudi International’s accounts based in London.

 

When it's Corruption, Hello KSA and UAE

Najib’s corruption case is closely related to his relations with Saudi Arabia, which was approved in 2016, when Saudi foreign minister, Adel al-Jubeir, confirmed that the Kingdom offer Najib Razak $681 million free of charge, while the authorities in more than one country accused the sovereign fund in Abu Dhabi of involvement in unknown transfers estimated at 3.5 billion of dollars. UAE’s ambassador in Washington, Yousef al-Otaiba, was also implicated in corruption cases directly related to issues related to 1MDB.

The support that Najib received from the Emirates and the Crown Prince of Abu Dhabi, Mohammed bin Zayed in person, is the same support that former premier Muhyiddin Yassin had enjoyed in 2020, reflecting the nature of the relationship between the two men with the Crown Prince of Abu Dhabi.

The Anti-Corruption Authority in Malaysia broadcast an audio recording of two phone calls underlining the strong relationship of Mohammed bin Zayed, and Mansour bin Zayed Al Nahyan, UAE Deputy Prime Minister and Minister of Presidential Affairs, with Najib.

According to the leaked recordings, Najib Razak asked bin Zayed in one call to transfer money to Riza Aziz, his son-in-law residing in New York, so that it appeared as a gift from bin Zayed to cover the expenses of producing a movie in Hollywood, which cost tens of millions of dollars, to help him escape corruption scandals.

Malaysian relations with both Saudi Arabia and Malaysia witnessed a deterioration, during the ruling of Mahathir Mohamad as prime minister, who returned to political work in May 2018 after Najib, the Life-long companion of Saudi Arabia and the UAE.

Mahathir froze several economic and political agreements with Saudi Arabia and the UAE, closed the "anti-terrorism center" established by Saudi Arabia, and withdrew from Operation Decisive Storm led by both Saudi Arabia and the UAE in Yemen, Al-Estiklal read.

After Mahathir resigned from his position in February 2020, former Prime Minister Muhyiddin with the support of the UAE and Saudi Arabia, took over the position and succeeded Mahathir, and after taking the oath before King Abdullah Shah, bin Zayed tweeted on March 5, 2020, saying: "I discussed with my friend Sultan Abdullah bin Sultan Ahmed Shah, King of Malaysia, the strong relations that unite our two countries, and the efforts made to raise them to higher levels.”