Daniel Halliday
May 15, 2019 · Last update 7 mo. ago.

What happened in the Malaysian 1MDB corruption case?

The 1Malaysia Development Berhad development company was a government run fund to drive strategic initiatives to act as a long-term boost to the Malaysian economy, by driving direct foreign investment. However suspicion surrounding the company’s transactions finally led to numerous investigations internationally, with former President Najib Razak and many individuals linked to him largely implicated in money laundering, criminal breach of trust and abuse of power. What are the implications and significance of this scandal and what can be done regarding the fallout from it?
Stats of Viewpoints
One of the biggest corruption scandals in history
0 agrees
0 disagrees
Fault of the government
0 agrees
0 disagrees
Saudi involvement
0 agrees
0 disagrees
Jho Low and the wider environment of corruption
0 agrees
0 disagrees
Bank facilitated corruption
0 agrees
0 disagrees
Viewpoints
Add New Viewpoint

One of the biggest corruption scandals in history

The Malaysian Anti-Corruption Commission arrested Najib Razak in 2018 over a suspicious transaction of over $10 million in his personal bank account from the 1MDB national sovereign fund. But thanks to whistle-blower Xavier Justo, a fuller picture of this scandal came to public attention. Justo, a former employee of PetroSaudi released documents that showed the company was part of a money laundering web of companies that helped associates of Najib siphon off over $700 million from the 1MDB fund, the fund itself with a debt of $11.73 billion by this time. Such large sums of money are unprecedented even for a country with a history of corruption like Malaysia, causing many journalists to refer to this as the biggest heist in history.

This monumental fraud may just be the tip of the iceberg with Malaysian businessman and former business partner of Najib's, Deepak Jaikishan, coming forward and confirming that money had been laundered for much longer in the form of luxury goods, jewelry and as cash. As investigations into 1MBD continues both in Malaysia and internationally (Australia, Hong Kong, Indonesia, Luxembourg, Seychelles, Singapore, Switzerland, the UAE, the UK and the US) further details are coming out against Najib, such as Ken Brown of the Wall Street Journal receiving evidence that the massive amount of money in Najib’s personal account came from 1MBD related companies, and not from the Saudi Royal family as claimed. Moving forward it is clear Najibs guilt seems increasingly clear, serving a jail sentence and the recovery of the stolen assets will be the only viable course for such a big deception.

theguardian.com/world/2016/jul/28/1mdb-inside-story-worlds-biggest-financial-scandal-malaysia aljazeera.com/programmes/101east/2019/05/malaysia-power-corruption-190509052155970.html todayonline.com/world/asia/rm26-billion-najibs-accounts-not-saudis-says-wsj-editor

Agree
Disagree
Latest conversation
Daniel Halliday
Apr 15
Approved
DH edited this paragraph
The Malaysian Anti-Corruption Commission arrested Najib Razak in 2018 over a suspicious transaction of over $10 million in his personal bank account from the 1MDB national sovereign fund. But thanks to whistle-blower Xavier Justo, a fuller picture of this scandal came to public attention. Justo, a former employee of PetroSaudi released documents that showed the company was part of a money laundering web of companies that helped associates of Najib siphon off over $700 million from the 1MDB fund, the fund itself with a debt of $11.73 billion by this time. Such large sums of money are unprecedented even for a country with a history of corruption like Malaysia, causing many journalists to refer to this as the biggest heist in history.

Fault of the government

Regardless of the actions of Najib Razak such scandals can only occur due to the failure of the usual checks and balances, which is the case in the case of Malaysia, a country with a long-term history of corruption. Although vital institutions were rendered defenceless as the country was robbed the scandal has caused a crisis of confidence in the Malaysian government and voters are recoiling against such practices, which could rejuvenate the democratic process in the country. Currently PricewaterhouseCoopers (PwC) are auditing 1MDB, but further government oversight is obviously needed in Malaysia and better stricter auditing rules for funds and companies seems like an obvious first step and a necessary step in the right direction for a less corrupt Malaysia.

In 2020 further issues have demonstrated the failings of the post-1MDB-scandal Malaysian Government. The political crisis that started in February has seen Malaysia’s king appoint Muhyiddin Yassin of the United Malays National Organisation (UMNO) as the countries prime minister, representing the unelected return of a block of politicians Malaysian voters tried to remove from government in the 2018 general election. While Najib Razak may be made an example of as the 1MDB investigation continues, it is clear that Malaysia’s political landscape is in need of reform that has so far been alluded, as Razak would not have been able to carry out just a massive fraud without some level of complicity from his corrupt party. A party that has now returned to power, illustrating how badly Malaysia needs renewal of its arguably rather stagnant democracy.

aljazeera.com/news/2015/10/royal-rulers-deplore-malaysia-crisis-confidence-151007064312312.html globalwitness.org/en/blog/does-fight-against-corruption-threaten-democracy web.archive.org/web/20180811132321/http://www.theedgemarkets.com/article/highest-office-high-court-malaysia-gripped-najibs-downfall malaymail.com/news/malaysia/2020/03/01/dr-m-says-feel-betrayed-by-muhyiddin-and-his-extensive-scheming-for-power/1842317

Agree
Disagree
Latest conversation
Daniel Halliday
Apr 15
Approved
DH edited this paragraph
https://www.aljazeera.com/news/2015/10/royal-rulers-deplore-malaysia-crisis-confidence-151007064312312.html https://www.globalwitness.org/en/blog/does-fight-against-corruption-threaten-democracy/ https://web.archive.org/web/20180811132321/http://www.theedgemarkets.com/article/highest-office-high-court-malaysia-gripped-najibs-downfall https://www.malaymail.com/news/malaysia/2020/03/01/dr-m-says-feel-betrayed-by-muhyiddin-and-his-extensive-scheming-for-power/1842317

Saudi involvement

The whole 1MDB scandal began in September 2009 when 1MDB put $2.5 billion into a joint venture with Saudi oil company PetroSaudi International. The whole scheme became public knowledge when a whistleblower from PetroSaudi International leaked 227,000 documents to the press. It was because of these leaks that an investigation was started and $700 million found in Razak’s personal bank accounts. In mid 2015 Najib Razak claimed the Saudi Royal Family had donated 2.6 billion Malaysian ringgit ($681m) to him personally, in order to explain the money found in his personal bank account.

The Saudi Foreign Minister claim that the $681 million donation conveniently materialised in February 2016, half a year after Razak had to explain his accounts, the Saudi Foreign Minister also claimed that this was a “genuine donation with nothing expected in return”. It has become clear during the Malaysian 1MDB scandal that numerous Saudis, and possibly some members of the Saudi Royal Family, are likely involved in directly or indirectly in interfering in Malaysian politics and/or international money laundering schemes. Two Saudi energy company officials are currently under investigation by the Swiss government on suspicion of bribery, and while Razak is not under accusation in this case, two 1MDB officials are also being investigated in the same probe. It is still not clear if this “donation” is linked directly to money from the 1MDB state fund, but either way it is some form of interference in Malaysian politics, clearly involves multiple Saudi nationals, and is something Malaysians should be very concerned about.

bbc.com/news/world-asia-36051474 aljazeera.com/news/2018/07/saudi-uae-executives-face-probe-malaysia-1mdb-scandal-180710082052877.html theguardian.com/world/2016/apr/15/saudi-arabia-money-malaysian-pm-najib-genuine-donation

Agree
Disagree
Latest conversation
Daniel Halliday
Apr 13
Approved
DH edited this paragraph
The Saudi Foreign Minister claim that the $681 million donation conveniently materialised in February 2016, half a year after Razak had to explain his accounts, the Saudi Foreign Minister also claimed that this was a “genuine donation with nothing expected in return”. It has become clear during the Malaysian 1MDB scandal that numerous Saudis, and possibly some members of the Saudi Royal Family, are likely involved in directly or indirectly in interfering in Malaysian politics and/or international money laundering schemes. Two Saudi energy company officials are currently under investigation by the Swiss government on suspicion of bribery, and while Razak is not under accusation in this case, two 1MDB officials are also being investigated in the same probe. It is still not clear if this “donation” is linked directly to money from the 1MDB state fund, but either way it is some form of interference in Malaysian politics, clearly involves multiple Saudi nationals, and is something Malaysians should be very concerned about.

Jho Low and the wider environment of corruption

While the case of the 1Malaysia Development Berhad scandal has been largely centred on the culpability of ex-Prime Minister Najib Razak, the story of mastermind fugitive fraudster Low Taek Jho seems much more telling. In October 2019 Jho Low reached a settlement with the US Department of Justice, relinquishing $900 million of contested assets in return for a comprehensive pardon, but judging by his fugitive reaction to the 1MDB investigation and ties to other international scandals, his story may not be over. Low's political actions in Malaysia and the United States have earned him further criticism, with Malaysian government opposition describing his fund raising for Razak's government as electioneering, corrupt projects carried out by Jho Low may go further than the 1MDB scandal.

Jho Low's corruption is not limited to Malaysia, as a US Justice Department employee was also found guilty of lobbying against the US investigation on Jho Low's behalf. Former Justice Department official, George Higginbotham, has pleaded guilty to transferring tens of millions of dollars into a lobbying campaign to try and influence US officials and influence the criminal charges being filed in the 1MDB case, this money was again laundered by Higginbotham on Jho Low's behalf. The attempt to influence US officials didn't stop there however, as Higginbotham was also funding lobby groups to influence US authorities in deporting an unnamed foreign national from the US. While fallout from the 1MDB scandal seems to have mainly effected Najib Razak, there appears to be a wider environment of corruption underlying the 1MDB case which now seems to include impunity surrounding the scandals mastermind - Jho Low, and the wider range of corrupt activities he was also engaged in.

straitstimes.com/asia/se-asia/jho-low-doj-settlement-high-powered-legal-team-led-by-ex-new-jersey-governor-chris abc.net.au/news/2019-05-29/malaysian-corruption-fugitive-implicated-in-kpop-sex-scandal/11159466 theedgemarkets.com/article/jho-lows-role-1mdb-kept-hidden-protect-najib-%E2%80%94-shahrol nst.com.my/world/2018/12/436259/us-justice-official-pleads-guilty-1mdb-lobbying-case#cxrecs_s

Agree
Disagree
Latest conversation
Daniel Halliday
Apr 10
Approved
DH edited this paragraph
Jho Low's corruption is not limited to Malaysia, as a US Justice Department employee was also found guilty of lobbying against the US investigation on Jho Low's behalf. Former Justice Department official, George Higginbotham, has pleaded guilty to transferring tens of millions of dollars into a lobbying campaign to try and influence US officials and influence the criminal charges being filed in the 1MDB case, this money was again laundered by Higginbotham on Jho Low's behalf. The attempt to influence US officials didn't stop there however, as Higginbotham was also funding lobby groups to influence US authorities in deporting an unnamed foreign national from the US. While fallout from the 1MDB scandal seems to have mainly effected Najib Razak, there appears to be a wider environment of corruption underlying the 1MDB case which now seems to include impunity surrounding the scandals mastermind - Jho Low, and the wider range of corrupt activities he was also engaged in.

Bank facilitated corruption

The US Department of Justice has reached a settlement with Jho Taek Low and his entire family and is willing to absolve them from any wrong doing if the US can recoup around $1 billion in laundered assets from this case, making it clear the US values money over justice. The recent deal struck between Jho Taek Low and the United States Department of Justice severely weaken the Malaysian government and the 1MBD case, as the Low family and the Trump administration seem to be the only parties standing to gain from the outcome of this scandal. The loose ends and responsibility are not a finished story however, as the Department of Justice’s case is based on allegations of money laundering, with Jho Low cleared of wrongdoing the only party left who are criminally implicated in the case are the Goldman Sachs investment bank.

Goldman Sachs has intimate knowledge of money laundering scheme and facilitates them anyway, the lead banker involved in this scandal, Tim Leissner, pleaded guilty to counts of bribery and money laundering. The implication and lesson to take away from the 1MBD scandal then is that international money laundering schemes are predicated on a corrupt international banking system that allows and facilitates this sort of actions to go on, and international cases into Goldman Sachs are therefore on-going. The Malaysian Government are now seeking to recover assets from Goldman Sachs as Jho Low goes free using this system that seems to secure an environment of impunity around an international elite criminal class.

business.financialpost.com/investing/global-investor/canadian-banks-help-chinese-flout-their-laws-to-get-piece-of-smurfing-billions intpolicydigest.org/2019/11/02/jho-low-is-absolved-by-the-department-of-justice-where-can-mahathir-go-from-here bbc.com/news/business-47148641 nytimes.com/2018/11/01/business/goldman-sachs-malaysia-investment-fund.html

Agree
Disagree
Latest conversation
Daniel Halliday
Apr 10
Approved
DH edited this paragraph
https://business.financialpost.com/investing/global-investor/canadian-banks-help-chinese-flout-their-laws-to-get-piece-of-smurfing-billions https://intpolicydigest.org/2019/11/02/jho-low-is-absolved-by-the-department-of-justice-where-can-mahathir-go-from-here/ https://www.bbc.com/news/business-47148641 https://www.nytimes.com/2018/11/01/business/goldman-sachs-malaysia-investment-fund.html
Translate