The 1MBD scandal has often been called “one of the world’s greatest financial scandals” involving over 10 countries, American real estate, famous artworks and even a Hollywood film directed by director Martin Scorsese.
What’s the 1MDB scandal, again?
- The 1MBD scandal has often been called “one of the world’s greatest financial scandals” involving over 10 countries, American real estate, famous artworks and even a Hollywood film directed by Martin Scorsese.
- But, before we get to all that, it’s important to know what happened to understand why this scandal still matters today.
- 1Malaysia Development Berhad, or 1MBD, was a company entirely owned by the Minister of Finance in Malaysia that was reportedly formed to create economic growth in Malaysia through projects in energy, real estate, tourism and agriculture.
- But, while the main focus of this company was to invest in long-term economic development for Malaysia, the company has been accused of laundering and stealing money since 2015.
- By serving as the advisory board chairman, Najib Razak, the former Prime Minister of Malaysia, was involved in starting 1MDB back in July 2009 when the scandal began.
So, how did it begin?
- So, the United States Department of Justice (DOJ) breaks the alleged theft down into three phases.
- The first phase of this scheme involves 1MDB entering into a US$2.5 billion joint venture with a private Saudi oil company called PetroSaudi International, with the Malaysian government directly funding the venture.
- PetroSaudi contributed US$1.5 billion in oil and gas assets to the venture, and 1MDB injected US$1 billion in cash.
- According to the DOJ, 1MDB then reportedly transferred US$300 million into a bank account belonging to the joint venture, but the remaining US$700 million was sent to a Swiss account controlled by Malaysian financier Jho Low, “a 29-year-old with no official position with 1MDB or PetroSaudi” and the reported mastermind behind this whole scheme.
- In 2012, 1MDB issued US$6 billion worth of bonds with the help of Goldman Sachs Group Inc. Over half of it reportedly was transferred to the personal accounts of Low, his associates and Najib.
- With the stolen money, Low bought real estate and world-famous art and financed Martin Scorsese’s “The Wolf of Wall Street.” His circle included the likes of A-list celebrities, such as Leonardo Dicaprio, Jamie Foxx, Emily Ratajkowski and Alicia Keys. Low was also romantically linked to Miranda Kerr in 2014.
- In fact, in mid-2017, Kerr surrendered US$8 million in jewelry gifted to her by Low to the US government amid an inquiry into the whole thing.
What are the consequences?
- 1MDB accumulated over US$11 billion worth of debt in six years of operation. With this and a lack of confidence surrounding the government, it added depreciatory pressures on Malaysia’s currency.
- None of this looked good on Najib since he served as 1MDB’s board chairman. There were also rumors and investigations regarding his involvement in the scandal.
- In August 2018, Najib was arrested. By July 2020, he was sentenced to 12 years imprisonment by the Malaysian high court after being found guilty on seven counts of abuse of power, money laundering and criminal breach of trust.
- In October 2016, Low had a red notice placed on him by Interpol, which means that Interpol is telling everyone that this guy needs to be arrested.
- Goldman Sachs, which has been involved in other scandals in the past, agreed to pay US$2.9 billion for their involvement.
What have Najib and Low said and where are they now?
- Despite being faced with criminal charges, those involved in the scandal have repeatedly maintained their innocence.
- Najib had an interview with Reuters back in 2018 where he, again, said he was innocent.
- “I didn’t benefit from 1MDB, because I believe that the 1MDB was created to do something good for the country. If I knew there was going to be misappropriation of funds, if that was my knowledge, I would have acted,” said Najib.
- Since Interpol issued a red notice for his arrest, Low is believed to be in China, where he secretly travels between major cities. His lawyers have responded in a statement that he maintains his innocence.
- “Low will not submit to any jurisdiction where guilt has been predetermined by politics and there is no independent legal process,” according to the statement released back in 2018. “It is clear that Mr. Low cannot get a fair trial in Malaysia.”
What’s next?
- On Wednesday, Najib appeared in court through Zoom to overturn the 12-year jail sentence but failed as all judges upheld convictions against the 68-year-old.
- While talking about transferring funds into Najib’s personal account, lead judge Abdul Karim Abdul Jalil said, “This has not been done in the national interest. There is no national interest here. It is a national embarrassment.”
- Speaking to reporters after, Najib said, “I would like to say that I am very disappointed with the judgment delivered by the Court of Appeal this morning.”
- So now Najib has one more opportunity to appeal the charges and will remain free on bail until he does. This will probably take a few months, and if it fails, he will be jailed and won’t be able to enter politics again.
- But even with this, Najib, whose father and uncle were both prime ministers, has been staging a bit of a political comeback and now has 4.6 million followers on Facebook.
- And, amid this whole thing, in the background, Beau Willmon, the creator of the hit Netflix series “House of Cards,” has indicated that he plans on making a series about the whole thing.
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