Former Malaysian Prime Minister Najib Razak was found guilty on seven charges related to the 1MDB scandal and sentenced to 12 years in prison on Tuesday. This is only the first of many trials concerning the multi-billion dollar corruption scandal. And Najib is only one of many lively characters involved. So what exactly happened? By Nat Cheung.
What is 1MDB?
The 1 Malaysia Development Berhad (1MDB) is a state-owned investment fund set up by the then PM in 2009. According to international prosecutors, in reality, it was a slush fund used to line the pockets of Najib and his advisors, and embezzled over $4.5 billion over the years according to the US Department of Justice.
Who was involved?
Najib Razak – PM of Malaysia from 2009 to 2018. The eldest son of the country’s second PM, and nephew of its third. Their party, UMNO, had dominated politics since Malaysian independence, until Najib’s defeat in the 2018 election.
Jho Low – a Chinese-Malaysian financier, arguably the most sensational character in this story. He never held a formal position with the fund, but journalist Bradley Hope says he was effectively “the connecting point between everyone involved.” The vastness of his network is unmistakable. He’s partied with Paris Hilton, courted Miranda Kerr with extravagant gifts (such as an acrylic, see-through grand piano), and Britney Spears herself popped out of his birthday cake in Vegas.
Tim Leissner – Goldman Sachs banker connected to Jho Low. The bank allegedly earned $600 million in arranging and underwriting three bond sales to raise $6.5 million for 1MDB in 2012 and 2013, enabled by Leissner. According to The New York Times, Goldman has since tried to portray Leissner as a rogue conman, even presenting to federal prosecutors a PowerPoint in which they claimed he was briefly married to two women at the same time, and twice converted to Islam to impress the Muslim women he was dating.
Where did the money go?
There were some eye-catching purchases. For starters, there’s luxury real estate, private jets, superyachts, Picasso, Monet, Van Gogh and Warhol originals.
Rosmah Mansor, Najib’s wife, is notorious for her expensive tastes in Malaysia. In 2018, the police raided her and her husband’s properties, which resulted in them wheeling out supermarket trolleys of 500 luxury handbags (272 of which are her favourite Hermès Birkins), 400 watches, 12,000 items of jewellery (including 14 tiaras), and 116 ringgit in over 26 different currencies. The police said that it was the biggest seizure in Malaysian history.
Most ironically, Najib’s step-son, Riza Aziz, was accused of receiving $250 million from 1MDB, which he used to produce, of all things, a blockbuster about greed and corruption: The Wolf of Wall Street.
Where did this information come from?
It was precisely a tip-off that Riza produced The Wolf of Wall Street which prompted journalist Clare Rewcastle-Brown to investigate this story.
In early 2015, she met with whistleblower Xavier Justo, a former employee at PetroSaudi. PetroSaudi had a US$1.8 billion joint venture with 1MDB, and upon resigning, Justo downloaded over 200,000 confidential emails from the company server onto a harddrive, which he then transferred to Rewcastle-Brown.
A few months later, 1MDB also missed payments due for some of the $11 billion it owed to banks and bondholders. Rewcastle-Brown published a story alleging that over $700 million had been transferred to the personal bank accounts of Najib, which led to the start of government raids and international authorities launching investigations.
Where is everyone now?
On Tuesday, Najib was sentenced to 12 years in prison for abuse of power, and 10 years in jail for money laundering and breach of trust. The sentences are to run concurrently, but other trials are still ongoing. He still faces 21 counts of money laundering and 4 counts of abuse of power.
His wife, Rosmah, also faces charges of tax evasion and money laundering, to which she has pleaded not guilty.
In 2018, Leissner pleaded guilty to US charges of conspiring to launder money and violating anti-corruption laws by bribing foreign officials. In December 2019 though, he reached a settlement with the SEC. He is permanently barred from working in the securities industry, and required to forfeit $43.7 million.
In 2019, Malaysia also filed charges against 17 current and former directors at Goldman Sachs. This month, they reached a $3.9 billion settlement. The bank still faces possible charges in the US.
Jho Low’s whereabouts are currently unknown, but he maintains his innocence in a statement on his official website…