image source: KYC360
Since the phenomenal election that leads to ‘The New Malaysia’, the 1MDB issue is back sticking out and the global eye is headed there. Especially since Najib Razak arrested on the alleged corruption. But not everyone understands what is the 1MDB case that stated as the world’s biggest financial scandal by The Guardian in 2016. Therefore, we are here to provide some cheat sheet about the multi-billion mega-scandal which became one of the triggers overturned 17 years Najib Razak regimes.
WHAT IS 1MDB?
source: Bloomberg
1MDB (Malaysian Development Bank) is a Malaysian strategic development company, wholly owned by the Minister of Finance (Incorporated) founded in 2009 by Najib, who chaired the fund’s advisory board until 2016. The fund, aimed at promoting economic development, was set up allegedly with the help of a Malaysian financier, Low Taek Jho, better known as Jho Low.
WHAT’S THE BIG PICTURE OF THIS COMPLEX CASE?
source: dailymail.co.uk
Critics of 1MDB claim the fund has been used as a vehicle to steal a large sum of money. Swiss authorities said that a probe into suspected bribery involving former 1MDB officials and other unknown people had thrown up “serious indications” that $4.5 billion had been misappropriated from Malaysian government companies.
WHO IS SUSPECTED TO BE BEHIND THE WRONG-DOING?
source: The Edge Malaysia
In July 2015 the Wall Street Journal reported that $681 million from 1MDB had made it into a private account belonging to the Malaysian prime minister. Razak strongly denied this claim. The head of state claimed the money came from donors. A further $700 million, earmarked for a joint venture with PetroSaudi International, was allegedly moved from 1MDB to offshore companies.
The U.S. Attorney General filed civil complaints seeking the recovery of more than $1 billion in assets associated with funds misappropriated from 1MDB, the U.S. Department of Justice (DOJ) announced Wednesday. According to the complaints, more than $3.5 billion of 1MDB assets were allegedly misappropriated by high-level officials of 1MDB and their associates between 2009 and 2015.
Suspicions of abuse of 1MDB money among Razak’s entourage continue to deepen. According to the DOJ, other beneficiaries of 1MDB funds included Riza Aziz, Najib’s stepson and a friend of Low’s. Some of the funds were used to finance the Hollywood films “The Wolf of Wall Street” and “Dumb and Dumber To”, both produced by Red Granite, a film company co-founded by Riza. Red Granite has agreed to pay the US $60 million as part of a settlement deal.
A person described in the US lawsuits as “Malaysian Official 1” was said to have received more than $1 billion in 1MDB funds, some of which was used to buy jewellery for the person’s wife. US and Malaysian sources have said, “Malaysian Official 1” refers to Najib.
Another person who has played a prominent role in the scandal is Low Taek Jho, a flamboyant jet-setter, art collector and family friend of the Razak. Known by the nickname Jho Low, the 34-year-old operates as an advisor of 1MDB and is suspected of having syphoned off several billion from the fund through bank accounts to shell companies in offshore centres, for which he also used the services of the Ticino private bank Banca Della Svizzera Italiana or BSI.
Also, recently named by U.S. investigators was Khadem Al-Qubaisi. He operates as an official representative of Abu Dhabi and is the former president of Zurich-based Falcon Private Bank, which belongs to the ruling family of the Emirates. Abu Dhabi was closely connected to the Malaysian state fund as a donor.
HOW DID $4.5 BILLION GO MISSING FROM 1MDB?
image source: The Insider
Between 2009 and 2013, 1MDB raised billions of dollars in bonds for use in investment projects and joint ventures. With the aid of several high-level 1MDB officials, their associates and bankers, the U.S. Department of Justice (DOJ) said $4.5 billion was instead diverted to offshore bank accounts and shell companies, many of which were linked to Low and some of his associates. The syphoned funds were allegedly used to buy luxury assets and real estate for Low and his associates.
Since July 2016, the DOJ has filed civil lawsuits seeking to seize a total of $1.7 billion in 1MDB-linked assets. The assets include gifts given by Low to celebrity friends, such as a Picasso painting for Hollywood actor Leonardo DiCaprio, and jewellery for Australian model Miranda Kerr, the lawsuits say. DiCaprio and Kerr have since handed the items to US authorities and say they are cooperating with the investigation.
Other assets include a private jet, real estate in London, Los Angeles and New York, and a $107-million stake in EMI Music Publishing. Low, through spokesmen, has consistently denied wrongdoing. His current whereabouts are unknown.
WHAT IMPACT HAS 1MDB HAD IN MALAYSIA?
image source: hornbillunleashed.wordpress.com
Najib withstood multiple calls to resign and sacked the deputy prime minister and the attorney-general in actions seen linked to the scandal. The government has also taken steps seen by critics as limiting discussion of 1MDB, including detaining civil rights activists, suspending a newspaper, and blocking websites and blogs.
In 2016, Mahathir resigned from the ruling coalition saying he was disgusted by the 1MDB scandal, and later joined forces with opposition leader Anwar Ibrahim, his former foe. Their alliance succeeded in ousting Najib in a stunning election win on Malaysian General Election 14, with political analysts crediting public anger over 1MDB as a key factor.
Sources: dnaindia.com, Bloomberg.com, finews.com, ft.com, The Edge Malaysia