Najib Razak became Prime Minister of Malaysia in 2009. In his first year in office, he established 1Malaysia Development Berhad (1MDB), a sovereign wealth fund. The purported purpose of the fund was to promote economic development in a country where the median income stands at approximately £300 per month.
As part of Najib’s economic liberalization policy and trademark 1Malaysia program the fund was supposed to make strategic investments in green energy and tourism to create Malaysian jobs which would alleviate poverty. The fund had a budget of $1 billion to invest, with Najib (named president of the board of advisers for 1MDB) having the sole authority to sign off investments and manage the personnel on its board and management team.
The 1Malaysia Development Berhad scandal aka the 1MDB scandal or just 1MDB, is an ongoing corruption, bribery and money laundering conspiracy in which the Malaysian sovereign wealth fund 1Malaysia Development Berhad (1MDB) was systematically embezzled, with assets diverted globally by the perpetrators of the scheme.
The US DOJ described the scheme as involving three phases:
In August 2009, Najib and Low met with representatives of private oil company PetroSaudi on a yacht in Monaco to discuss 1MDB's first investment.
This included Saudi royal Turki bin Abdullah Al Saud and Saudi national Tarek Obaid.
During a subsequent visit to Saudi Arabia, Najib signed a $2.5 billion joint venture between PetroSaudi and 1MDB.
The DOJ later said this was used as a "pretense" to move $1 billion into a Swiss bank account.
An additional $1.4 billion was then raised by Goldman Sachs in a bond issue and misappropriated into a bank account in Switzerland.
An additional $1.3 billion from Goldman Sachs was also diverted into a bank account in Singapore.
“A number of corrupt 1MDB officials treated
this public trust as a personal bank account,” Lynch told the press last week.
“The co-conspirators laundered their stolen funds through a complex web of opaque transactions and fraudulent shell companies, with bank accounts in countries around the world, including Switzerland, Singapore and the United States.”
The alleged mastermind of the scheme, Jho Low, was central in the movement of 1MDB funds internationally through shell companies and offshore bank accounts. According to The New York Times, "By 2007, Low had formed an investment group that included a Malaysian prince, a Kuwaiti sheik and a friend from the United Arab Emirates who went on to become ambassador to the United States and Mexico, and is now one of the most powerful right hand persons for the Crown Prince of Abu Dhabi."
Despite not having a formal position at 1MDB, Low supported its establishment and was given extensive access to the fund due to high-profile political connections in Malaysia and the Middle East, and entertainment connections in the United States.
Low had been instrumental in working with Goldman Sachs to set up a sovereign wealth fund to invest the revenues of the oil-rich Malaysian state. He took control of the fund and siphoned $700 million to himself. Low joined high-level meetings and facilitated numerous deals. Although Low never received an official position, he had enough control over the fund to facilitate the eventual transfer of more than $5 billion from the fund into his personal accounts.
Low supported and funded the Prime Minister with 1MDB cash during the 2013 elections.
He organized a free pro-government concert in his home state of Penang featuring American musicians Busta Rhymes and Ludacris which was criticized by the local opposition government as unfair electioneering even though Low's close friend claimed the concert was for charity.
The scandal began in 2009 in Malaysia, but the scandal's global scope implicated institutions and individuals in politics, banking, and entertainment, and led to criminal investigations in a number of nations. Outside of Malaysia, investigations into financial and criminal activity relating to 1MDB opened in at least six countries.
The 1MDB scandal has been described as
"one of the world's greatest financial scandals"
and declared by the
United States Department of Justice
as the "largest kleptocracy case to date" in 2016.
In a separate case, the DoJ is also investigating whether Goldman Sachs violated US banking law in its handling of $6.5bn in bond offerings that it carried out for 1MDB. US authorities say that Goldman Sachs, particularly Roger Ng, were central to orchestrating the scheme, particularly the laundering of money from the fund, some of which was used to pay bribes to officials in Malaysia and the United Arab Emirates. The bankers were also interested in Jho for money, primarily earning fees from transactions and deals.
Attempts were also made for embezzled funds to be put towards political donations and lobbying in the United States:
According to a 6 May 2019 United States Department of Justice's indictment, Low was allegedly involved in a conspiracy to gain access to, and potentially influence, Barack Obama's 2012 campaign without disclosing the foreign origins of the money funneled to Obama's Super PAC.
Low was also helped by former Justice Department employee Higginbotham, who pleaded guilty to a charge in November 2018, to set up bank accounts for a lobbying campaign against the US investigations into the 1MDB scandal.
Leissner also claimed that in 2017, Low said his lawyers and him were in talks with the Trump administration for a deal that would spare 1MDB from U.S. charges, according to Reuters.
Low also said he talked with Jared Kushner, a senior White House adviser under the Trump administration, to shut down the questions around 1MDB, according to The Guardian.
Elliot Brody pleaded guilty to lobbying the Trump Administration illegally on behalf of Low.
In June 2021, Low was charged by a federal grand jury for running a back-channel campaign to get the Trump administration to drop an investigation of Low and the 1MDB investment company.
Low cultivated relationships with some of the world's largest and most reputable sovereign wealth funds, including:
the takeover of Coastal Energy in 2014 for US$2.2 billion
Low took a 20% stake in the buyout of EMI's music publishing business in 2012 for US$2.2 billion with the Blackstone Group, Sony Corporation and Mubadala.
Low was the architect for Jynwel Capital's unsuccessful US$2.2 billion bid to buy Reebok from Adidas AG in October 2014.
He signed documents for private equity firm Jynwel Capital and non-profit group Jynwel Charitable Foundation in July 2018
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