1MDB Scandal

Blog written and researched by Natalie Hawkins

1Malaysia Development Berhad (1MDB) was a fund set up in 2009 by the former Malaysian Prime Minister Najib Tun Razak. The purpose of the fund was to use public finances to promote economic development within Malaysia. This ongoing scandal first gained international attention in 2015 when Najib was accused of channeling nearly $700 million USD from 1MDB to his personal bank account. Najib continues to deny any wrongdoing related to the investment fund. Elections in May 2018 ousted Najib for 92 year old Prime Minister Mahathir Bin Mohamad. On July 4th, 2018 Najib was officially charged three counts of criminal breach of trust and one count of using his position for gratification.

Timeline of Events:

2009

Najib Tun Razak becomes Prime Minister of Malaysia, and shortly after establishes the 1MDB fund in the guise of promoting economic development in various industries.

2015
January: 1MDB misses loan payments of nearly $550 million USD, which sparks a task force to investigate the fund by the central bank, police, anti-grant agency and attorney general.

July: The Wall Street Journal reports that around $700 million USD has been taken from the 1MDB fund and believed transferred directly to the PM’s bank account.

August: The anti-grant agency concluded that the money deposited into the PM’s account was a donation and not linked to the 1MDB fund. Shortly after, Swiss authorities open criminal proceedings on suspected corruption of public officials and money laundering.

2016
January: Malaysia’s attorney general clears the Najib of any misconduct, agreeing with the anti-grant agency that the money in dispute was a donation, supposedly from a member of the Saudi royal family.

July: The US Department of Justice files civil lawsuits to seize assets purchased with the allegedly stolen funds from 1MDB.

2017
March: “The Wolf on Wall Street” production company Red Granit agrees to pay $60 million USD to the US government to settle the civil lawsuit seeking to seize assets.

June: The US Justice Department states nearly $45 billion USD has been taken from the 1MDB by corrupt officials.

December: the 1MDB scandal is labeled as “kleptocracy at its worst

2018
May: Najib loses the election to the now current Prime Minister Mahathir Bin Mohamad, who immediately re-opened the investigation into Najib and the misuse of taxpayer money from the 1MDB fund.  Both Najib and his wife are banned from leaving the country.

June: PM Mahathir states that embezzlement and bribery charges will likely be brought against Najib. Police estimate $275 million USD of assets found on the properties of Najib which are linked to the 1MDB fund.  Najib’s political party bank accounts are frozen.

July: Over 400 bank accounts are frozen with links to the 1MDB scandal.

July 4th, 2018 Former Prime Minister Najib Tun Razak is arrested and officially charged with three counts of criminal breach of trust and one count of using his position for gratification. Other charges may be laid as the investigation continues.


Ongoing developments

The newest twist in the 1MDB scandal brings in Chinese involvement, with the Malaysian government having now suspended three major construction projects (two pipelines, and one rail line) led by Chinese firms. It is believed that these projects were used to launder money for the previous administration, led by Najib. Two of the three contracts are estimated worth $2.3 billion USD. The Malaysian Ministry of Finance was shocked to discover that 88% of the contracts have been paid to the Chinese company, Chine Petroleum Pipeline Bureau, with only 13% of the work actually having been completed.

Prime Minister Mahathir is set to travel to China in August to discuss the matter, and possible re-negotiate these large contracts.

. . . More to come