Former Malaysian prime minister Najib Razak will on Tuesday face the first verdict in a series of criminal trials against him in connection with the billions of dollars allegedly stolen from 1Malaysia Development Bhd (1MDB). Najib, who served as prime minister from 2009 to 2018, is faced with several corruption trials linked to the scandal.
What is 1MDB?
1MDB was a sovereign fund set up in 2009 by Najib with the help of Malaysian financier Jho Low to promote economic development. Najib served as the chairman of its advisory board until 2016.
Where did the billions go?
The state fund raised billions of dollars in bonds for use in investment projects and joint ventures between 2009 and 2013. The U.S. Department of Justice (DoJ) said $4.5 billion was diverted to offshore bank accounts and shell companies, many linked to Low.
Malaysian authorities say at least $4.3 billion more is unaccounted for. The funds siphoned off were used to buy luxury assets and real estate for Low and his associates, including a private jet, a superyacht, hotels, and artwork by Picasso and Monet, U.S. lawsuits said.
It was alleged that some of the money was also used to finance Hollywood films including the 2013- superhit "The Wolf of Wall Street". The movie was produced by Red Granite, a film company co-founded by Najib's stepson, Riza Aziz.
Malaysian prosecutors withdrew money laundering charges against Riza in May after reaching a $107.3 million settlement.
What was Najib's role?
Authorities say Najib illegally received more than $1 billion traceable to 1MDB. Najib who was voted out in a 2018 election amid public anger over the scandal, has plead not guilty to 42 criminal charges over losses at 1MDB and other state entities. He has pleaded not guilty to criminal breach of trust, money laundering and abuse of power.
Furthermore, Najib's party returned to power this year in an alliance led by Prime Minister Muhyiddin Yassin. This has led to concerns that the government could go slow on the several corruption cases against Najib and his allies.
According to Japan Times, Najib testified that he was misled by Malaysian financier Jho Low and other 1MDB officials into believing the funds were donated by the Saudi royal family and not misappropriated from SRC, as prosecutors charge. Saudi Arabia’s foreign minister in 2016 had said that the funds were “a genuine donation,” but the government has not commented on the case since. Najib's wife, Rosmah Mansor, has also been charged with money laundering and bribery. She, too, has pleaded not guilty.
A Malaysian court on Wednesday also ordered Razak to settle 1.69 billion ringgit (US$397.41 million) in unpaid taxes over seven years while he was still in office, according to a report by national newswire Bernama. Authorities had filed the suit last June to recover unpaid taxes, plus penalties and interest, accumulated by Najib between 2011 and 2017.
At least six countries, including Singapore and Switzerland, have launched money laundering, financial mismanagement and criminal investigations into the 1MDB dealings.
The DoJ struck a deal in November to recoup $1 billion from the sale of seized assets linked to Low, a record haul for a U.S. anti-corruption probe. Malaysia had also accused Goldman Sachs of misleading investors over three bond sales totalling $6.5 billion that the U.S. bank helped raise for 1MDB. Goldman had pleaded not guilty and consistently denied wrongdoing.
This week, Goldman agreed to settle the dispute for $3.9 billion with Malaysia, which will drop all criminal charges against the bank. Low, charged in Malaysia and the United States over his central role in the case, denies wrongdoing.
His whereabouts are not known though authorities believe he may be hiding in China.
(Image: Malay Mail)