The 1Malaysia Development Berhad scandal (1MDB) which came to light in 2015 reads almost like a movie script. There are corrupt politicians, crazy parties, fine art, A-list celebrities, diamonds, and a major motion picture. And that’s just the tip of the iceberg. Buckle up, because this might be the craziest scandal we have ever covered.
How to Be a Player
Najib Razak was the Prime Minister of Malaysia from 2009 until 2018. The son of a former Malaysian Prime Minister, Najib came from political royalty and for many it seemed only natural for him to take up his father’s mantle. Shortly after Najib came to power in 2009, he set up 1MDB as a government owned investment company to help finance infrastructure in Malaysia and broker deals to boost the economy, and he put himself at the helm of the company. Unfortunately for Malaysia, none of the promises and ideas originally put forth with the founding of 1MDB actually came to fruition.
For the most part, 1MDB managed to fly under the radar while steadily accruing debt. While nothing happened, there was little controversy. Journalists and authorities were looking, but nothing concrete seemed to emerge . Finally in 2015, red flags started to appear when 1MDB failed to make payments towards its $12 billion debt. Not too long after, US authorities began to investigate as at least $4.5 billion had been siphoned out of 1MDB.
While in office, Najib was not convicted of any crimes, and despite protests, refused to resign until he was voted out of power in 2018. Once he was out of office, the convictions started rolling in. Najib had faced criticism while in power for the excessive spending habits of his wife, Rosmah Mansor. The spending became even more evident when their assets were seized and shopping carts full of luxury goods worth $273 million were pulled out of their residence.
And there was a third player in the game. Najib was friends with a Chinese-Malaysian financier by the name of Low Taek Jho, also known as Jho Low. While Jho Low never held an official position at 1MDB, he allegedly played a crucial role in the activities that took place there. Jho Low lived a lavish lifestyle and surrounded himself with A-list celebrities. His antics include an insane 31st birthday party featuring Britney Spears popping out of a cake, flying his friends around on private jets, and hanging out with Leonardo DiCaprio. Jho Low fled the country once things started going south, and while no one knows where he is, he continues to maintain his innocence on his website.
Show Me the Money
We know that 1MDB was having its funds siphoned off to line the pockets of the prime minister, his wife and Jho Low, but the question still remains – where did the money come from? Goldman Sachs was responsible for a staggering half of the total funds raised by 1MDB – about $6.5 billion.
It will come as no surprise that the bank ignored several red flags in order to make this happen. At the time, Timothy Leissner was the chairman for the bank in Southeast Asia. Leissner met Jho Low, who had previously been rejected by Goldman Sachs after compliance officials raised concerns as to where his money was coming from. Leissner saw an opportunity, and agreed to help Jho Low sell $6.5 billion worth of bonds in exchange for a staggering $600 million fee. After the money was raised, Jho Low allegedly siphoned off $2.7 billion for himself.
It’s unclear where exactly the rest of the $12 billion came from. Some of it was purported to be gifts, but that seems to be a lie. Hopefully the truth will come as the trials against Najib, Rosmah, and Jho Low proceed.
Hey Big Spender
You may have been asking yourself, where did the money go? And this is where things truly get interesting. Riza Aziz, Najib’s stepson, received approximately $248 million. Aziz had his own production company, Red Granite Pictures, which gave $100 million to produce Martin Scorcese’s “Wolf of Wall Street”. Yes, you read that correctly. The company also gave Leonardo DiCaprio a lavish birthday gift – Marlon Brando’s Oscar for Best Actor. DiCaprio had to turn over the gift to the authorities once the allegations came out. Red Granite Pictures ended up paying $60 million to the US government as part of their settlement.
Obviously, given the sheer amount of luxury goods seized at their home, Najib and Mansor spent a lot of the money themselves. But despite their penchant for expensive items, it seems the majority of the 1MDB money was actually spent by Jho Low under the guise of bringing in more business through bribes.
Jho Low purchased luxury multi-million dollar properties in Manhattan and Beverly Hills with some of the funds, and bought fine art pieces for another $137 million. Leonardo DiCaprio makes another appearance too, as he was gifted some of the fine art pieces which included a Picasso. DiCaprio has turned the art over to authorities.There’s even a rumor that $100,000 went towards President Donald Trump’s election campaign, although that is still being investigated. And Jho Low seems to be bipartisan, as he also funneled over $21 million for Obama’s re-election campaign in 2012.
During this period Jho Low also dated Australian model Miranda Kerr. At one point, Jho Low flew Kerr and several of her friends to Atlantic City on a helicopter for a night of gambling, presumably on his dime. Kerr has had to turn over $8 million dollars worth of jewelry she received from Jho Low over to the authorities. Jho Low also sent millions of dollars worth of jewelry to Rosmah Mansor;t appears jewelry was a popular way to launder money on behalf of 1MDB.
Murder He Wrote
Just when this fantastical story seems like it’s reached its peak, there is another twist. It seems that Najib had been a shady character for a while and is linked to a murder. Prior to his stint as prime minister, Najib served as the Minister of Defense from 1991 to 1995, then again from 2000 until 2008.
In 2002, two submarines were purchased by the Malaysian Defense Department from French company DCNS. The deal was in part brokered by Mongolian model Altantuya Shaariibuu, who acted as a translator during the later stages of the deal, though it is unclear if she actually spoke French. At the time, Shaariibuu was the mistress of Najib’s good friend and confidant, Abdul Razak Baginda, and Baginda allegedly received a financial kickback for his help in brokering the submarine sale.
In 2006, the remains of Shaariibuu were found in the Malaysian jungle; she had been murdered. The two men responsible for the heinous crime had acted as bodyguards for Najib. After her death, it came to light that Shaariibuu had been blackmailing Baginda, although exactly what she was threatening to reveal is unclear. While the two men were convicted, neither Baginda or Najib were ever convicted for their potential role in the murder. Baginda was acquited (a charge was brought against him for obstructing the murder investigation) and he fled the country shortly after. Now that Najib is no longer in power, Shaariibuu’s family hopes that justice will prevail, with a new lawsuit for her murder launched in January 2019. .
Crime and Punishment
As mentioned earlier, Jho Low is on the run despite having his $250 million yacht seized by authorities. Nobody seems to know where Low is, and it seems that when you have as much money as he does, you can hide for a very long time. Despite his absence, Jho Low has maintained lawyers and a PR team – he even tried to get a book about him pulled from the shelves when it came out.
Najib and Rosmah are both facing a number of convictions, but despite the evidence against them, Najib is protesting their innocence through the power of song. It’s unclear if Najib is legitimately delusional or thinks this will help his case, but he says he did nothing wrong. Najib is facing 38 charges of fraud, corruption, and money laundering, and Rosmah is facing 17 charges of money laundering.
Timothy Leissner faced charges himself, but at least he has admitted that he is guilty. Leissner stepped down from Goldman Sachs once it became clear he was involved. He pled guilty to charges against him and was ordered to forfeit over $40 million as a result of his crimes. As a result of his conviction, Leissner has been banned from Hong Kong for life. Roger Ng, who helped orchestrate the 1MDB deal and who also worked at Goldman Sachs, has pled not guilty.
As for Goldman Sachs, the bank is also dealing with charges. Malaysia has brought charges against 17 current and former executives at the bank in an attempt to recoup the money that was stolen. Unsurprisingly, Goldman Sachs has closed ranks and is refusing to admit any wrongdoing beyond the actions of Leissner and Ng. In fact, all the financial institution has done is apologize, but only for the actions of Leissner. Goldman Sachs did offer to pay $241 million back to Malaysia, but the new prime minister was unhappy with how small the offered compensation was.
Conclusion: 1MDB — The Financial Scandal that Rocked Malaysia
We hope you have enjoyed this wild ride of a scandal, but we barely scratched the surface. Every time you discover something new about this money laundering case, another layer appears. It will certainly be interesting to see how the trials for Najib and Rosmah unfold, and if Jho Low will ever be found.