A Refresher On Convicted Ex-PM Najib's Role In The Multi-Billion Dollar 1MDB Scandal

Najib remains on trial in the four other cases.

Cover image via Hasnoor Hussain/Reuters

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The Federal Court ordered former prime minister Najib Razak to begin a 12-year prison sentence on Tuesday, 23 August

The country's top court made the decision after rejecting his appeal against a conviction on charges related to a multi-billion dollar graft scandal at state fund 1Malaysia Development Berhad (1MDB).

The following are details of the scandal and cases brought against him:

What is 1MDB?

1MDB was a sovereign fund set up in 2009 with the help of Malaysian financier Jho Low, also known as Low Taek Jho, to promote economic development.

Najib, who was prime minister from 2009 to 2018, co-founded 1MDB and chaired its advisory board until 2016.

Najib Razak speaks to journalists outside the Federal Court during a court break in Putrajaya earlier today, 23 August.

Image via Lai Seng Sin/Reuters

How did billions go missing?

1MDB raised billions of dollars in bonds for use in investment projects and joint ventures between 2009 and 2013.

Conducting its largest-ever kleptocracy investigation, the US Department of Justice (DoJ) said USD4.5 billion was diverted to offshore bank accounts and shell companies, many linked to Low.

Malaysian authorities say billions more remain unaccounted for.

The siphoned funds were used to buy luxury assets and real estate for Low and his associates, including a private jet, a superyacht, hotels, jewellery, and to finance the 2013 Hollywood film The Wolf of Wall Street, US lawsuits have said.

Low, a fugitive, has been charged in Malaysia and the US over his central role in the case. He denies wrongdoing.

His whereabouts are unknown. Malaysia has said he is in China, but Beijing denies it.

Najib was not named by the DoJ but was alluded to in the investigation as "Malaysian Official 1", according to Malaysian and US sources.

What are the cases against Najib?

Malaysian authorities say Najib illegally received more than USD1 billion traceable to 1MDB.

A person described in US lawsuits as "Malaysian Official 1" allegedly received more than USD1 billion in 1MDB funds, some of which were used to buy jewellery for the person's wife.

The lawsuits said the person received USD681 million shortly before Malaysia's 2013 election when the Barisan Nasional coalition led by Najib's UMNO held onto power while losing the popular vote.

Najib, voted out in a 2018 election amid public anger over the scandal, is facing 42 criminal charges over losses at 1MDB and other state entities. If convicted, he could face decades in prison as well as hefty fines.

In July 2020, in the first of five trials, he was sentenced to 12 years in prison and an RM210 million (USD46.94 million) fine after being found guilty of criminal breach of trust, abuse of power, and money laundering for illegally receiving about USD10 million from SRC International, a former 1MDB unit.

The verdict was upheld by an appellate court last year, and on Tuesday, 23 August the Federal Court ruled against Najib's final appeal.

Other trials he faces involve funds at 1MDB and other government bodies, as well as allegations of audit tampering. He has pleaded not guilty to all charges.

Najib speaks during a news conference at the Federal Court in Putrajaya.

Image via Hasnoor Hussain/Reuters

What is the status of these cases?

Despite the scandal, Najib has retained some of his former popularity and remains influential within UMNO, which is now back in power.

He remains on trial in the four other cases.

Najib has said he was misled by Low and other 1MDB officials into believing the funds banked into his accounts were donated by the Saudi royal family.

Supporters of former Malaysian prime minister Najib Razak react outside the Federal Court in Putrajaya.

Image via Lai Seng Sin/Reuters

How are the authorities investigating 1MDB?

At least six countries, including Singapore and Switzerland, have launched financial mismanagement and criminal investigations into 1MDB dealings, in a global probe that has implicated financial institutions and high-ranking officials worldwide.

In 2020, US firm Goldman Sachs agreed to pay more than USD5 billion, including a record USD2.9 billion in the US, to settle investigations into its role in underwriting USD6.5 billion in bond sales for 1MDB.

In April this year, former Goldman Sachs banker Roger Ng, a Malaysian, was convicted by a US court of conspiring to violate an anti-corruption law and money laundering. He is the first, and likely only, person to face trial in the US over the scheme.

The Federal Court today sent Najib to jail:

Read about the case where Goldman Sachs' former investment boss for Malaysia Roger Ng Chong Hwa was found guilty:

Ng's trial in the US also brought back focus on Najib and Rosmah:

The Pekan member of parliament has used his freedom to rally support and said that he will not rule out the possibility of contesting in the next general election despite being convicted of corruption:

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