This week the former prime minister of Malaysia Najib Razak appeared in court facing multiple charges related to money-laundering and abuse of power, in what is billed as one of the biggest financial trials in recent history.
It brought down a government, involved billions of dollars, funded a Hollywood film starring Leonardo DiCaprio and was exposed by a fearless British reporter, yet the 1MDB scandal has received relatively little attention in the UK since it broke in 2015.
Give me it in a nutshell...
Razak is accused of stealing billions of dollars from a state fund that was established to accelerate his country’s economic development.
Sounds serious
It really is. The scandal brought down Razak’s government and he has since been charged with 42 criminal offences including money laundering and abuse of power.
He has denied any wrongdoing and says the charges against him are politically motivated, but the evidence is stacked against him – not least the tens of millions of dollars in cash and hundreds of millions of dollars worth of luxury goods found in his properties.
How did he allegedly do it?
Nijab co-founded 1Malaysia Development Berhad (hence “1MDB”) in 2009, a state-owned fund that was supposed be used to forge international partnerships and promote foreign investment.
Instead, the US and several other countries are investigating allegations of cross-border embezzlement and money laundering at 1MDB, which accumulated billions in debt.
The US Justice Department says at least 4.5 billion dollars (£3.18 billion) was stolen from 1MDB by associates of Najib, and it is working to seize 1.7 billion dollars (£1.2 billion) that it says was taken from the fund to buy assets in the US, potentially its largest asset seizure ever.
One of the assets seized was this massive £200million yacht which is currently being auctioned off if you have a spare bit of cash lying around.
Did he allegedly do it alone?
Nijab is currently on trial in Malaysia and on the opening day this week, the prosecution argued that Najib had not acted alone, colluding on numerous occasions with fugitive financier Low Taek Jho, better known as Jho Low.
Low, who faces criminal charges in Malaysia and the United States over his alleged central role in the 1MDB case, has consistently denied wrongdoing and his whereabouts are unknown, Reuters reports.
“If you place the accused before a mirror, you will see Jho Low. And if you place Jho Low before a mirror, you will see the accused,” prosecutor Gopal Sri Ram said.
Malaysian prosecutors have also filed criminal charges against 17 current and former directors at three Goldman Sachs subsidiaries over their role in the alleged multibillion-dollar ransacking of the state investment fund.
In addition, former Goldman Sachs executive Roger Ng was arrested in Malaysia last year and has been extradited to the US, where he also faces charges.
Malaysia’s current government has also filed criminal charges against Goldman Sachs and is seeking 7.5 billion dollars (£6.17 billion) in compensation from the bank.
What’s this about Leonardo DiCaprio?
In a bizarre twist, it is alleged that some of the money taken from the fund was used to buy assets in the US including helping finance the movie The Wolf of Wall Street, featuring DiCaprio.
How was the scandal exposed?
Whisperings of the scandal were reported in various papers around the world but the work of British journalist Clare Rewcastle Brown, sister-in-law of former PM Gordon Brown.
As the scandal broke, Razak’s government responded in 2018 by proposing a law that ostensibly targeted fake news but was widely condemned as an attempt to crack down on dissent ahead of a general election.
In a blog for HuffPost UK, Rewcastle-Brown wrote:
“As I found myself in the thick of the biggest investigative story of my career, I suffered state-backed computer hacking of my systems. Myself and my family were stalked by private security companies; my house was under surveillance.
“I was the target of death threats and numerous criminal charges; a heavily funded PR operation waged online hate campaigns against me. The Malaysian government of the time tried, unsuccessfully, to get Interpol to arrest and extradite me to stand trial for ‘activities detrimental to parliamentary democracy.’”
Undeterred, Rewcastle-Brown, persisted in her reporting and managed to shed light on the scandal.
“As I unravelled the story, I was able to demonstrate how several major banks had got involved in helping raise and transport the money via the offshore system into the personal bank accounts of Najib, Jho and Riza, along with a number of co-conspirators.”
So what’s happening now?
Najib was voted out of power last year amid widespread public anger over the scandal.
After the shock election loss, Najib and his wife Rosmah Mansor were barred from leaving Malaysia and scrutiny of their luxurious lifestyle uncovered nearly $300million (£246million) worth of goods and cash at properties linked to him.
Rosmah, known for her designer handbags and jewellery, has also been charged with corruption. She has pleaded not guilty.
In his second trial on Wednesday, Najib faces 21 charges of money laundering and four charges of abuse of power for allegedly receiving illegal transfers of at least 2.3billion ringgit ($550.8million) between 2011 and 2014.
The prosecution said Najib used 1MDB as a vehicle “to obtain gratification for himself”.
He has accused Malaysia’s new government of seeking political vengeance and vowed to clear his name in his trial.
Lawyers are expected to submit closing arguments in that case in October, with the judge to rule by November 11.