Malaysia: 1MDB scandal haunts PM

Malaysian Prime Minister Najib Razak.

Reacting to what is reportedly the biggest financial scandal in history, US authorities have subpoenaed documents from Goldman Sachs relating to the dealings of the 1Malaysia Development Berhad (1MDB).

Set up in 2009 by the Malaysian government, 1MDB is supposed to generate growth and establish the country as a financial hub.

However, according to the Wall Street Journal, at least US$1 billion has gone into the pocket of a person referred to in Department of Justice documents as “Malaysian Official 1” — widely reported to be Malaysian Prime Minister Najib Razak.

BBC News reported on July 22 that US authorities are moving to seize more than $1 billion in assets from people connected to Razak — ranging from plush properties to a private jet. This would be the largest asset seizure ever by the Justice Department's anti-corruption unit.

In March, an ABC Four Corners team was detained and expelled from Malaysia while trying to report on the scandal.

On July 26, the London-based online investigative journal, Sarawak Report published leaked Malaysian cabinet papers showing that the government was preparing to funnel money into 1MDB via paying an exaggerated price to a Chinese company to build the East Coast Rail Project.

The documents show that the parties involved were quite aware that the price was inflated by 100% and that the beneficiary would be 1MDB, allowing it to cover its debts.

Thus, far from attracting foreign investment into Malaysia, 1MDB has become a hole into which Malaysian national wealth is being poured to the benefit of corrupt politicians and their cronies.