1MDB SCANDAL

Siddhant Taware

BCM 2019

Birkin is a French company that produces handmade luxury handbags. Malaysia held the record for, The Country having the most Birkin handbags in the World. Guess who was their biggest customer in Malaysia - Rosmah Mansor who was the wife of ex-PM Najib Razak.

Najib Razak was charged for corruption, money laundering, and various other charges for his role in the 1MDB Scandal. The US Justice Department believes that the scandal was worth more than $4.5bn dollars out of which a one-time payment of around $700mn was made to him. Jho Low is also one of the masterminds of what is one of the biggest financial scams in history.

1MDB(Malaysia Development Berhad) was originally a state-owned Malaysian Fund that was set up in 2009 to promote development through foreign investments and partnerships. Some of the investors include Goldman Sachs and The Saudi Royal Family.

The scam took place between 2009-12 and even after that but in 2015 the Malaysian Government defaulted on a payment of around $11 bn which they owed to the banks and the bondholders. It is reported that Goldman Sachs received around $600mn in fees for arranging and underwriting bonds to raise $6.5bn.

Goldman Sachs has paid Malaysia $2.5 billion as a part of the settlement over the bank's role in this multi-billion-dollar, the total value of the agreement is around $3.9 billion.

Where did the cash go?

The money was siphoned into banks in Switzerland, Singapore and the U.S. Najib and his wife had an extravagant lifestyle. More than 500 luxury handbags, hundreds of watches, and around 12,000 jewelry items worth $273mn were seized from them. Jho Low had allegedly purchased billions of dollars' worth of property in Beverly Hills and Manhattan. He also bought a private jet and a yacht worth around $35mn and $260mn respectively. He gifted a Picasso painting worth around $3.2mn to Leonardo DiCaprio.

He also had gambling debts in Las Vegas of around $85mn. He used to throw lavish parties for Hollywood celebrities and make them perform live. He even gifted diamonds worth around $8mn to Australian supermodel Miranda Kerr. He also funded a Hollywood Blockbuster through a production company that was run by Najib's stepson. The movie was-

"The Wolf Of The Wall Street"

Malaysia's public debt was around 52% of its GDP and to repay these debts they introduced various taxes with GST being one of them. Again it's the common person who has to pay for somebody else's wrongdoing. Najib was handed a 12-year jail term after being convicted of the charges yet he remains free on bail while he appeals.