Political corruption in Malaysia: 1MDB

Por: Laura Paola Villa García | Posted on September 24, 2019

Context

Najib Razak — son of Malaysian ex-prime minister, Abdul Razak — was educated in the United Kingdom and dedicated to politics since he was young, however, it was not until 2009 when head of the ruling National Front.

In the beginning he gained popular support, but it was eroded when he enacted hugely unpopular tax of 6% on consumer goods and services. Later, he was investigated by the Swiss authorities and the U.S for the 1MDB corruption scandal (Britannica, s.f.).

Fact: Who gave what to whom and why?

Najib Razak embezzled the 1Malaysia Development Berhad, known as 1MDB, which was a state fund set up to promote social development through foreign investment and partnerships. According to the U.S Department of Justice, USD $4,500 millions were stolen during Najib’s government.

Najib syphoned off these funds through governments bonds and then deposited them in bank accounts in Switzerland, Singapore and United States (Petersen, 2018).

Out of the total amount mentioned, USD$731 million appeared in Najib’s personal bank account just ahead of the 2013 elections and this money was allegedly used to pay bribes, his credit card bill and his wife’s shopping. Nonetheless, Najib held that this money was donated by a prince un Saudi Arabia (Petersen, 2018).

Furthermore, the money was allegedly used to pay the lavish life of Jho Low, who was one of Najib’s consultants. He used the money to buy among other things, a luxury yatch of and estimated value of USD $260 million; a department that belonged to Beyoncé and Jay Z; a Picasso painting that was later a gift for Leonardo Dicaprio and a dozen million dollars given to Najib’s stepson Riza Aziz for the production of The Wolf of Wall Street (Petersen, 2018).

Najib is being prosecuted over the following charges (Suhkry, 2019):

  • Embezzlement of the 1MDB fund.
  • Active Bribery after he received USD $10.3 million in bribes.
  • Breach of trust and money laundering.
  • Embezzlement and four counts of corruption involving $681 million that appeared in his personal bank accounts.
  • He was accused of making a payment of 6.6 billion ringgit (Malaysian currency) to an Abu Dhabi sovereign wealth fund and investing in projects related to Chinese companies.
  • He was accused of altering a state audit report into 1MDB.
  • He was accused of receiving $47 million ringgit proceeding from illegal activities.

Applicable Law

  • Malaysian Criminal Code

¿Why the case is relevant?

This case is relevant because it is one of the biggest corruption scandals in the modern history of Malaysia not only due to the amount of money stolen for illegal activities but also because this investigation involves a chief of state in Asia.

Moreover, the lavish life of Najib’s wife is pretty shocking because after Najib was arrested, Malaysian police seized 1400 necklaces, 567 bags, 23 watches, 2200 rings and 14 tiaras with an estimated value of USD $273 million.

Lessons learned

This is a case in which once more we testify that there is no limit in the greed of some public officials, who steal money from their people notwithstanding their poverty and misery. Nonetheless, if Najib Razak and ex-prime minister is being prosecuted for embezzling the 1MDB then it is possible to bring to trial at least hundreds of public officials that have done all kinds of grafts all over the world.

 

What type of corruption is it and what are the crimes involved?

This is a very complex case as it is a case of both political and grand corruption due to the fact that Razak manipulated a government institution, 1MDB, in order to allocate its funds in an illegal manner and preserve his power and wealth. Furthermore, the size of the transactions that were done in the allocation of resources is enormous and represents a violation of human rights for Malaysians (Convention, s.f.).

Najib also participated in other crimes such as embezzlement, money laundering and forgery. The first one consists in the act in which a public official uses or traffics the funds or goods thy have been entrusted with for personal enrichment (Abogados, s.f.). The second crime consists in concealing the origin of resources obtained illegally by hiding them within legitimate economic activities. The third consists in modifying official documents (Abogados, s.f.).

References (Harvard – Anglia)

Transparency, 2019. Transparency. [Online]
Available at: https://bit.ly/2MicdBo

Abogados, D., s.f. Glosario de Derecho Anticorrupción. [Online]
Available at: Ebook

Convention, U. N., s.f. Grand Corruption occurs when. [Online]
Available at: Grand corruption occurs when. [Ebook]. Oficina de las Naciones Unidas contra la Droga y el Delito. Recuperado de https://bit.ly/2momz6s

Britannica, s.f. Britannica. [Online]
Available at: https://www.britannica.com/biography/Najib-Razak

Latiff, R., 2019. Reuters. [Online]
Available at: https://www.reuters.com/article/us-malaysia-politics-1mdb/malaysia-aims-to-recover-about-5-billion-in-1mdb-linked-assets-idUSKCN1TM09Y

Shukry, A., 2019. Bloomberg. [Online]
Available at: https://bloom.bg/2UoO7YD

Petersen, H., 2018. The Guardian. [Online]
Available at: https://bit.ly/2D4Gyhs

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"Political corruption in Malaysia: 1MDB"; Laura Paola Villa García, México, 2019.