Malaysia’s financial scandal: 1MDB

In this May 14, 2015 photo, construction workers chat in front of a billboard for state investment fund 1 Malaysia Development Berhad (1MDB) at the fund's flagship Tun Razak Exchange development in Kuala Lumpur, Malaysia. (AP Photo/Joshua Paul)

Malaysia’s massive 1MDB corruption scandal allegedly saw top officials loot billions from state funds, splurging on luxury assets worldwide including a Monet painting and even funding a Hollywood blockbuster.

The case also ensnared global banking firm Goldman Sachs, which helped raise US$6.5 billion for the now-defunct fund that prosecutors say was plundered of US$4.5 billion between 2009 and 2015.

The scandal shook Malaysian politics, contributing to the 2018 downfall of the ruling coalition that had governed since independence in 1957, and led to the convictions of two former Goldman bankers.

Here’s what you need to know about 1MDB:

What was 1MDB?

1Malaysia Development Berhad (1MDB) was a state investment fund launched by Najib Razak in 2009, shortly after he became prime minister.

It invested in power plants, energy assets and real estate in Malaysia and the Middle East, under Najib’s close supervision.

Whistleblowers said Jho Low, a well-connected Malaysian financier with no official role, helped set up the fund and made key financial decisions.

Alarm grew in 2014 when 1MDB’s debts ballooned to about US$11 billion and questions surfaced over missing money.

The Sarawak Report news portal first blew the whistle, followed by The Wall Street Journal in 2015, which published documents showing Najib received at least US$681 million in payments to his personal accounts.

How was the money spent?

The U.S. Department of Justice later launched a major probe, alleging that stolen Malaysian funds were laundered through the U.S. financial system and used to buy luxury assets.

It is estimated that over US$4.5 billion was diverted from 1MDB between 2009 and 2015 by fund officials and associates.

Tens of millions of dollars were used in 2012 by Najib’s stepson Riza Aziz, an aspiring film producer, to fund the Hollywood film “The Wolf of Wall Street”, starring Leonardo DiCaprio.

Hundreds of millions more were spent on high-end real estate in Beverly Hills, New York and London.

Other purchases reportedly included a US$35 million Monet painting, a US$5.5 million Van Gogh, a US$35 million Bombardier jet, a US$100 million stake in EMI Music Publishing, and a us$250 million yacht.

What role did Goldman play?

Apart from Najib, Malaysia also charged Goldman Sachs and several current and former employees for their role in arranging 1MDB bond sales.

Prosecutors said bank officials helped divert large sums and bribed officials to secure contracts, while misleading investors.

Two ex-bankers were accused -- along with Low and a former 1MDB employee -- of being involved in misappropriating large sums during the fundraising, bribing officials to ensure they were selected to carry out work and giving false statements to investors.

Tim Leissner, Goldman’s former Southeast Asia chairman, pleaded guilty in the U.S. to bribery and money-laundering charges, agreeing to a lifetime ban from the securities industry. He was handed a two-year sentence after assisting investigators.

A second banker, Ng Chong Hwa, also known as Roger Ng, a Malaysian former managing director, was given a 10-year sentence.

How were the assets recovered?

In July 2020, Goldman agreed to pay US$3.9 billion to Malaysia in a settlement that ended criminal proceedings over its role in arranging 1MDB bonds.

The deal included a US$2.5 billion cash payment and a guarantee to help recover at least US$1.4 billion in misappropriated assets.

Tensions resurfaced in 2023 when Malaysian Prime Minister Anwar Ibrahim sought to renegotiate the agreement, saying Malaysia “cannot be taken for a ride”. Goldman later sued the government as the dispute dragged on.

Despite the uncertainty, asset recovery efforts have surpassed expectations.

The U.S. Department of Justice said in June 2024 that it had recovered and helped return about US$1.4 billion to Malaysia, and in January 2025, it recovered another US$20 million.

In August 2025, JPMorgan Chase agreed to pay US$330 million to settle all matters related to 1MDB.

Earlier this month, the Malaysian Anti-Corruption Commission said talks with U.S. officials would lead to the return of 12 high-value paintings -- including works by Pablo Picasso, Henri Matisse and Joan Miro -- worth more than US$30 million.