The Malaysia Corruption Scandal–How Did They Do It?

How did the largest kleptocracy case in the world play out?

The biggest corruption scandal of the 21st century is finally coming to an end. A single leader of a single country carried out a con game against not just his people but the entire world. Former Malaysian Prime Minister Najib Razak, currently awaiting a final decision by the jury, has been charged for more than 40 crimes including embezzlement of over $4 billion from the state fund. Mahathir Mohamad, who came to power last May in the general election, has openly denounced Najib and immediately barred him from fleeing the country. When the police forces searched Najib’s properties, they seized hundreds and thousands of luxury goods: 234 pairs of sunglasses, 423 watches, 567 handbags and 12,000 items of jewelry as well as 30 million dollars of cash in various currencies. By far, the Malaysia Scandal is “the largest kleptocracy case,” as US Attorney General Loretta Lynch described.

How is a 12 billion-dollar international fraud involving Hollywood celebrities and more than 12 countries worldwide possible?

It all began in 2009 when Najib Razak was elected Prime Minister of Malaysia. One of his first actions was creating the 1Malaysia Development Berhad (1MDB), a government-run investment company which was supposed to promote economic growth and lead Malaysia to become a more developed, sustainable nation. Its announced initiatives included purchasing privately owned power plants and building a new financial district in Kuala Lumpur, which would understandably lead to astronomical costs. In order to raise funds for his “projects,” Najib issued international bonds for state-owned oil and in the process took advantage of connections with the International Petroleum Investment Company (IPIC), Goldman Sachs, and Deloitte to establish trust among the international economic society. As a result, Najib successfully raked in bond sales totaling 6.5 billion dollars. However, instead of reaching towards its initial goals, 1MDB was exploited by Najib and other high-ranking officials.

In the center of the scheme was Jho Low, also known as the “Asian Gatsby.” As the main conductor, Low managed to bribe famous Hollywood celebrities and renowned public figures and utilize them as tools of “word of mouth” to promote his 1MDB business. It seemed that Najib and Low would live in luxury forever. However, the US Department of Justice reported how the pair used the money from 1MDB to buy real estate in the United States, rare artwork, and custom-made jewelry.

Corruption is seldom uncovered when the corrupt are in power. However, at the time of the regime change, the power of the commander-in-chief is weakened, the inner circle of the politician handing the torch off to the new administrative team. With this newfound (minimal) instability, criticism of the Malaysian people against Najib and his party intensified. In the process, Mahathir recognized that he could rise into power once again and resolve this financial crisis.

Regarding the Malaysian case, it is hard not to notice a striking similarity with South Korea’s presidential scandal in 2016: a leader can lead his or her country to not only prosperity but also drive it towards chaos. In order to prevent such political and economic fiascos, it is necessary to establish global and international apparatuses and mechanisms of anticorruption so that the behavior of politicians can be scrutinized and regulated for any foul play.

–William Cho (’21)

Featured Image: Associated Press

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