The 1MDB Scandal: A Tale of Corruption and Power
In the opaque world of global finance, few stories have drawn as much attention as the 1MDB affair. Described by the media as "one of the world's greatest financial scandals" and labeled the "largest kleptocracy case to date" by the United States Department of Justice, the 1MDB scandal is a shocking narrative of corruption, greed, and the abuse of power at the highest levels of government.
At its core, this scandal revolves around kleptocracy—a system where corrupt officials exploit their positions to enrich themselves through bribes, kickbacks, and illicit transfers of public funds. In the case of 1MDB, these practices were executed on an extraordinary scale. Established as a Malaysian state investment fund, 1MDB was intended to finance development projects, create jobs, and attract investments to benefit the nation. Instead, it became a vehicle for theft and deceit.
Between 2009 and 2015, Jho Low, a young Malaysian financier and close associate of then-Malaysian Prime Minister Najib Razak, masterminded the embezzlement of over $4.5 billion from 1MDB. The acronym stands for 1Malaysia Development Berhad, with “Berhad” denoting a Malaysian public limited company. The sheer audacity of the theft, along with the flamboyant ways the stolen funds were spent, underscores the risks of unchecked power and the critical importance of government transparency.
Where the Money Went
A large portion of the stolen funds was funneled directly to Najib Razak, his family, and other corrupt officials in Malaysia and countries in the Arabian Gulf where 1MDB conducted business. However, Jho Low and his associates spent a significant amount of the money on an extravagant lifestyle. This included lavish parties, luxury real estate, art acquisitions, and superyachts. Shockingly, $100 million of the stolen funds was used to finance the Hollywood film The Wolf of Wall Street. At one point, Jho Low was rumored to have more personal liquid cash than anyone else in the world.
But beneath the glamor and excess lies a grimmer reality. The scandal wasn’t victimless. Among those harmed was a young mother who was murdered to cover up a separate corruption case indirectly linked to 1MDB, highlighting the darker, more sinister dimensions of this sprawling scheme.
The Brave Journalists Who Exposed the Truth
Uncovering the 1MDB scandal required fearless investigative reporting. Clare Rewcastle Brown, the journalist behind the Sarawak Report website, played a critical role despite facing death threats for her coverage. Mary Ann Jolly of Al Jazeera also brought the story to light, producing a revealing 101 East documentary that included an interview with Najib Razak himself. Authors Bradley Hope and Tom Wright provided a comprehensive account in their book The Billion Dollar Whale, which offers an in-depth exploration of the scandal’s intricacies.
The Rise of Jho Low
Jho Low, the scandal’s architect, was born in 1981 to an upper-middle-class family in Malaysia. Although not excessively wealthy, his family was affluent enough to send him to Harrow, an elite boarding school in London whose alumni include Winston Churchill and Benedict Cumberbatch. Low then attended the Wharton Business School in Pennsylvania, renowned for producing business icons like Warren Buffett and Elon Musk.
It was during his time in London that Low formed a pivotal connection with Riza Aziz, the stepson of Malaysian Prime Minister Najib Razak. This relationship opened the door for Low to become close with Najib and his wife, Rosmah Mansor. Far from being a passive observer, Rosmah played an active role in the scheme alongside her husband and Jho Low.
A Scandal of Global Proportions
The 1MDB affair weaves a complex web of corruption, greed, and abuse of power that spans multiple nations and involves a cast of larger-than-life characters. It remains a stark warning of the dangers of unbridled authority and financial opacity in global governance.
The rise of Jho Low, from a young and ambitious financier to the central figure in one of the world’s most infamous financial scandals, is a story defined by strategic networking, calculated influence, and bold manipulation. While details about his early business ventures remain sparse, his knack for cultivating relationships with influential individuals was evident from the outset.
In 2006, at just 25 years old, Low orchestrated his first major deal. With financing from a Kuwaiti bank, he acquired a luxury high-rise building in Kuala Lumpur for $87 million. While the exact financial outcome of this venture remains unclear, it marked the beginning of his rapid ascent in the international financial world.
Building a Network of Power
After this initial success, Low formed an investment group that included high-profile partners: a Malaysian prince, a Kuwaiti sheikh, and a friend from the United Arab Emirates. This Emirati connection proved particularly fruitful, as the friend later became an ambassador to both the United States and Mexico, eventually rising to a powerful position as a key advisor to the Crown Prince of Abu Dhabi. This ability to identify and align himself with people of influence became one of Low’s defining traits.
These connections ultimately brought him into the inner circle of Malaysian Prime Minister Najib Razak and his family, who saw Low as a financial prodigy. While the specifics of their discussions remain unknown, the relationship culminated in a pivotal meeting aboard a 300-foot superyacht in the Mediterranean in September 2009.
The yacht gathering brought together Jho Low, Najib Razak, his wife Rosmah Mansor, their children, and two prominent Saudis: Prince Turki bin Abdullah bin Abdel Aziz, the seventh son of the Saudi king and brother to Mohammed bin Salman (MBS), and Tarek Obaid, whom Low had met during a party in Geneva.
Obaid was the co-founder of PetroSaudi International (PSI), a company established with Prince Turki that claimed ownership of valuable oil fields in Central Asia. These oil fields were presented as collateral to secure financing from state investors. During the yacht meeting, a deal was struck: PetroSaudi and 1MDB would form a $2.5 billion joint venture, ostensibly to fund projects in Malaysia aimed at driving economic growth, creating jobs, and improving infrastructure. In reality, the deal’s true purpose was personal enrichment for the key players involved.
Rapid Execution and Deception
The deal progressed with astonishing speed. Within weeks, 1MDB injected its first billion dollars into the joint venture. However, $700 million was almost immediately diverted under the pretext of repaying a loan PetroSaudi had allegedly extended to the venture. The 1MDB board was informed that the repayment was urgent, but emails later revealed this was a carefully orchestrated deception.
Despite never holding an official position on 1MDB’s board, Low’s involvement was central. Documents published by the Sarawak Report and The Wall Street Journal revealed that Low had crafted the entire joint venture plan before presenting it to either PetroSaudi or 1MDB. Leveraging his close relationship with Prime Minister Najib Razak—who wielded ultimate control over 1MDB as both Prime Minister and Finance Minister—Low manipulated and bribed the board to execute his scheme.
The $700 million diverted from the joint venture was deposited into a Zurich bank account controlled by Low. This bold misappropriation occurred within weeks of the yacht meeting and set the stage for the global 1MDB scandal.
Jho Low’s ability to navigate international financial systems, exploit political connections, and orchestrate complex schemes allowed him to carry out one of the most audacious acts of financial fraud in modern history.
1MDB: A Lavish Lifestyle Fueled by Corruption
As the 1MDB scandal unraveled, the sheer audacity of Jho Low’s actions became increasingly apparent. After siphoning $700 million from the 1MDB-PetroSaudi joint venture, Low wasted no time distributing the wealth among his collaborators and indulging in extravagance. Two PetroSaudi directors, Tarek Obaid and Patrick Mahony, who had joined the scheme mere weeks earlier, each received $85 million from Low. Their payments were essentially rewards for assisting in the heist of Malaysian public funds.
With $530 million still at his disposal, Low began spending recklessly. The day after the $700 million transfer, one of Low’s associates posted on Facebook: “I feel the earth move under my feet.” A few days later, another post read: “In Vegas, bring a jacket cos it’s raining crystal haha.”
From October 2009 to June 2010, Low and his entourage reportedly burned through more than $80 million on high-end indulgences:
Alcohol and Gambling: Lavish nights in Las Vegas, where bottles of champagne flowed freely.
Private Jets and Yachts: Chartering luxury aircraft and renting superyachts.
Celebrities and Models: Paying Playmates and Hollywood stars to join their parties.
Low’s fascination with celebrity culture led to his fixation on Paris Hilton, with whom he was frequently seen at parties. For Hilton’s 29th birthday in Las Vegas, Low gifted her a Cartier watch and $250,000 in gambling chips. During the same celebration, Low lost $2 million in a mere 10 minutes at the baccarat table. Observers remarked on his carefree demeanor, noting, “He acted like the cash wasn’t his own.”
Expanding the Scheme
The $700 million theft was only the beginning. In July 2010, Low convinced 1MDB to inject an additional $500 million into the joint venture. He used $260 million of this to purchase a Malaysian bank in which he was already a major shareholder—at a highly inflated price. A few months later, 1MDB lent another $830 million to the venture, with $330 million reportedly landing in Low’s Swiss bank account.
Within just two years of 1MDB’s creation, over $1 billion had been siphoned off. Much of this money is suspected to have been funneled back to Malaysian Prime Minister Najib Razak and his wife, Rosmah Mansor.
To expand his scheme further, Low brought in Tim Leissner, the charismatic chairman of Goldman Sachs Southeast Asia. Known for his charm and love of excess, Leissner was an ambitious figure who thrived in the morally flexible world of high-stakes finance. He had earned a reputation for winning business in environments where government and private interests overlapped, often greased by bribes and backdoor deals.
Leissner’s personal life mirrored his professional opportunism. Known for his womanizing tendencies, he converted to Islam twice to impress Muslim women he dated. Despite already earning around $10 million a year, Leissner wasn’t satisfied. He wanted more than just a high salary or accolades for structuring deals—he craved a share of the profits and a seat at the table alongside power players like Jho Low.
This partnership between Low and Leissner set the stage for the scandal to reach even greater heights, dragging one of the world’s most prestigious financial institutions into the mire.
The involvement of Tim Leissner, a Goldman Sachs heavyweight, brought the 1MDB scandal into the global spotlight. Leissner’s personal life mirrored his professional recklessness—he married Kimora Lee Simmons, former wife of Def Jam founder Russell Simmons, while still married to another woman, presenting her with doctored divorce documents. Professionally, his partnership with Jho Low, alongside Goldman colleague Roger Ng, ensured that the financial giant played a central role in what would become one of the largest financial scandals in history.
Goldman Sachs’ Role in Raising Funds
In 2012 and 2013, Goldman Sachs underwrote three bond issues for 1MDB, raising $6.5 billion. The bank earned a jaw-dropping $600 million in fees—a near 10% commission, far exceeding the industry norm of 1-2%. This outsized fee may have been tied to earlier concerns within Goldman about Low’s compliance record and the suspicious origins of his wealth, which had led the bank to reject him as a client.
Of the $6.5 billion raised, Jho Low diverted $2.5 billion, fueling even greater extravagance. While some legitimate business acquisitions were made, much of the money was spent on Low’s extraordinary purchases and indulgent lifestyle.
Low’s shopping spree with stolen funds redefined excess:
Luxury Real Estate: A $30.5 million penthouse in New York’s Time Warner Center, a $39 million house in Los Angeles, a $35 million penthouse in London, and a $17.5 million home for Prime Minister Najib Razak’s stepson in Beverly Hills, among others.
Art Collection: In 2013 alone, Low spent $330 million on art, including Jean-Michel Basquiat’s Dustheads for $48.8 million and Picasso’s Women of Algiers for $179 million.
Jewelry: Over $200 million was spent on jewelry in just 18 months, including $8 million in gifts for supermodel Miranda Kerr and a $27 million pink diamond necklace from New York jeweler Lorraine Schwartz for Rosmah Mansor, the Prime Minister’s wife.
Luxury Transportation: A $35 million private jet and, in 2014, a $261 million yacht named Equanimity.
Parties and Hollywood Connections
Low’s parties became legendary for their extravagance. His 31st birthday in Las Vegas in 2012 epitomized his over-the-top lifestyle, with over 300 celebrity guests, including Leonardo DiCaprio, Jamie Foxx, Kanye West, Kim Kardashian, and Michael Phelps. Highlights included:
An indoor Ferris wheel and an ice-sculpted bar.
Britney Spears being paid $1 million to jump out of a cake and sing “Happy Birthday.”
South Korean singer Psy reportedly earning even more for his performance.
A total cost estimated at $100 million, with Robin Leach, host of Lifestyles of the Rich & Famous, calling it “the most expensive party Las Vegas has ever seen.”
Low also used stolen funds to buy influence in Hollywood, forming close ties with Leonardo DiCaprio. Low financed Red Granite Pictures, a production company owned by Prime Minister Najib Razak’s stepson, Riza Aziz, using $100 million of 1MDB money. The company’s crowning achievement was producing The Wolf of Wall Street, a film ironically reflecting Low’s own life of fraud-fueled excess.
DiCaprio, who became one of Low’s close friends, received extravagant gifts including a $3.2 million Picasso and an Oscar statuette originally awarded to Marlon Brando. DiCaprio even thanked Low during his Golden Globes acceptance speech for Best Actor, underscoring how deeply Low had ingratiated himself into Hollywood’s elite.
A Life Imitating Art
Low’s story—stealing billions to fund an opulent lifestyle of parties, properties, and yachts—was mirrored in the very film he financed. The Wolf of Wall Street became a symbolic centerpiece of the 1MDB scandal, highlighting the shocking scope of corruption and the audacity with which Jho Low wielded his stolen wealth.
Jho Low’s extraordinary fraud and lavish lifestyle would have been impossible without the complicity of Malaysia’s most powerful figure: Prime Minister Najib Razak. A member of Malaysia’s political aristocracy, Razak was initially regarded as a reformer. Early in his tenure, he implemented liberal policies, easing restrictions on public gatherings, cutting government subsidies, and encouraging foreign investment. But as allegations of corruption began to tarnish his reputation, Razak’s tactics shifted. He reinstated draconian laws such as detention without trial and aggressively pursued critics under sedition charges.
Razak’s History of Scandal
The 1MDB affair was far from Razak’s first controversy. In 2002, as Minister of Defence, Razak signed a €1.2 billion deal to acquire three French submarines. Altantuya Shaariibuu, a Mongolian interpreter and mother, was hired for the deal. It was later revealed that a €114 million kickback from the contract went to a company controlled by Razak’s close associate. This firm, supposedly hired for "consulting," had been formed mere months before the deal.
Altantuya, who was romantically involved with Razak’s associate, claimed she was owed €500,000 for her role. When the money never materialized, she threatened to expose what she knew. Soon after, she was kidnapped, shot, and her body destroyed with military-grade explosives. Two elite police officers were convicted of her murder, but allegations surfaced that Razak had ordered the killing.
Razak personally profited handsomely from the 1MDB scheme. Days after Goldman Sachs closed its 2013 bond offering, $681 million of misappropriated funds was transferred into an account held by Razak. This revelation, first reported by the Sarawak Report in 2015 based on whistleblower documents, was a turning point in exposing the scale of the scandal.
When these revelations came to light, Razak used his authority to obstruct investigations and suppress dissent. Key actions included:
Firing the Attorney General: Replacing him with a loyalist who declared there was no wrongdoing.
Arrests and Promotions: Detaining opposition politicians and promoting four members of the parliamentary accounts committee investigating 1MDB to cabinet roles, effectively halting their work.
Destroying Evidence: A mysterious fire at police headquarters destroyed key records of white-collar crimes.
The government also targeted journalists, including Clare Rewcastle Brown of the Sarawak Report. In a drastic move, they attempted to have Interpol issue a “Red Notice” for her arrest. Rewcastle Brown, who faced death threats, remained steadfast in exposing the truth.
When confronted about the $681 million deposit into his account, Razak claimed it was a generous donation from Saudi Arabia, supposedly a reward for Malaysia’s efforts in combating Muslim extremism. This claim was bolstered by a Saudi government spokesperson. However, investigative reports from the Wall Street Journal and the Sarawak Report proved the funds originated from an account controlled by Jho Low in Singapore. Even so, Malaysia’s new Attorney General insisted the transaction was legitimate and claimed Razak had returned $620 million of the “unused” funds to the Saudi royal family.
For decades, Razak likely assumed his party’s unbroken grip on power—since Malaysia’s first elections in 1959—would shield him from consequences. But the 2018 general election proved otherwise. An opposition coalition led by former Prime Minister Mahathir Mohamad campaigned on promises to investigate the 1MDB scandal. Against all odds, they triumphed, ousting Razak and marking a dramatic political shift in Malaysia.
Razak’s loss signaled the beginning of accountability, as his unchecked power finally gave way to public demands for justice.
After Najib Razak’s historic election defeat in 2018, law enforcement quickly uncovered the vast extent of his and his wife Rosmah Mansor’s ill-gotten wealth. Police raids on their properties revealed an almost unbelievable hoard: 567 luxury handbags containing over $30 million in cash, 423 luxury watches, and 12,000 pieces of jewelry valued between $223 million and $273 million. Notably absent was the infamous $27 million pink diamond necklace.
When journalist Mary Ann Jolly confronted Razak in an interview following the scandal, he maintained that the extravagant gifts, his son-in-law’s investments, and even the jewels were offerings from generous Arabian princes. However, his explanations crumbled under scrutiny, and he abruptly walked out of the interview.
Sentencing and Consequences
In July 2020, Razak was convicted on seven charges and sentenced to 12 years in prison with a $49.5 million fine. His wife, Rosmah Mansor—deeply implicated in the corruption, including accepting millions in jewelry as bribes for government contracts—was also convicted. In September 2022, she was sentenced to 10 years in prison and fined $194 million. Despite these verdicts, Rosmah remains free on bail pending appeal, and her future remains uncertain.
The 1MDB scandal exposed the devastating consequences of unchecked power and corruption. It underscored the necessity of a free press, an independent judiciary, and courageous individuals like Clare Rewcastle Brown and Mary Ann Jolly, who risked their safety to uncover the truth.
Yet, the story is far from over. Rosmah’s appeal remains pending, and the return of Razak’s party to power in a coalition raises concerns about the durability of justice. Observers fear that deep-rooted corruption in Malaysia might lead to Rosmah evading sentencing or even Razak receiving early release.
The Fates of Key Figures
While some central figures in the scandal have faced justice, others remain at large:
Tim Leissner, the former Goldman Sachs executive who turned state witness in the U.S., paid a $43 million fine but awaits the conclusion of his case. His testimony helped convict Roger Ng, Goldman’s former Malaysia head, who was sentenced to 10 years in prison.
Goldman Sachs itself paid dearly, settling with the Malaysian government and the U.S. Department of Justice for over $5 billion.
Tarek Obaid and Patrick Mahony, the PetroSaudi executives who facilitated the initial $700 million theft, were charged in absentia by Malaysia in 2020, with arrest warrants issued.
Red Granite Pictures, the company that produced The Wolf of Wall Street with stolen funds, dissolved after paying a $60 million settlement.
The Mastermind Still at Large
Jho Low, the architect of the scandal, remains elusive. Believed to be hiding in China, Low is thought to control hundreds of millions of dollars stashed away in secret accounts. Investigations traced $333 million to a company linked to Low in the British Virgin Islands. Despite an Interpol Red Notice and a U.S. arrest warrant, Low has avoided capture, likely protected by powerful allies in Malaysia and abroad.
The authors of Billion Dollar Whale summed it up aptly: “Too many powerful people in Malaysia are connected to Low.” Until these connections are fully severed, justice for 1MDB’s victims will remain incomplete.
Jho Low’s audacity extends beyond his financial crimes. He has reportedly used his remaining wealth to lobby U.S. politicians to drop criminal charges against him. This effort gained public attention when Pras Michel, a former member of the Fugees, was indicted by a federal grand jury. Pras was accused of orchestrating a back-channel campaign to convince the U.S. government to abandon its case against Low. His trial is scheduled to begin on March 27, 2023.
Despite his crimes, Low has perversely earned a level of admiration in Malaysia. Many marvel at his ability to execute one of the largest financial heists in history, trigger the nation’s first regime change, and remain on the run. This reaction exposes a troubling undercurrent in Malaysian society, where systemic corruption allows figures like Najib Razak—suspected not only of massive embezzlement but also possible involvement in a high-profile murder—to cling to the possibility of early release and even a return to political power.
To date, only about a quarter of the estimated $4.5 billion stolen from 1MDB has been recovered. The case highlights the immense challenges faced by nations grappling with systemic corruption and the urgent need for international collaboration to bring perpetrators to justice.
The 1MDB scandal stands as a stark reminder of the damage unchecked power and greed can inflict, not just on a nation’s finances, but on its integrity and trust in governance.
Disclaimer
Each article is grounded in extensive research from a range of reputable sources, which can include written articles, books, videos, and podcasts. The specific types of sources may vary depending on the topic. I compile this information into a detailed document, typically around 6,000-9,000 words, to serve as a rehearsal script for my podcast episodes. My goal is not to produce a polished article but to create a working script that structures my thoughts for the episode.
To refine this script, I use ChatGPT with carefully crafted prompts, ensuring all facts and figures are accurate while preserving my opinions and voice. This process helps transform my research into a script mainly, but also an article, that reflects the depth of my preparation while staying true to my perspective.
Sources
https://docs.google.com/document/d/1vrHeoLznO0VYCLXvNd1FmgaPYDZZ1lVMbpQq1s0qlbI/edit?usp=sharing