THE WOLVES OF 1MDB

A hollow yet, intricate web of lies and embezzlement worth billions, popularly known as the 1MDB Scandal, came crashing down on Ex-Malaysian Prime Minister, Mr Najib Razak, with his conviction this week.

The 12-year prison term for Mr Najib is immediately effective. It comes with a 210-million-ringgit ($47 million) penalty and expulsion from the national parliament.

To most Malaysians, it was justice at last, as it put a fitting end to the unsavoury controversy that has been darkening the nation's politics for the last few years. It may yet spell the end of a six-decade-long hegemony of Mr Najib's party, the United Malays National Organisation (Umno). A primary accused in the case, Jho Low, believed to be the mastermind behind the scheme carefully built over the years, remains a financial fugitive.

Background

1MDB was a state fund launched by former Prime Minister of Malaysia, Mr Najib Razak, to promote economic development. However, a series of exposes have revealed that the fund was used for spurious purposes. Between 2009 and 2015, around $4.5 billion went missing from its coffers; among other things, Mr Najib and Mr Jho Low, the mastermind behind the plotting, used it to purchase renowned artwork, a superyacht, and diamond jewellery. Even "The Wolf of Wall Street," a movie exposing fraud, was made possible by a portion of the money.

The court was informed that more than $700 million of the $4.5 billion went through Mr Najib's account. At least six countries later launched investigations into the fraud, and Goldman Sachs, a bank, eventually reached a $3.9 billion settlement with Malaysia for its involvement in the scheme. However, Mr Najib has consistently maintained that he considers the entire amount in his account to be a gift from the Saudi royal family. He points out that it is not illegal in Malaysia to fail to declare such gifts.

However, this defence failed to win over the courts. Prosecutors built a purposefully modest case to convict a suspect who had previously been thought untouchable in a nation where judicial independence was not always guaranteed. The prosecution said that Mr Najib laundered just 42 million ringgits ($9 million) in two accounts between 2014 and 2015. In 2020, Mr Najib was found guilty. Since then, he has unsuccessfully appealed the judgment. His claim of a Saudi gift was rejected by an appeals court last year as "a concoction that is completely devoid of any credibility.

However, it appears that the Umno remains a political power, largely due to the inability of the opposition to run the country efficiently, which saw the dissolution of two coalition governments in less than three years. Last year, UMNO was back at the helm at the head of a third coalition.

Analysis

Mr Najib is far from being a spent force in Malaysian politics. Running a robust campaign on social media, he is projecting himself as deeply religious (and repentant?) who is now appealing to the ultimate courts of the divinity for his salvation. This has a great deal of appeal for Malaysia's growingly devout Muslim population. He has also been trying to charm the Malaysian monarch, hoping perhaps for a royal pardon.

The case exposed the loopholes in the global financial systems that ruthless politicians can exploit with the connivance of international financial services corporations. The banking behemoth Goldman Sachs leveraged its reputation and expertise in the field to siphon money into the 1mdb business and get a fair share of the cut for themselves. For long, this prestigious company was associated with public trust and faith, a conviction that has come crashing down along with the complex web of lies and illicit transactions that constituted the 1 MDB scam.