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On Wednesday, May 12, the Malaysian government confirmed that the US Department of Justice returned 1.9 billion ringgit (about $460 million) from seized assets related to the ongoing 1Malaysia Development Berhad (1MDB) scandal.
The development is the result of a five-year-long joint effort between US and Malaysian authorities to seize assets allegedly bought with money stolen from the fund. These assets include real estate in New York and Los Angeles, artwork by world-famous painters such as Van Gogh and Monet, and even profits received from the blockbuster movie, “The Wolf of Wall Street.” The goal: to recoup the stolen funds and repay outstanding debts incurred by 1MDB and its subsidiary, SRC International — which, together, amount to over 42 billion ringgit.
US authorities have helped to recover more than 4.5 billion ringgit so far, and in all, Malaysia has recovered 16.05 billion ringgit (or about $3.89 billion) of the 1MDB funds.
The scandal itself has made headlines since 2015. Reports had emerged that money meant for the country’s sovereign wealth fund — established in 2009 to promote Malaysia’s economic development — instead found its way into then-Malaysian Prime Minister Najib Razak’s bank accounts. A formal investigation launched in 2018 revealed wide-scale corruption involving several high-ranking officials who conspired to siphon off and pocket an estimated $4.5 billion from the fund.
The man who many believe orchestrated the entire scheme, Jho Low, is still at large. Even so, plenty of other alleged conspirators have been caught. There have been numerous arrests, the imprisonment of Malaysia’s former prime minister, and the implication of several officials and financial institutions around the world, including Goldman Sachs Group, JP Morgan, and Deutsche Bank.
Indeed, last October, Goldman Sachs Group’s Malaysian subsidiary admitted in US court that it had paid over $1 billion in bribes to raise money for the fund. The bank was fined $2.3 billion and agreed to return $600 million of the funds it received from the scheme to Malaysia. That settlement was on top of another reached with Malaysian authorities earlier that year that saw the bank pay $2.5 billion to the Malaysian government and pledge to return at least $1.4 billion in recovered funds.
1MDB also announced earlier this month that it had filed six civil suits against nine entities — including JP Morgan and Deutsche Bank — and 25 individuals to recover an additional $23 billion in linked assets and punish those that the justice system determines to be part of or beneficiaries of the conspiracy. Also among those named are Jho Low, his father and sister, and a close associate of Jho Low’s, Eric Tan Kim Loong.
While it remains to be seen how effective these civil lawsuits will be, it’s clear that there will still be more twists and turns — and punishments meted out — before this scandal truly comes to a close.
Originally published May 20, 2021, updated August 25, 2022
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