1MDB began as Terengganu Investment Authority (TIA), a sovereign wealth fund aimed at ensuring economic development for the state of Terengganu that is long term and sustainable while safeguarding the economic well-being of the people of Terengganu.
TIA was established in 2008, and was renamed 1Malaysia Development Berhad on January 2009. In his announcement on 22 July 2009, Prime Minister Najib Razak said the decision to expand TIA into a federal entity was made to enable its benefits to reach a broad spectrum of Malaysians rather than to the residents of only one state.
1MDB focuses on strategic development projects in the areas of energy, real estate, tourism and agribusiness.
On 30 September 2009, 1MDB and its strategic partner PetroSaudi International Limited announced the setting up of a US$2.5 billion joint venture company, aimed at spearheading the flow of foreign direct investment from the Middle East into Malaysia.
Following that, on 11 January 2010, 1MDB signed a co-operation framework agreement with the State Grid Corporation of China (SGCC), with the intention to undertake various energy-based projects in the Sarawak Corridor of Renewable Energy (SCORE) and subsequently become major investors in SCORE.
On 18 January 2010, 1MDB signed a co-operation agreement with Abu Dhabi Future Energy Company (also known as Masdar) to explore clean technology projects and investments, including the possibility of building Malaysia’s first carbon-neutral city.
On 13 May 2010, 1MDB as part of a consortium of companies, will jointly undertake a multi-billion-ringgit redevelopment project on the Sungai Besi old international airport, which is now the base for the Royal Malaysian Air Force. The site covers 162 hectares and is planned to be developed into an Islamic financial centre and will include Qatar Investment Authority (QIA) as a partner. This project is dubbed the City of Malaysia. About the same time, 1MDB and QIA had signed an MOU to assess the viability of energy and real estate investments. In the MOU, QIA also proposed to invest US$5bil.
The Sungai Besi airport land transfer took place on June 2011 will be developed as Bandar Malaysia, a mixed integrated development of commercial, residential and hi-tech green environment.
On 21 May 2010, it was reported that 1MDB will jointly develop the Tun Razak Exchange project at a currently vacant piece of land covering 34.4 hectares in the city of Kuala Lumpur with Mubadala Development Company. The Tun Razak Exchange was launched on July 30, 2012 by Prime Minister Najib Razak. During his speech on Tenth Malaysia Plan, Najib Razak identified the KLIFD and City of Malaysia projects as two of many public-private partnership projects which will help drive the nation's transformation agenda.
1MDB has a three-tier check-and-balance system comprising a Board of Advisors, a Board of Directors and a senior management team. The Board of Advisors is chaired by the Prime Minister of Malaysia, Najib Razak.
In early March 2015, with public discontent growing at the perceived lack of financial transparency at 1MDB, the Malaysian Prime Minister, who is also the Chairman of 1MDB's Board of Advisors, ordered the country's Auditor General to carry out an audit of 1MDB.
In November 2015, the company agreed to sell its energy assets, worth around $2.3 billion, to China General Nuclear Power Group and its subsidiaries.
The involvement of 1MDB in the multi-billion ringgit Tun Razak Exchange development project barely a year after its establishment has drawn criticisms from the opposition. Opposition leader and Member of Parliament for Permatang Pauh, Anwar Ibrahim, has openly questioned the credentials of the company. He told Parliament that according to the records held by the companies commission, 1MDB "has no business address and no appointed auditor." He further questioned the Prime Minister's interest in the approval given to 1MDB on this matter.
The RM 425 million profit between September the 25th 2009 and March the 31st 2010 raised many criticisms and controversies on the lack of transparency given to 1MDB's accounts. Tony Pua, DAP Member of Parliament for Petaling Jaya Utara questioned Prime Minister Datuk Seri Najib Razak, 1MDB advisory board chairman, whether the figures were the result of an asset injection into 1MDB by the government such as the transfer of land rights to the company.
During the October 2010 parliamentary session, 1MDB explained that its accounts had been fully audited and signed by KPMG, and closed as of 31 March 2010. Deloitte was involved in the valuation and analysis of the portfolio, while Ernst & Young provided tax advice for 1MDB.
1MDB raised attention by asking for a six-month extension on the annual report meant to be filed in with the CCM by September the 30th 2013. In the meantime, the change of three auditors since its inception in 2009 was considered suspicious.
It also said that 1MDB has lodged the necessary information, including its registered address, with the Companies Commission of Malaysia as required by the law. The business address is also available on the company’s website, www.1mdb.com.my.
It was reported that 1MDB has accumulated debts totalling RM42 billion, causing the bonds issued by the fund to be downgraded to junk status by ratings agencies such as Standard & Poor's and Fitch Ratings. It was reported that the Malaysian cabinet had rejected a RM3 billion cash injection for 1MDB narrowing its options to pay off its debts on time.
It was reported by news portal Sarawak Report and British newspaper The Sunday Times using leaked email correspondences that Penang-based financier Jho Low, who has ties with Najib's stepson, Riza Aziz, was able to siphon US$700 million from a joint venture deal between 1MDB and the leading oil exploration and production company PetroSaudi. An email revealed that Jho Low had the loan approval from Prime Minister Najib for US$1 billion without getting any approval from Bank Negara.
It was claimed through a report by the Wall Street Journal that 1MDB made overpriced purchases of power assets in Malaysia through Genting Group in 2012. Genting then allegedly donated this money to a foundation controlled by Prime Minister Najib Razak, who used these funds for election campaign purposes during the 2013 general elections.
Further allegations were made by the Wall Street Journal that US$700 million were transferred from 1MDB and deposited in AmBank and Affin Bank accounts under Najib's name. A task force that was tasked to investigate these claims have frozen 6 bank accounts linked to Najib and 1MDB. According to highly placed sources, three of the bank accounts that have been frozen belongs to Najib. The Wall Street Journal revealed the bank account details online to rebut denials by Najib and his supporters.
1MDB's president and group executive director, Arul Kanda, in August 2015 appeared in a local TV programme to clarify issues and allegations against 1MDB.
Earlier that month, the Malaysian Anti Corruption Commission had confirmed that no funds from 1MDB were transferred to the Prime Minister's private accounts as alleged by the Wall Street Journal.
In media interviews in September 2015, 1MDB said some media reports concerning the company appear to be politically motivated. Its president and group executive director, Arul Kanda, also clarified that none of the company's accounts in Singapore have been frozen, rebutting news reports on the matter. The company has also dismissed claims of wrongdoing.
In February 2016, United States' Federal Bureau of Investigation (FBI) began probing the connection between a regional top executive of global investment bank Goldman Sachs to Razak and the nature of the former’s involvement in multibillion-dollar deals with 1MDB. Similar probes have also taken place or are currently undergoing in the United Kingdom, Australia, Hong Kong and Singapore into banks that facilitated transactions for 1MDB.