The RM425 million profit between 25 September 2009 and 31 March 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 Najib, 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 30 September 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 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. There have been questions by the opposition regarding lack of progress on Bandar Malaysia even after 1MDB raised RM3.5 billion in loans and Islamic bonds to fund the project and take ownership of the land. In April 2013, 1MDB awarded a RM2.1 billion contract to Perbadanan Perwira Harta Malaysia (PPHM), a subsidiary of Lembaga Tabung Angkatan Tentera (LTAT) to develop eight sites for the relocation of Pangkalan Udara Kuala Lumpur, the military base in Sungai Besi. The construction of Bandar Malaysia will be set to commence following the completion of this relocation project. As part of its debt rationalisation plan, on 31 December 2015, 1MDB inked an agreement with a consortium comprising Iskandar Waterfront Holdings and China Railway Engineering Corporation to sell 60% of its stake in Bandar Malaysia Sdn Bhd.
On 7 September 2015 a member of the board of advisors to 1MDB Abdul Samad Alias resigned stating that he did so after his many requests for information on 1MDB affairs were ignored. 1MDB subsequently denied receiving repeated requests from Abdul Samad, stating that its President, Arul Kanda, has personally met Abdul Samad in January and March that year to "discuss the company's affairs".
It was reported that 1MDB has accumulated debts of nearly RM42 billion. Further alleged financial challenges caused 1MDB bonds to trade at a record low in early 2015. 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 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. Sarawak Report showed minutes of a meeting at 1MDB that CEO Arul Kanda gave out false bank statements pertaining to its subsidiary's accounts at the Singapore branch of BSI Bank. Arul Kanda denied the allegation that he gave false bank statements to 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, who used these funds for election campaign purposes during the 2013 general elections. According to a news report quoting 1MDB, the company denied that it overpaid for its energy assets. 1MDB was quoted as saying that their energy acquisitions were made only when the company was convinced of its long-term value.
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. The Malaysian Anti-Corruption Commission (MACC) subsequently, in August 2015, cleared 1MDB of this allegation. MACC issued a statement saying, among others, "Results of the investigation have found that the RM2.6bil which was allegedly transferred into the account belonging to Prime Minister Datuk Seri Najib Tun Razak came from the contribution of donors, and not from 1MDB".
According to highly placed sources, three of the bank accounts that have been frozen belong to Najib. The Wall Street Journal revealed the bank account details online to rebut denials by Najib and his supporters. Singapore police have frozen two Singapore bank accounts in connection with their own investigation into the alleged financial mismanagement at 1MDB, after reports stated that US$700 million worth of deposits was moved through Falcon Bank in Singapore into Najib's personal accounts in Malaysia. However, 1MDB denied having any knowledge of their accounts being frozen, and that they have not been contacted by any of the foreign investigating authorities.
Wall Street Journal also reported that 1MDB transferred around $850 million via three transactions in 2014 to a British Virgin Islands-registered company with a name that was disguised that it was controlled by IPIC, according to wire transfer documents.
The Wall Street Journal (WSJ) released a report stating that 1MDB failed to pay a United Arab Emirates state investment vehicle International Petroleum Investment Co (IPIC) USD 1.4 billion. The money was owed to IPIC after it had guaranteed a US$3.5 billion bond issued by 1MDB to fund its purchase of power plant assets back in 2012. The WSJ released another report saying that a further USD 993 million was missing that 1MDB was supposed to pay IPIC. 1MDB responded to the WSJ report, saying that the company continues to enjoy a strong business relationship IPIC as proven by the execution of a binding term sheet that saw IPIC assume obligation for a US$3.5 billion bond principal and interest, currently held by 1MDB, and followed a US$1 billion cash payment made by IPIC to 1MDB in June. Earlier in October 2015, IPIC reaffirmed their commitment to working with 1MDB and the Malaysian Ministry of Finance.
Another report by the WSJ pointed out that 1MDB, in connection with a United States political fundraiser DuSable Capital Management LLC that had ties to Barack Obama and Hillary Clinton signed a joint venture agreement, creating a fund Yurus PE Fund to develop solar power plants in Malaysia. Six months after the join venture agreement was signed 1MDB bought out DuSable's stake of 49% of Yurus for US$69 million before any construction took place. According to bank transfer information, the WSJ revealed that Najib spent close to USD$15 million on clothes, jewellery and a car in places such as United States, Singapore and Italy using a credit card that was paid from one of several private bank accounts owned by Najib, that 1MDB funds were diverted to.
On 3 August 2015, the Malaysian Anti-Corruption Commission stated that the RM 2.6 billion that had been banked into Najib's personal account came from donors, not 1MDB, but did not elaborate on who the donors were or why the funds were transferred, nor why this explanation had taken so long to emerge since the allegations were first made on 2 July 2015. UMNO Kuantan division chief Wan Adnan Wan Mamat later claimed that the RM 2.6 billion is from Saudi Arabia as thanks for fighting ISIS. He further claimed that the Muslim community in the Philippines as well as southern Thailand had also received similar donations, and that since the donations were made to Najib personally as opposed to UMNO, the funds were deposited into Najib's personal accounts.
On 29 August 2015, tens of thousands of protesters took to the streets of Kuala Lumpur during the Bersih rally, calling for Najib to resign. Saudi Foreign Minister Adel al-Jubeir said he did not think that the money had come from the Saudi government or that it was a political donation, but said there had been no wrongdoing. Attorney-general Mohamad Apandi Ali has said that the donation was from one of the sons of the late Saudi King Abdullah. In an interview with ABC News, Wall Street Journal finance editor Ken Brown stated that the money did not come from the Saudis and they had evidence that it came from companies related to 1MDB.
Swiss authorities under the direction of the Office of the Attorney General of Switzerland began to freeze bank accounts amounting to several million US dollars linked to 1MDB. The Swiss attorney general's office said its investigation revealed indications that funds estimated to be US$4billion may have been misappropriated and said it was looking into four cases of potential criminal conduct. The Swiss prosecutor has said that money had been deposited into Swiss bank accounts of former Malaysian public officials and current and former officials of United Arab Emirates. Swiss Financial Market Supervisory Authority (Finma) has begun investigations into several Swiss banks as part of the money laundering probe involving 1MDB.
Hong Kong police have begun investigations regarding US$250 million in Credit Suisse branch deposits in Hong Kong linked to Najib and 1MDB. United Kingdom's Serious Fraud Office has begun investigations into money laundering involving 1MDB after it was highlighted by Clare Rewcastle Brown and Sarawak Report. The United Kingdom's investigation is focusing on the transfer of money from 1MDB funds in Malaysia to Switzerland as it involved Royal Bank of Scotland's branch in Zurich.
United States of America
It was reported the FBI in the United States had begun investigations regarding money laundering involving 1MDB. The US Justice Department's international corruption unit has begun a probe looking into property purchases in the United States's involving Najib's step-son Riza Aziz and the transfer of millions of dollars into Najib's personal account. The probe is looking at properties that have been purchased by shell companies that belong to Riza Aziz and close family friend Jho Low. Investment banks such as JPMorgan Chase & Co., Deutsche Bank AG and Wells Fargo have been asked by the Justice Department to retain and turn over records that may be related to improper transfers from 1MDB. The FBI has issued subpoenas to several past and present employees of film production company Red Granite Pictures in regards to allegations that US$155 million was diverted from 1MDB to help financed the 2013 film The Wolf of Wall Street, and which has Najib's stepson Riza Aziz as its co-founder and chairman.
Also under scrutiny by the FBI and Department of Justice is the role of Goldman Sachs in allegations of money laundering and corruption. The FBI is now 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. Tim Leissner, the former chairman of Goldman Sachs' Southeast Asia branch and husband of Kimora Lee Leissner was issued a subpoena by the Justice Department as part of their investigations.
The US Department of Justice under the direction of Attorney Loretta Lynch began moves to recover more than US$1 billion from people close to Najib and 1MDB. Assets include high-end properties in Beverly Hills, Los Angeles, Manhattan, New York City and London. Also included in the assets seizure was fine artwork, a private jet and royalties from the film Wolf of Wall Street and its production company Red Granite Pictures Within the lawsuit, a government official of high rank who had control over 1MDB was referred to as "Malaysian Official 1", and mentioned over 30 times. "Malaysian Official 1" was alleged to have received around 681 million USD (2.797 billion MYR) of stolen money from 1MDB while returning most of it. In September 2016, Najib was identified as "Malaysian Official 1" by Datuk Abdul Rahman Dahlan, Minister in the Prime Minister's Department and the Barisan Nasional strategic communications director. Dahlan also claimed that Najib was not named because he was "not part of this investigation".
In Singapore, the Monetary Authority of Singapore and the Commercial Affairs Department have seized a number of bank accounts in Singapore for possible money-laundering offences related to investigations into alleged financial mismanagement at 1MDB. One of the bank accounts frozen belonged to Yak Yew Chee, who was the relationship manager for 1MDB Global Investments Ltd, Aabar Investment PJS Limited and SRC International and Low Taek Jho. Singaporean Yeo Jiawei, an ex-BSI banker has been charged for money laundering and cheating offences as part of the Singapore probe into 1MDB, and Yeo's dealings with firms linked to 1MDB, Brazen Sky Ltd. and Bridge Partners Investment Management. A second individual Kelvin Ang Wee Keng was charged with corruption in connection with Singaporean investigation into 1MDB.
According to a joint statement from the Attorney General's Chambers and the Monetary Authority of Singapore, assets totalling S$240 million have been seized during their investigations into 1MDB. Of the bank accounts and properties seized were S$120 million belonging to Jho Low and his family.
State prosecutors in Luxembourg have also started money laundering investigations concerning 1MDB as it involved transfers of several hundred million dollars to an offshore company involving a bank account from Luxembourg. The bank in question is a private bank of the Edmond de Rothschild Group which manages money on behalf of wealthy clients.
The United Arab Emirates has issued travel bans and frozen bank accounts's of former Abu Dhabi sovereign-wealth fund International Petroleum Investment Company's employees Khadem al-Qubaisi and Mohammed Badawy Al Husseiny who had close connections to 1MDB, and may have used the British Virgin Islands-based Aabar Investments PJS to funnel money from 1MDB into various accounts and companies around the world.
The Seychelles's Financial Intelligence Unit is helping an international investigation into the troubled state fund 1MDB, by providing detailed information relating to offshore entities registered in Seychelles that are related to the international investigation.
Using the premise that 1MDB used inaccurate or incomplete disclosure of information, Bank Negara has revoked permissions earlier granted to 1MDB for investments abroad totalling US$1.83 billion. Bank Negara has called the Attorney General to begin criminal prosecution of 1MDB after completing their own investigations of 1MDB. 1MDB has stated that they are unable to repatriate the US1.83 billion demanded by Bank Negara because the funds have been spent.
The scandal took a dramatic twist on 28 August 2015 when a member of Najib's own UMNO party filed a civil suit against him alleging a breach of duties as trustee and that he defrauded party members by failing to disclose receipt of the donated funds, and account for their use. This suit was filed in the Kuala Lumpur High Court and also named party executive secretary Abdul Rauf Yusof. Expressing fear that Najib would wield influence to remove any member of UMNO "for the sole purpose of avoiding liability" the court was also being moved for an injunction to restrain UMNO, its Supreme Council, state liaison body, divisions and branches from removing the nominal plaintiff as a party member pending the determination of the suit. The plaintiff is also seeking a repayment amounting to US$650 million, the amount allegedly deposited by Najib to a Singapore bank, an account of all monies that he had received in the form of donations, details of all monies in an AmPrivate Banking Account (No. 2112022009694), allegedly belonging to Najib, along with damages, costs, and other reliefs. One of the UMNO representatives, Anina Saadudin, who filed the lawsuit, was immediately expelled from the party.
Another police report was filed by a Johor UMNO member, Abdul Rashed Jamaludin, against Najib, over the funds that went into his bank account and the wrongdoings at 1MDB.
Another UMNO member, Khairuddin Abu Hassan, and his lawyer Matthias Chang, has submitted evidence on the 1MDB scandal to the Swiss attorney-general for investigation on whether any Swiss banks had done any business with 1MDB Khairuddin also lodged a police report in Hong Kong against Najib and Jho Low, pertaining to three companies: Alliance Assets International, Cityfield Enterprises, Bartingale International and Wonder Quest Investment which had purported dealings with 1MDB. Khairuddin and Matthias were barred from leaving Malaysia after confirmation from immigration officials who were under orders by the police to prevent them from leaving. Khairuddin and Matthias were charged under the Security Offenses Act (SOSMA) under the pretext of sabotaging Malaysia's banking and financial sector.
The opposition People's Justice Party (PKR)has filed a lawsuit against Najib, Tengku Adnan Tengku Mansor, 1MDB and the Election Commission accusing them of violating election laws on campaign expenses, using funds from 1MDB. However the Malaysian High Court threw out the suit stating PKR had no legal standing to bring out the suit against Najib and 1MDB.
Former Prime Minister Mahathir has filed a lawsuit against Najib for alleged interference in government investigations on 1MDB and the RM2.6 billion political donation.
Following criticisms of the 1MDB issue, deputy Prime Minister Muhyiddin Yassin was removed from office and his position was given to Ahmad Zahid Hamidi who is the current Home Minister. Also removed from office was Rural and Regional Development Minister Shafie Apdal who was also critical of the 1MDB issue.
The attorney general Abdul Gani Patail who was heading a multi-agency task force investigating claims of misappropriations of funds allegedly involving Najib and 1MDB, was removed from his position and his post was given to Mohamed Apandi Ali, a former Federal Court judge. Furthermore, the Public Action Committee that was investigating the purported losses in 1MDB was indefinitely postponed due to 4 of its members being given positions in Najib's cabinet, namely the PAC chairman Nur Jazlan Mohamed, Reezal Merican Naina Merican, Wilfred Madius Tangau and Mas Ermieyati Samsudin.
The news publications The Edge Malaysia and The Edge Financial Daily were suspended for three months in July for allegedly publishing false reports on the 1MDB issue by the Malaysian Home Ministry. The website Sarawak Report was also blocked by Malaysian Communications and Multimedia Commission, which regulates Internet services in Malaysia. The Malaysian police have issued an arrest warrant for Clare Rewcastle Brown, who manages the Sarawak Report website giving the reason that she was involved in activities detrimental to parliamentary democracy and disseminating false reports about Najib Razak.
The police also arrested UMNO member Khairuddin Abu Hassan after he had lodged police reports in London, Singapore, France and Hong Kong regarding financial improprieties regarding 1MDB. According to his lawyer Khairuddin was going to the United States to meet with the Federal Bureau of Investigation to urged them to probe 1MDB over money laundering. However the FBI's New York City office has confirmed to the WSJ that no agent had arranged to meet Khairuddin or had any previous contact with him.
Former Kedah Menteri Besar Mukhriz Mahathir who resigned from his post on 3 February 2016 saying he did so because he was told by Najib that he was in the wrong in criticising Najib and 1MDB.
Opposition member of parliament Rafizi Ramli was arrested and charged under the Official Secrets Act by police and government for leaking information about the Auditor General's report on 1MDB.
The Home Ministry has stated that they and Interpol have been unsuccessful in locating the following individuals linked to 1MDB to help in facilitating their investigations into 1MDB: business tycoon Jho Low, 1MDB’s former senior executives Casey Tang Keng Chee and Jasmine Loo Ai Swan and SRC International managing director Nik Faisal Ariff Kamil, and Deutsche Bank country manager Yusof Annuar Yaacob.
Currently, Medium.com, a popular platform offering amateurs and professionals alike a simple way to publish their articles, was also blocked by Malaysian Communications and Multimedia Commission(MCMC), over a single article posted by Sarawak Report. Another website Asia Sentinel was blocked by the MCMC after carrying a Sarawak Report article related to the MACC completing a probe and having alleged 37 charges drawn up against Najib Razak involving 1MDB. Another Malaysian news website The Malaysian Insider was blocked and its journalists investigated for carrying a report saying that the MACC had found enough evidence in investigations into Najib Razak to charge him for corruption.
The Australian fund management company Avestra Asset Management, which managed up to 2.32 billion in 1MDB funds, is being liquidated, and is under investigation by the Australian Securities and Investments Commission for reported breaches of the law and potential losses to its members. The Australian High Court has ordered five investment schemes run by Avestra to close down after discovering undisclosed related-party transactions, with 13 potential breaches of corporate law and failure to invest according to the fund's individual mandates.
The Malaysian Public Accounts Committee (PAC) inquiry into 1MDB revealed that the management of the fund acted without the board's approval and misled auditors several times, calling for the police to investigate its former manager. The PAC also found that the board of directors in which Najib was the chairman failed in giving proper oversight of the fund's finances. The 1MDB board of directors immediately submitted their resignations after the PAC findings were made public. In the PAC report it stated that USD3.5 billion was paid to a company Aabar Investments PJS, however IPIC has released a statement stating that neither it or its subsidiary Aabar Investments PJS have any links to a British Virgin Islands-incorporated firm Aabar BVI or received any money from that BVI firm.
International Petroleum Investment Company made an announcement in a filing in the London Stock Exchange that 1MDB has failed to make a USD 1.1 billion payment as part of its debt restructuring agreement and that the debt deal between the two companies has been terminated.