1MDB

As of August 2026: Najib Razak's December 26, 2025 conviction on all 25 charges in the main 1MDB trial, with a 15-year sentence, came on top of the SRC International sentence he has served since August 2022 (halved to six years by the Pardons Board in early 2024); further legal avenues remained open. Jho Low remains a fugitive: July 2025 reports placing him in Shanghai under an alias and a May 2026 report that he sought a US presidential pardon are unconfirmed.

Also known as: 1Malaysia Development Berhad.

What happened?

1Malaysia Development Berhad (1MDB) was set up in 2009 as a state investment fund meant to finance Malaysia’s development. Instead, according to the US Department of Justice, more than US$4.5 billion was misappropriated from it between 2009 and 2015 by high-level officials of the fund and their associates. At the centre of the scheme was Low Taek Jho (Jho Low), a young Malaysian financier with no official position at the fund but, as investigators would allege, effective control over where its money went.

Money raised for power plants and development projects, much of it through bond deals arranged by Goldman Sachs, was routed offshore and spent on penthouses, mansions, paintings, and film productions. It became the textbook modern kleptocracy case: a sovereign fund looted at the top, laundered through the international financial system, and spent conspicuously in the world’s luxury capitals.

Which techniques did it use?

The core machinery was the offshore shell company. The DOJ’s civil forfeiture complaints describe fund monies passing through webs of corporate vehicles in multiple jurisdictions: companies with no real business of their own, holding accounts at banks that accepted them as ordinary clients. Each transfer between entities added distance from the original theft; by the time money surfaced in a purchase, its paper trail led back only to an anonymous vehicle, not the fund. It was layering performed at sovereign scale, and it depended on banks failing to ask who the beneficial owner behind each shell really was, and failing to treat transactions touching a serving prime minister, a textbook politically exposed person, with the scrutiny that status demands.

The second signature technique was real estate. Diverted funds were converted into trophy property (a penthouse at Manhattan’s Time Warner Center, homes in Beverly Hills, real estate in London), assets that store hundreds of millions of dollars in single transactions, appreciate quietly, and clothe their owner in respectability. Property was joined by film finance: Red Granite Pictures, co-founded by Najib’s stepson Riza Aziz, produced The Wolf of Wall Street with money the DOJ alleged came from 1MDB. Luxury assets like these are the integration stage made visible, which is precisely why they later became the targets of forfeiture.

How was it found?

Through journalism and leaked documents. Reporting by The Edge, the Sarawak Report and The Wall Street Journal, drawing on a leak of fund-related documents, converged in early July 2015 when the Journal published records showing that at least US$681 million had flowed into Prime Minister Najib Razak’s personal bank accounts. Najib denied wrongdoing and domestic inquiries stalled while he remained in office, but the story had escaped Malaysia’s ability to contain it.

The decisive turn came from abroad. The US DOJ’s Kleptocracy Asset Recovery Initiative filed civil forfeiture complaints seeking assets bought with 1MDB money, laying out the alleged diversion of billions in exhaustive public detail. Regulators in the US, UK, Singapore and Hong Kong would eventually join the Goldman Sachs resolution. When Najib’s coalition lost Malaysia’s May 2018 election (the scandal a central issue), domestic investigations revived within weeks, and he was arrested that July.

What was the outcome?

The reckoning ran through courts on three continents.

Najib Razak was convicted in July 2020 on seven counts in the SRC International case (abuse of power, criminal breach of trust and money laundering) and began his 12-year sentence in August 2022 after losing his final appeal. In early 2024 Malaysia’s Pardons Board halved that sentence to six years and cut his fine from RM210 million to RM50 million. Then, on December 26, 2025, the Kuala Lumpur High Court found him guilty on all 25 charges in the main 1MDB trial (21 money-laundering counts and four abuse-of-power counts) and sentenced him to a further 15 years, his second major conviction.

Goldman Sachs paid for its role in the bond deals. In July 2020 it settled with Malaysia for $3.9 billion, and on October 22, 2020 it reached a global resolution of more than $2.9 billion with the DOJ and regulators in four countries, the largest penalty ever under the Foreign Corrupt Practices Act, with its Malaysian subsidiary pleading guilty to a conspiracy count. The combined 1MDB cost to the bank exceeded $5 billion.

Jho Low has never faced trial. Charged in the US and Malaysia, he has been subject to an Interpol Red Notice since 2018. In 2019 he settled US civil forfeiture claims covering roughly $700 million in assets, including US real estate, without admitting wrongdoing. In July 2025, the journalists who wrote Billion Dollar Whale reported he was living in Shanghai under a Greek alias using a forged Australian passport; Malaysia said it had no credible confirmation. In May 2026 it was reported, again unconfirmed, that he had sought a pardon from US President Trump. Red Granite Pictures settled the film-money claims for $60 million in March 2018.

What changed afterwards?

1MDB reset expectations of what financial investigators will pursue. A sitting prime minister was voted out, prosecuted and imprisoned in substantial part over laundering charges; a top-tier US investment bank took a multi-billion-dollar penalty and a subsidiary guilty plea for the conduct of its bankers; and US civil forfeiture proved it could claw back kleptocracy assets (apartments, film rights, corporate settlements) even with the alleged architect still at large.

For compliance, the case became the standing exam question on politically exposed persons and beneficial ownership: every institution that touched the money had, somewhere in its files, a shell company, a PEP, and a transaction too large to explain. The detection lesson is that those signals were present from the first bond deal; what was missing was the will to act on them while the client was still profitable.

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First published August 28, 2026 · Last updated August 28, 2026 · Legal statuses current as of August 2026