After 7 Years, Malaysia’s Judiciary Delivers Justice in 1MDB Case

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After 7 Years, Malaysia’s Judiciary Delivers Justice in 1MDB Case

The jailing of Najib Razak is a major step toward accountability for the massive financial scandal, but many of its architects and enablers remain at large.

After 7 Years, Malaysia’s Judiciary Delivers Justice in 1MDB Case

Former Malaysian Prime Minister Najib Razak, who was jailed yesterday for his involvement in the pilfering of the state fund 1MDB.

Credit: Depositphotos

Yesterday, Najib Razak became the first former prime minister of Malaysia to be sentenced to prison after losing his final appeal against a conviction related to the theft of the state development fund 1MDB.

In 2020, Najib was found guilty of seven charges including abuse of power, criminal breach of trust, and money laundering for illegally receiving $9.4 million from a former unit of 1MDB, which was set up shortly after he came to office in 2009. A Federal Court panel headed by Malaysia’s chief justice, Maimum Tuan Mat, unanimously dismissed Najib’s final appeal against the convictions. He was transferred to prison last night to begin his 12-year sentence.

The guilty verdict shows that the Malaysian judicial system has worked, proving its ability to rule in a high-profile and politically sensitive case. U.S. and Malaysian investigators estimated that around $4.5 billion was siphoned from 1MDB between 2009 and 2014 by high-level officials of the fund and their associates, including, most prominently, the fugitive Penang financier Jho Low. In rejecting Najib’s first appeal in December, judges described his actions as a “national embarrassment.”

Malaysia’s democracy might have its share of troubles – the country is currently ruled by a coalition led by Najib’s party, the United Malays National Organisation (UMNO), which lost the country’s most recent general election – but the Federal Court’s ruling sends a powerful message that even the country’s most wealthy and powerful figures are not beyond the law. It also stands out in a region where impunity for the rich and well-connected is widespread.

The outcome would seem to lend credence to Fareed Zakaria’s argument that the “Western model” or constitutional liberalism is “best symbolized not by the mass plebiscite but the impartial judge.” To be sure, Najib needed to be deprived of the powers of office via an election before he could face justice. Prior to his sensational defeat by a reformist coalition in May 2018, he used all the powers at his disposal to stymie the investigations into the 1MDB thefts, which were first reported by the Wall Street Journal in 2015.

He replaced Malaysia’s attorney general just as he was getting ready to file criminal charges against him, and sacked cabinet members critical of the government’s handling of the fund. His government also initiated legal proceedings against media outlets reporting on the scandal. It was only after the voters tossed him out of office that he was arrested over the 1MDB scandal.

In comments given to Asia Times, James Chin of the University of Tasmania described the verdict as “a very historic moment for Malaysia.” He told the publication, “There was a lot of suspicion that the judiciary would be influenced by the political class in this case, but the result is an affirmation of the leadership of the judiciary.”

Indeed, Malaysia’s judicial system has come closer to delivering justice for the 1MDB theft than many other jurisdictions, despite investigations being underway in at least six other countries. As the journalist Tom Wright, co-author of “Billion Dollar Whale,” the definitive account of the scandal, put it on Twitter yesterday: “Malaysia is only one of two nations to jail anyone in the 1MDB scandal (the other is Singapore). Malaysia has its issues but its system has held.”

There is also the responsibility of those that enabled the theft of the fund to proceed, who helped conceal the stolen money in layers of opaque and arcane financial instruments. As Wright and his co-author Bradley Hope wrote in “Billion Dollar Whale,” these enablers bear an additional burden of guilt for the pilfering of the 1MDB fund.

“[Jho] Low’s genius was he sensed that the world’s largest banks, its auditors, and its lawyers would not throw up obstacles to his scheme if they smelled profits,” they wrote. “It’s easy to sneer at Malaysia as a cesspool of graft, but that misses the point. None of this could have happened without the connivance of scores of senior executives in London, Geneva, New York, Los Angeles, Singapore, Hong Kong, Abu Dhabi, and elsewhere.”

So far, there have been some big payouts – the investment bank Goldman Sachs, which is alleged to have played a particularly egregious role in the scandal, agreed in late 2020 to pay nearly $3 billion to end a probe of its role – but as with the global financial crisis of 2008-09, none of the individuals involved have gone to jail. (Here’s an article by Wright and Hope from May that shows just how little justice has been delivered over the past seven years.)

Then there is Jho Low, the billion-dollar whale himself, who is believed to be living in China, under the de facto protection of the Chinese government. “With Najib in prison,” Hope tweeted yesterday, “he’s the final piece of the puzzle.”

Najib’s jailing is a huge step toward accountability for one of the largest corruption scandals in modern history. It’s also an occasion to recognize many of its architects remain extravagantly at large.