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Malaysia's Former PM Najib Razak Begins Trial On 1MDB Slush-Fund Charges

Najib Razak, Malaysia's former prime minister, leaves court in Kuala Lumpur on Wednesday — the first day in his trial over charges that he used a slush fund to put millions of dollars into his own accounts.
Mohd Rasfan
AFP/Getty Images
Najib Razak, Malaysia's former prime minister, leaves court in Kuala Lumpur on Wednesday — the first day in his trial over charges that he used a slush fund to put millions of dollars into his own accounts.

Updated at 10:33 a.m. ET

Malaysia's former Prime Minister Najib Razak is on trial in a wide-ranging corruption case, accused of siphoning millions of dollars from a state investment fund called 1MDB. Najib's trial began Wednesday, nearly a year after he was voted out of office.

Najib, 65, has insisted he is innocent, saying he didn't improperly enrich himself during the decade in which he jointly served as Malaysia's prime minister and finance minister. But prosecutors say those dual posts gave Najib nearly absolute authority — and that he criminally abused it.

"Today's trial involves the transfer of more than $10 million into Najib's personal account from an account linked to 1MDB," NPR's Michael Sullivan reports from Kuala Lumpur. "Investigations by other countries allege that hundreds of millions found their way into Najib's accounts over the years."

The former prime minister is facing a raft of charges that include criminal breach of trust and money laundering — and Wednesday's trial is the first of many cases brought against him in connection with the broader 1MBD scandal and the alleged misuse of billions of dollars.

While the government's allegations against Najib involve more than $680 million in state funds that wound up in his personal bank accounts, the 1MDB fund accumulated some $6.5 billion — money raised with the help of U.S. bank Goldman Sachs, which also faces charges related to 1MDB.

Founded in 2009, the alleged slush-fund snowballed from being a tool for exorbitant lifestyles to fueling massive pet projects.

The U.S. Justice Department said in 2017 that it believes Malaysian kleptocrats stole at least $4.5 billion from 1MDB accounts, and that some of that money was laundered through shell companies before being used to buy luxury items and make investments in the U.S.

As the DOJ described those purchases: "These assets allegedly included high-end real estate and hotel properties in New York and Los Angeles, a $35 million jet aircraft, works of art by Vincent Van Gogh and Claude Monet, an interest in the music publishing rights of EMI Music and the production of the 2013 film The Wolf of Wall Street."

Others who have been charged in the scandal include Malaysian financier Jho Low — believed to be the fraud's mastermind — along with two former Goldman Sachs bankers.

The alleged fraud was exposed by The Wall Street Journal in 2015. Speaking to NPR's Morning Edition, the Journal's Tom Wright, who helped break the story, called it "probably the largest corruption scandal ever to have occurred."

Wright says 1MDB "wasn't a traditional sovereign wealth fund. This was a fund that went and raised money on global markets and it did so with the help of Goldman Sachs."

He laid out how the 1MDB enterprise got its start:

"It started in 2009 when the Malaysian prime minister at the time, Najib Razak, wanted a political slush fund to stay in power. And he leaned on a 27-year-old Malaysian financier called Jho Low, who he allowed to run a sovereign wealth fund.

"Low helped him to funnel money around the world — and $1 billion into Najib's account, that Najib then used to pay off politicians in his home country. But unbeknownst to Najib, Jho Low then used billions more to fund a billionaire's lifestyle. He partied with Hollywood celebrities, he bought storied U.S. companies like EMI Music Publishing. He became a billionaire in his own right."

Jho Low faces charges in both the U.S. and Malaysia. But he remains at large and is currently believed to be living in China.

Attorney General Tommy Thomas laid out the case against Najib in court Wednesday — highlighting a shopping trip in late 2014 in which Najib is said to have used his credit card to buy $130,625 worth of items at a Chanel store in Honolulu, Hawaii.

Thomas said Najib also used the money to pay for renovations at two properties that the former leader owns.

"A former prime minister is charged under due process in the ordinary court of the land, like any other accused," Thomas said, according to Malaysian newspaper The Star. "The accused is not above the law and his prosecution and this trial should serve as precedents for all future holders of this august office."

Malaysia is currently led by Prime Minister Mahathir Mohamad, the country's previous long-time leader who returned to the post last year, when Najib's political party lost power for the first time in more than 60 years.

Within days of Najib's election loss last May, police zeroed in on the ousted leader, raiding a residence at which they seized numerous luxury items, from Hermes crocodile skin bags to diamonds and jewelry. The goods, some of which were bought in Paris and Switzerland, included more than 560 handbags and 2,200 rings.

Copyright 2020 NPR. To see more, visit https://www.npr.org.

Bill Chappell is a writer and editor on the News Desk in the heart of NPR's newsroom in Washington, D.C.