Abstract

recent scandal involving a colossal theft from the 1Malaysia Development Berhad (1MDB) has shaken Malaysia to its core. Filings by the U.S. Justice Department allege that more than US$4.5 billion was stolen between the creation of 1MDB in 2009 and 2015, with some reportedly going to pay for such luxury purchases as a $260 million superyacht. Intimidation and personnel changes worked to stifle investigations by domestic enforcement agencies, and Prime Minister Najib Razak, facing heavy criticism over the scandal, is seeking to shield himself through dangerous identity politics and purges of detractors in his party. The 1MDB affair has also revealed the continued complicity of global financial institutions, including major international banks, in kleptocratic money laundering. Fighting kleptocracy will require a new cross-border legal mechanism and far stiffer due-diligence requirements for financial institutions.

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