One of Malaysia’s biggest financial scandals is 1MDB. The scandal involves massive money laundering, bribery and fraud involving the government investment fund. The money was often transferred outside of the country. A cohort of Malaysian bankers, businessmen, and government officials have been implicated.
The Malaysian government attempted to cover up the scandal. The first sign of trouble came in 2013, when the on-line business newspaper KINIBIZ reported on irregularities in the 1MDB fund. The article detailed mispricing of bonds and overpayment of energy assets. It was written by British journalist Clare Rewcastle Brown, who also managed the portal Sarawak Report.
Before 1MDB, Malaysia had its own share of financial scandals. The Bank Bumiputra scandal involved $1 billion in public funds and was also surrounded by widespread corruption. It involved false accounting, sham profits, and a massive web of deceit. The bank’s main mastermind, George Tan, was the prime suspect in the web of deception.
The scandal has sparked international interest and the investigation of the 1MDB heist remains an issue of concern. In addition to Malaysia’s own internal investigation, the US and Swiss authorities have also stepped in to investigate the affair. In 2015, 1MDB borrowed an astonishing RM41.9 billion ($10 billion). The sum of these loans includes the RM8.2 billion inherited from other companies it acquired.
One of the most important lessons learned from the 1MDB scandal is that corruption in the country can lead to huge amounts of money being lent. In addition, Malaysian authorities must do better to prevent future financial scandals. This paper builds on findings from earlier papers and books. It focuses on the link between money-laundering and corruption. The paper calls for better internal controls within 1MDB.
1MDB’s investigation also focuses on money laundering. Much of the embezzled money passed through Swiss banks. In addition to Malaysia, investigations have also been conducted in other countries, including the United States, the UK, Australia, and New Zealand. The investigations have revealed names and locations of banks, JV partners, and trusts connected to 1MDB.
One of the most troubling aspects of recent financial scandals in Malaysia has been the failure of auditors. This has harmed the credibility and public confidence in the profession. The findings of this study provide valuable information for policymakers, audit firms, and academia. It is hoped that it will improve the quality of auditing in Malaysia.