The 1MDB Scandal: How Goldman Sachs Helped Steal $4.5 Billion from Malaysia

In 2009, Malaysia’s newly elected Prime Minister Najib Razak announced the creation of 1Malaysia Development Berhad — a government sovereign wealth fund whose stated purpose was to attract foreign investment and lift Malaysians out of poverty. Within months, a shadowy young financier named Jho Low had embedded himself at the heart of the fund. Within years, one of the most audacious financial frauds in history was underway — a theft so brazen, so vast, and so meticulously laundered through the world’s most prestigious financial institutions that it would take a decade to unravel. At its centre: Goldman Sachs, the bank that made it possible.

What Was 1MDB?

1Malaysia Development Berhad was established in 2009 with a stated capital of $1 billion and a mandate to make strategic investments for Malaysia’s development. Its structure gave Prime Minister Najib Razak near-total control: he chaired the fund’s advisory board and held sole signatory authority over major transactions. It had no independent board, no meaningful external audit, and no effective oversight. In the words of the US Department of Justice, it was “kleptocracy at its worst.”

The fund’s first auditors — Ernst & Young — resigned within months. Its second auditors, KPMG, resigned shortly after. The third auditors, Deloitte, were later fined by Malaysian authorities. Three successive major accounting firms walked away from 1MDB. This was, as one legal analyst later observed, not a subtle red flag — it was a screaming alarm. Goldman Sachs, which would later arrange $6.5 billion in bond offerings for the fund, appears to have ignored it entirely.

Jho Low: The Fixer Nobody Should Have Trusted

Low Taek Jho — known as Jho Low — was a Malaysian-Chinese financier who had studied at Harrow in England and the Wharton School at the University of Pennsylvania. He held no formal position at 1MDB. He was not an elected official, not a government minister, not a licensed banker. Yet he attended high-level government meetings, facilitated international deals, and directed billions of dollars in sovereign funds to accounts he controlled — all while cultivating a reputation as a lavish party host in Las Vegas, London and New York.

Low’s political access came through his relationship with Najib Razak and Najib’s wife, Rosmah Mansor — who became close to Low and whose son, Riza Aziz, would later be implicated in the scandal through the 1MDB-funded Hollywood production company Red Granite Pictures. Low was, in essence, the operation’s invisible architect — orchestrating the scheme from outside the formal structures of government and finance, using his connections to bypass the controls that should have stopped him.

“Jho Low could never have pulled off this international financial scandal without the support of that major bank.”

— Clare Rewcastle Brown, investigative journalist who first exposed the 1MDB scandal, referring to Goldman Sachs

Goldman Sachs: The Bank That Looked the Other Way

Between 2012 and 2013, Goldman Sachs underwrote three bond offerings for 1MDB, raising a total of $6.5 billion. The fees Goldman charged were extraordinary: approximately $600 million — more than 200 times the typical fee for such transactions. When two Goldman partners were later asked why fees were so dramatically above market rates, one reportedly said it reflected the “risk” Goldman was taking. Critics have a different explanation: it reflects how much Goldman knew.

Goldman’s own internal compliance system — the “business intelligence group” — had flagged Jho Low as a potential risk not once, but at least twice. He had appeared on internal watchlists. Yet senior Goldman executives, including then-chairman of Southeast Asia Tim Leissner and his colleague Roger Ng, continued to work with Low and his political connections. The DOJ later alleged that Leissner and Ng paid approximately $2 billion in bribes to Malaysian and Abu Dhabi officials to secure the bond deals. Both were charged with conspiracy to launder money and violate anti-bribery laws.

How the Money Was Stolen: Three Phases

The US Department of Justice described the theft in three phases.

Phase 1 — The PetroSaudi Joint Venture (2009): 1MDB entered a $2.5 billion joint venture with PetroSaudi International, a private Saudi oil company. Prosecutors later determined that $1 billion of 1MDB’s contribution was immediately diverted into a Swiss bank account controlled by Jho Low’s associates, rather than the joint venture itself.

Phase 2 — The First Goldman Bond (2012): Goldman raised $1.75 billion for 1MDB in a bond offering. Of this, $1.4 billion was diverted into a Swiss offshore company controlled by Low’s associates.

Phase 3 — The Second and Third Goldman Bonds (2012–2013): Goldman raised a further $4.75 billion in two additional bond offerings. Prosecutors determined that $1.3 billion from one offering was routed to a Singapore account controlled by associates of Najib and Low. In total, across all three phases, at least $4.5 billion was stolen — much of it routed through a labyrinth of shell companies across Singapore, Switzerland, the Cayman Islands, the British Virgin Islands, and the United States.

The Lifestyle: Superyachts, Picassos and Hollywood

The stolen funds were spent with spectacular abandon. Jho Low purchased a $250 million superyacht — the Equanimity — which he used for celebrity parties. He acquired luxury apartments in Manhattan, Beverly Hills, and London. He bought artworks by Monet, Van Gogh and Basquiat. He threw birthday parties featuring A-list performers including Britney Spears emerging from a cake.

Most strikingly, $681 million was transferred directly into the personal bank account of Prime Minister Najib Razak — a sum so large that it attracted immediate attention from Malaysian investigators. Najib claimed it was a donation from the Saudi royal family. The explanation was not credible and the investigation it prompted would eventually bring down his government.

1MDB funds also financed the Hollywood production company Red Granite Pictures — owned by Najib’s stepson Riza Aziz — which produced, among other films, The Wolf of Wall Street. In a moment of profound irony, a film about financial fraud was itself financed by fraud. Red Granite eventually settled with the DOJ, paying $60 million.

How the Fraud Was Exposed

The 1MDB scandal was first exposed not by a regulator, a bank, or a government oversight body — but by a blogger. Clare Rewcastle Brown, a Sarawak-born British journalist who ran the blog Sarawak Report, published documents in 2015 showing that nearly $700 million had been transferred into accounts controlled by Jho Low. The Malaysian government dismissed the reports as fabrications. Najib’s government shut down opposition newspapers and arrested critics.

But the international banking trail was too wide to suppress. Singapore, Switzerland, the UAE and the United States all opened investigations. In 2016, the US Department of Justice filed its first civil forfeiture action. In 2018, Najib’s coalition lost the Malaysian general election — the first time the governing coalition had lost power since independence in 1957. New Prime Minister Mahathir Mohamad ordered a full investigation.

The Reckoning: Convictions, Settlements and Fugitives

In July 2020, Najib Razak was convicted on all seven counts against him — including abuse of power, money laundering and criminal breach of trust — and sentenced to 12 years in prison. He appealed. His conviction was upheld. He began serving his sentence in 2022.

Goldman Sachs agreed in 2020 to pay $2.9 billion to settle claims with the Malaysian government — one of the largest financial penalties in Wall Street history. Goldman’s Southeast Asia chairman Tim Leissner pleaded guilty to conspiracy to launder money and violating anti-bribery laws, and received a two-year prison sentence in 2025. His colleague Roger Ng was convicted at trial in 2022 and sentenced to 10 years.

Jho Low remains a fugitive. He is believed to be living in China, which has not agreed to extradite him. In a remarkable development reported in May 2026, Low applied to President Trump for a presidential pardon — a request listed on the DOJ’s website as “pending.” He has never been tried.

Conclusion: The Questions That Remain

The 1MDB scandal raises questions that go far beyond Malaysia. It demonstrates how the world’s most prestigious financial institutions can become instruments of grand theft — whether through corruption, wilful blindness, or calculated indifference. Goldman Sachs, whose compliance system flagged Jho Low as a risk and was ignored, paid $2.9 billion in fines and returned to business as usual. No Goldman executive faced criminal conviction. The bank’s stock price recovered within months.

The 1MDB fraud was possible because the global financial system — its offshore secrecy jurisdictions, its shell companies, its correspondent banking relationships — was designed to move money without asking too many questions. The scandal exposed that design in the starkest possible terms. Whether it changed anything fundamental about that system is a question the next financial scandal will answer.