Ex-Prime Minister’s Conviction Upheld in World’s 'Largest Kleptocracy Case'

In the latest in a scandal the U.S. justice department once called the “largest kleptocracy case” it’s ever handled, Malaysia’s appellate court upheld former prime minister Najib Razak’s guilty verdict for corruption involving some $10 billion in state funds.

The Malaysian Court of Appeal on Wednesday affirmed the July 2020 verdict delivered by the Kuala Lumpur High Court, which found Najib guilty of diverting the funds from SRC International, part of the 1Malaysia Development Berhad (1MDB) public investment fund, into his personal bank accounts. 

The Kuala Lumpur court had sentenced Najib to 12 years in prison and imposed a $50 million fine. The appellate court unanimously affirmed both penalties, but Najib’s lawyers succeeded in requesting a stay as they appeal the verdict before the Federal Court, Malaysia’s highest tribunal. He remains free on bail pending this final appeal.

Najib has denied all the allegations against him, claiming he was misled by Malaysian financier Jho Low, who remains at large.

Created by Najib in 2008 soon after he came to power, 1MDB was supposed to attract foreign investment into Malaysia. However, the succeeding years saw officials and their associates embezzling funds in an elaborate scheme of global proportions. 

According to the U.S. Department of Justice, the funds were spent on “extravagant items” including luxury properties in Beverly Hills, New York, and London; a 300-foot superyacht; fine art by Claude Monet, Vincent Van Gogh, Pablo Picasso, and Andy Warhol; and various business investments including the redevelopment of Manhattan’s Park Lane Hotel. Part of the fund was also used to bankroll the film The Wolf of Wall Street, starring Leonardo DiCaprio.

The U.S. justice department jumped on the case after it received civil forfeiture complaints from 2009 to 2015 involving a total of $4.5 billion belonging to 1MDB, allegedly misappropriated by top officials and their associates. At one point, the money laundering trail had triggered investigations in 12 countries. Loretta Lynch, the U.S. attorney general at the time, called it “the largest kleptocracy case in the world.”

Last August, the U.S. justice department said it had restored an additional $452 million in misappropriated funds to Malaysia, bringing the total repatriated to $1.2 billion.

The scandal initially toppled Najib and his party, the United Malays National Organization, as they lost power in 2018 for the first time since Malaysia’s independence in 1957. The former prime minister was officially charged with corruption two months later.

But Najib, who attended the Court of Appeal verdict virtually today, had been mounting a political comeback in recent months, with his party winning a key local poll ahead of the 2023 general election. Najib himself had been eyeing reelection to parliament, Reuters reported, but that requires an overturn of his conviction.

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