EXPLAINER-Malaysia's ex-PM Najib Razak and the multi-billion-dollar 1MDB scandal

Malaysia's king has granted a second pardon to jailed former premier Najib Razak, allowing him to serve ​the remainder of his sentence under house arrest, four years after a conviction for his involvement in a ​multi-billion-dollar financial scandal.

The following are details of the sprawling scandal at ‌state fund ​1Malaysia Development Berhad and cases brought against Najib, who has consistently denied wrongdoing. WHAT IS 1MDB?

1Malaysia Development Berhad was a sovereign fund set up in 2009 with the help of Malaysian financier Jho Low to promote economic development. Najib, who was prime minister from 2009 to 2018, co-founded 1MDB and chaired its advisory board until 2016. HOW DID BILLIONS GO ‌MISSING?

1MDB raised billions of dollars in bonds for use in investment projects and joint ventures between 2009 and 2013. Conducting its largest-ever kleptocracy investigation, the US Department of Justice said $4.5 billion was diverted to offshore bank accounts and shell companies, many linked to Low, whose whereabouts are unknown. Malaysian authorities say billions more remain unaccounted for.

The siphoned funds were used to buy luxury assets and real estate for Low and his associates, including a private jet, a superyacht, hotels, jewelry, and to finance the 2013 ‌Hollywood film "The Wolf of Wall Street", US lawsuits have said. Low, a fugitive, has been charged in Malaysia and the United States over his central role in the case. He denies wrongdoing and his whereabouts remain unknown. Malaysia has ‌said he is in China, but Beijing denies it. Najib was not named by the DOJ, but was alluded to in the investigation as "Malaysian Official 1", according to Malaysian and US sources.

WHAT ARE THE CASES AGAINST NAJIB? Malaysian authorities say Najib illegally received more than $1 billion traceable to 1MDB, and according to US lawsuits, allege that some of these funds were used to buy jewelry.

The US lawsuits, which did not name Najib, stated that this individual received $681 million shortly before Malaysia's 2013 election. Public anger over the scandal contributed to Najib's defeat in the 2018 election. In 2019, Najib ⁠was charged in ​Malaysia with four counts of abuse of power and 21 counts ⁠of money laundering. He was found guilty in December 2025 and sentenced to 15 years in prison and fined $2.8 billion and has lodged an appeal.

Najib has faced other 1MDB-related trials. In July 2020, he was sentenced in Malaysia to 12 years in prison and fined 210 million ringgit ($46.94 ⁠million) after being found guilty of criminal breach of trust, abuse of power, and money laundering for illegally receiving about $10 million from SRC International, a former 1MDB subsidiary. The verdict was upheld by an appellate court in 2021 and in August 2022, Najib began serving his sentence. ​A pardons board chaired by a former king halved his sentence to six years and reduced his fine in 2024.

The board, chaired by current King Sultan Ibrahim, on September 18 allowed Najib to serve the ⁠remainder of that under house arrest until August 2028. In a separate trial over the tampering of the 1MDB audit report, Malaysia's High Court acquitted Najib and 1MDB’s former CEO Arul Kanda in March 2023.

In another case, Najib and former treasury secretary Irwan Serigar Abdullah faced charges for allegedly misappropriating billions in government ⁠funds ​meant for payments to Abu Dhabi's International Petroleum Investment Company. In November 2024, Malaysia's High Court granted them a Discharge Not Amounting to Acquittal due to the prosecution’s failure to provide crucial documentation to the defence, though the judge noted that both men could be charged again in the future.

HOW DID AUTHORITIES INVESTIGATE 1MDB? At least six countries, including the United States, Singapore and Switzerland, launched financial mismanagement and criminal investigations, in a global probe that has implicated financial institutions and high-ranking officials ⁠worldwide.

In 2020, US firm Goldman Sachs agreed to pay $3.9 billion to settle investigations into its role in underwriting $6.5 billion in bond sales for 1MDB. However, when Prime Minister Anwar Ibrahim came into power in 2022 and renegotiated the ⁠agreement, Goldman Sachs sued the government following the dispute. Former Goldman Sachs ⁠bankers Roger Ng and Tim Leissner were convicted in the US for bribery and money laundering related to the scheme.

To date, Malaysia has recovered about 31.3 billion ringgit ($7.67 billion) in assets representing nearly 75% of all identified properties linked to 1MDB. 1MDB obligations borne by Malaysia's government amounted to 51.4 billion ringgit ($12.60 billion), according to the finance ministry, most of ‌which had been paid by the ‌government.

Factoring in recovery proceeds, the remaining losses borne by the government as of September 13 were 20 billion ringgit ($4.91 billion). (Reporting ​by Ashley Tang; Editing by Martin Petty and Jan Harvey)