The next question is whether Malaysia’s one-party state can weather the storm and maintain its grip on power with elections looming.
The US says it wants to seize a Picasso painting, a luxury apartment in Manhattan and the movie rights to Jim Carey’s “Dumb and Dumber To” as part of a money-laundering probe.
The US is looking to seize luxury property and other assets linked to fraud at the fund, which was intended to promote Malaysian development projects.
It is alleged that the inner circle of Prime Minister Najib Razak were the chief beneficiaries.
There have been large street protests in Kuala Lumpur in recent years calling for Najib, who used to chair 1MDB’s advisory board, to resign.
But Najib’s press secretary, Tengku Sariffuddin, tried to play down the allegations: “The judicial process is not served by headline seeking.” Najib and his ruling United Malays National Organisation have proved remarkably impervious to the 1MDB scandal but he must wonder how much longer his luck will last.
The US Justice Department says more than US$4.5 billion has been stolen from 1MDB, which was created in 2009.
“This money financed the lavish lifestyles of the alleged co-conspirators at the expense and detriment of the Malaysian people,” acting US Assistant Attorney General Kenneth Blanco announced.
The assets include a 22-carat pink diamond necklace, allegedly bought for Najib’s wife, Rosmah Mansor, for around US$27.3 million.
Nakia is expected to call a general election later this year.
Last year, prosecutors pounced on more than US$1 billion allegedly embezzled by Malaysian tycoons with political connections. The funds were due to pay for property in New York and California, a US$35-million plane, works by Vincent Van Gogh and Claude Monet and to finance Hollywood movies, including “Dumb and Dumber To” and “The Wolf of Wall Street”, which unfortunately detailed financial crime.
Singapore, Hong Kong and Switzerland have launched parallel investigations.
US federal prosecutors this week alleged that in 2014 Malaysian business owner Low Taek Jho (pictured) stole US$850 million in funds borrowed from a syndicate.
The assets included a US$261-million, 300-foot luxury yacht called the Equanimity with a helicopter landing pad and movie theatre. Several of the movies were produced by Red Granite, a Los Angeles company co-founded by Riza Aziz, Najib’s son-in-law.
Sandra Brown, an acting US attorney, said: “These cases involve billions of dollars that should have been used to help the people of Malaysia, but instead was used by a small number of individuals to fuel their astonishing greed.
“We simply will not allow the United States to be a place where corrupt individuals can expect to hide assets and lavishly spend money that should be used for the benefit of citizens of other nations.”
Bloomberg reported that a collage by Basquiat and “Nature Morte au Crane de Taureau” by Picasso were both presented as birthday presents to “Wolf of Wall Street” star Leonardo DiCaprio, who is not known to be living in poverty.
A DiCaprio spokesman told Bloomberg that the actor was cooperating with the investigation and had “initiated return” of the items, which he had accepted for a charity auction for his foundation.
The lawsuits allege that Low spent about US$9 million in 2014 buying jewellery for the Australian model Miranda Kerr (pictured).
Low is accused of buying a necklace containing an 11.7-carat, heart-shaped diamond for US$1.29 million, with Kerr’s initials “MK” inscribed on the back as a supposed Valentine gift.
Malaysia’s Communications and Multimedia Minister Dr Salleh Said Keruak condemned the opposition for ignoring national sovereignty and encouraging foreign powers to interfere in domestic affairs.
He claimed Najib’s opponents were using the US lawsuits to further their political gains.
The minister accused the opposition of “manipulation of this issue to tarnish the country’s image and damage the reputation of the prime minister”.
Salleh said the attorney general had repeatedly insisted investigations showed Najib was not involved in the alleged money laundering and there was no substantiated evidence for any court action.
Salleh added that the US investigations did not prove the validity of any allegations before they were decided by the courts.
“Evidently, some Malaysians have gone to the United States to make the allegations there, when Malaysia has its own laws,” he told the media.
Whether Malaysian taxpayers will make the connection between inadequate public services at home and the ruling elite’s overseas spending when the general election is called remains to be seen.
Buying jewellery for models in a frankly ambitious Valentine gift is not normally a successful vote-winning strategy.
The regular transfer of power is one definition of a healthy democracy and it might be time for Malaysian power to change hands.