U.S. Confirms Mishandling of 1MDB Funds

The United States Justice Department has concluded that the Malaysian prime minister is linked to the billions of dollars embezzled from the 1MDB. This news comes a year after investigative journalists first uncovered the possible connection.

1MDB stands for 1Malaysia Development Berhad. It is a sovereign wealth fund, a state-owned investment company that can back a variety of securities. It was supposed to be used for investments whose profits would in turn be used to support the Malaysian people. 

About $6.5 billion of the funds assets came from bond sales, with more money coming from an international oil deal. Over $1 billion of those funds were then diverted into the United States via shell companies. 

With the government money, family and friends of Najib Razak, the prime minister, purchased luxury real-estate, financed movies, and bought lavish paintings.

While Singapore and Switzerland have also investigated the 1MDB, this is the most definitive action taken by a foreign government in this conspiracy. The U.S. is now demanding a forfeiture of the assets purchased with the embezzled money.

Months after the release of the "Panama Papers", this story comes at a time when governments are on the lookout for illegal transactions and misuse of shell companies. Unfortunately, the U.S. involvement in this case has forced a confrontation between U.S. prosecutors and Malaysia. Malaysia, an essential American ally, has been increasingly a major partner in counterterrorism. Their role as an ally has also allowed them to be a moderator between the U.S. and the communist nation of China.