Leonardo DiCaprio, the Malaysian Money Scandal
The financial scandal that has spread from Malaysia to Hollywood
In accepting his 2014 Golden Globe for acting in "The Wolf of Wall Street," Leonardo DiCaprio thanked "Joey, Riz and Jho," three little-known producers and financiers, "for taking a chance on this movie."
The film is based on the memoirs of a stockbroker who defrauded investors with millions of dollars in the 1980s.
The three men, Joey McFarland, Riza Aziz and Jho Low, have since been charged with even greater fraud: the theft of more than $ 4.5 billion from a Malaysian government investment fund known as 1MDB.
The most recent charges in the case were against Riza, who was arrested in Malaysia last week and pleaded not guilty to laundering nearly a quarter of a billion dollars, in part to finance the film.
The worldwide investigation has also implicated a former Malaysian prime minister, employees of a prestigious Wall Street investment bank, a member of the rap group Fugees and a top Republican fundraiser.
Here is the latest news:
What is 1MDB?
Short for 1Malaysia Development Berhad (which means limited), the fund was created in 2009 by then-Prime Minister Najib Razak to invest government revenues in real estate, Middle Eastern oil and other sectors.
Questions about the fund arose in early 2015 when it defaulted on $ 11 billion of debt. The Wall Street Journal then published documents showing that nearly $ 700 million from 1MDB-linked entities had ended up in Najib's personal bank accounts just before the 2013 election.
Investigations on three continents soon uncovered evidence that Malaysian government funds had been diverted to bank accounts in the United States, Switzerland, and Singapore and spent on lavish purchases, including properties in the Hollywood Hills and Manhattan, French Impressionist artwork, a private jet and a $ 260 million yacht.
What is the connection to Hollywood?
Investigators say Riza, who is Najib's stepson, used money from 1MDB to fund a production company, Red Granite Pictures. With 12 employees and no backgrounds, West Hollywood-based Red Granite made a name for itself by developing problematic films that other studios had missed.
With funding they said came from undisclosed investors in the Middle East and Asia, Riza and her co-founder McFarland announced themselves with a 2011 Cannes beach launch party featuring Kanye West, Jamie Foxx, DiCaprio and others. top-tier stars.
Among the films they funded are "Dumb and Dumber Two," the sequel to the 1994 box office hit comedy, and the $ 100 million "The Wolf of Wall Street," directed by Martin Scorsese. It is believed that DiCaprio, Scorsese and others involved in the film did not know the source of the Red Granite money.
What is Red Granite's response?
The company, which has not released a film since 2017, has denied wrongdoing and paid $ 60 million to settle a civil lawsuit with the United States government without admitting guilt. The US returned the money to Malaysia.
In February, the Justice Department moved to seize tens of millions more bank and escrow accounts dating back to McFarland. The producer has not been charged and he is said to be cooperating with investigators.
Riza was the first person connected to Red Granite to face charges. His New York attorney, Matthew Schwartz, said in an emailed statement to the Los Angeles Times that "when the actual evidence comes out, it will be clear that he has done nothing wrong."
Who was behind the plan?
The US and Malaysian authorities allege that the mastermind was Low, a Malaysian financier who they said made his way into Najib's inner circle and became entangled in an astonishing network of celebrities, bankers and political agents to help loot the 1MDB. .
Chubby and bespectacled, Low hardly looked like a member of the Hollywood circle. But he allegedly used the 1MDB money to host star-studded Vegas parties and shower celebrities with expensive gifts. DiCaprio has returned a Picasso painting reportedly given to him by Low.
Faced with a long list of accusations in the United States, Low is said to have fled to China and has issued repeated pleas of innocence on a personal website, accusing the Justice Department of attempting to “reach a guilty verdict through the media. Communication".
What about the old Malay leader?
Najib, who lost his re-election bid in 2018 due to the pressure of the scandal, is out on bail awaiting trial in Malaysia on 25 corruption and money laundering charges involving $ 550 million related to the fund, that he supervised.
The 65-year-old former prime minister maintains his innocence, but issued a public apology for "shortcomings and mistakes," which in itself is a staggering admission for a longtime leader who had enjoyed almost total power.
A February 2020 trial date has been set for Rosmah Mansor, Najib's wife and Riza's mother, who allegedly used government funds to finance extravagant shopping trips abroad.
Shortly after Najib's electoral defeat, authorities raided several properties related to the family and seized more than $ 260 million worth of luxury goods, including watches, jewelry, silks and hundreds of designer handbags, earning him Rosmah comparisons with Imelda Marcos, the former Filipino first lady known for her shoe collection.
Who else is being investigated?
The case has also reached US politics. In May, Pras Michel, one of the Fugees' founders, pleaded not guilty to conspiring with Low to divert nearly $ 1 million in 1MDB funding to Barack Obama's 2012 reelection campaign without revealing his source.
And last year, the Wall Street Journal reported that Republican fundraiser Elliott Broidy, vice chairman of President Trump's 2016 campaign, discussed a deal with Low who would have paid him tens of millions of dollars to pressure the Justice Department to end. that he abandoned his 1MDB investigation. Broidy has not been charged.
On Wall Street, two employees of the investment bank Goldman Sachs, who advised on three bond offerings that raised $ 6.5 billion for 1MDB, have been charged by federal prosecutors with paying kickbacks and kickbacks to Malaysian officials.
Goldman officials, who have struggled to repair the bank's reputation since the 2008 financial crisis, have called the alleged misconduct the actions of a few dishonest employees. However, the bank is preparing for more damaging charges to emerge in a criminal trial in Malaysia, which seeks more than $ 3 billion in fines.
How has the case affected Malaysia?
The Southeast Asian country of 30 million people has never experienced a scandal of this magnitude.
The slowness of the investigation has provided arguments to Najib and other critics who accuse the Malaysian authorities of seeking political retaliation. Najib's successor, Mahathir Mohamad, has vowed to end a culture of corruption by strengthening the independence of investigative bodies.
Many Malaysians have closely followed every turn of the case against Najib, and the start of his trial next month will be a milestone.
"No prime minister has been tried for doing things like this, given the political culture that has prevailed here, coupled with the notion of deference to authority and unquestioning loyalty to the people in power," said Chandra Muzaffar, a prominent political scientist. "What is happening in many ways is a turning point in our history."
