Professional Ethics 1MDB

This is a case study of a real-life situation that demonstrates how security concepts apply not just to your professional life, but to the world stage.

In 2009, Najib Razak, then - prime minister of Malaysia, launched a state investment fund, Malaysia Development Berhad (1MDB) to improve the standard of living for Malaysians.

1MDB was tasked with increasing Malaysia's development through investment in tourism and green energy.

This case study provides an example of how a lack of oversight can lead to an ethical breach and the subsequent results.

Between 2009 and 2015, banks such as Goldman Sachs and Deutsche Bank, together with investors from the Middle East, invested billions of U.S. dollars into the fund. This money was to be used to fund projects such as providing affordable housing, construction and real estate together with joint ventures in the energy sector providing green energy. There were actually numerous projects planned although the full extent of them is not necessary for this study.

The problem was that the investment in 1MDB was just that, an investment, and not a gift. As such, the investments were a debt that had to be re-paid together with a pre-agreed percentage of any profits.

By 2015, the debts were increasing and secret repayments were being made.

But in the same year, things started to go wrong for 1MDB and Razak; upon closer inspection of the fund's finances, large payments were found to be going directly into the prime minister's personal account - $681 million to be exact. While 1MDB claimed that this was for legitimate purposes, the U.S. Department of Justice reported that this was an attempt to hide money by moving it between accounts.

In July 2020, Razak was sentenced to 12 years in jail by a Malaysia court. In the first of several multi-million-dollar corruption trials, he was found guilty on all seven counts.