List of scandals in Malaysia

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This is a dynamic list and may never be able to satisfy particular standards for completeness. You can help by adding missing items with reliable sources.

The following is a list of reported scams and scandals in Malaysia since independence. These include political, financial, corporate and others. Entries are arranged in reverse chronological order by year. The year is the one in which the alleged scam was first reported or came into knowledge of public.

## Notable scandals[edit]

Notable scandals in Malaysia

Scandal  | Year reported  | Scope Malaysian Ringgit | Summary
Fake Halal meat scandal | 2020  |  | Corruption scandal involving the selling of fake Halal meat in Malaysia over a period of 40 years, discovered in December 2020. A meat cartel was smuggling meat from non-Halal certified sources like Brazil, Bolivia, Canada, China, Colombia, Mexico, Spain and Ukraine. The meat being smuggled included horse, kangaroo and even pork meat which were mixed and sold as Halal certified beef.
MISC | 2018  | RM108.57mil  | It was reported that the company had come under MACC’s radar following allegations of abuse of power, corruption and false payment claims involving about RM109 million.
1Malaysia Development Berhad scandal | 2010s  | 42 billion debt  | 1MDB scandal was a large corruption, bribery and money laundering scandal which began in 2009 in Malaysia but became global in scope and was exposed in 2015. It was as described as "one of the world's greatest financial scandals"[1][2] and declared by the United States Department of Justice as the "largest kleptocracy case to date" in 2016.[3]

In 2015, Malaysia's then-Prime Minister Najib Razak was accused of channelling over RM 2.67 billion (approximately US$700 million) into his personal bank accounts from 1Malaysia Development Berhad (1MDB), a government-run strategic development company masterminded by Low Taek Jho.[4] Dismissal of charges triggered widespread outrage among Malaysians,[5] with many calling for Najib Razak's resignation. Among Najib's critics was politician Mahathir Mohamad,[6] who later defeated Najib in the 2018 general election and returned to power.

Anwar Ibrahim, a political leader in opposition to Najib, openly questioned 1MDB's credentials as early as 2010. He had told Parliament that, according to records held by the Companies Commission, the company "has no business address and no appointed auditor."[7] According to its publicly filed accounts, 1MDB had nearly RM 42 billion (US$11.73 billion) in debt by 2015.[8] Some of this debt resulted from a $3 billion state-guaranteed 2013 bond issue led by the American investment bank Goldman Sachs, which had been reported to have received fees of up to $300 million for the deal, although the bank disputes this figure.[9] Nevertheless, Goldman Sachs was charged in a Foreign Bribery Case and agreed to pay over $2.9 billion in a settlement with the U.S. Department of Justice (DOJ).[10] The Malaysian Conference of Rulers called for prompt investigation of the scandal, saying that it was causing a crisis of confidence in Malaysia.[11][12]

After the 2018 election, the newly elected prime minister, Mahathir Mohamad, reopened investigations into the 1MDB scandal.[13] Malaysian Immigration Department barred Najib [14] and 11 others[15] from leaving the country, while the police seized more than 500 handbags and 12,000 pieces of jewellery estimated to be worth US$270 million from property linked to Najib.[16] Najib was charged with criminal breach of trust, money laundering and abuse of power, while Low Taek Jho (commonly referred to as Jho Low), was charged with money laundering. The U.S.Department of Justice pursued its own investigation into 1MDB, alleging that more than US$4.5 billion was diverted from 1MDB by Jho Low and other conspirators including officials from Malaysia, Saudi Arabia and the United Arab Emirates.[17] Najib was subsequently found guilty of seven charges connected to SRC International, a dummy corporation associated with 1MDB, and was sentenced to twelve years imprisonment.[18]

In September 2020, the alleged amount stolen from 1MDB was estimated to be US$4.5 billion and a Malaysian government report listed 1MBD's outstanding debts to be at US$7.8 billion.[19] The government has assumed 1MDB's debts, which includes 30-year bonds due in 2039.[20]

As of 5 August 2021, in an ongoing effort to fight global kleptocracy, the U.S. Department of Justice recovered and returned a total of US$1.2 billion of 1MDB funds misappropriated within U.S. jurisdiction to the people of Malaysia,[21] joining a list of several countries which have initiated recovery or that have already repatriated smaller recovered amounts.[22]

Murder of Shaariibuugiin Altantuyaa | 2006  |  | Shaariibuugiin Altantuyaa was a murder victim who was either murdered by PETN and RDX explosives or was somehow killed first and her remains destroyed with explosive on 18 October 2006 in a deserted area in Shah Alam, near Kuala Lumpur.[23][24] Her murder case is significant in contemporary Malaysian politics due to the alleged involvement of persons close to the former Malaysian Prime Minister, Najib Razak.

The Shah Alam High Court originally acquitted Abdul Razak Baginda and meted out the death sentence to two of the accused, Chief Inspector Azilah Hadri and Corporal Sirul Azhar Umar, on 9 April 2009, wrapping up the 159-day trial.[25] On 23 August 2013, Sirul and Azilah were acquitted by the Court of Appeal, sparking controversy.[26] On 13 January 2015, the Federal Court overturned the acquittal of both individuals, finding them both guilty of murder and sentenced both of them to death.[27] However, Sirul fled to Australia and efforts by the Malaysian authorities to extradite him were hampered by existing Australian legislation prohibiting the extradition of individuals to countries with the death penalty.[28]

After the Malaysian 14th general election marking a historic defeat for the ruling Barisan Nasional coalition, Prime Minister Mahathir Mohamad and some relevant parties including Altantuyaa's father have hoped for further investigations to find the motive of murder and bring justice to the case. Sirul said he was willing to reveal what really happened in the murder case provided he was given a full pardon to come back to Malaysia.[29]

On 16 December 2019, convicted killer Azilah Hadri has made an explosive allegation from death row in Kajang Prison – the order to kill Altantuya Shaariibuu came from former Prime Minister Najib Razak and the latter's close associate, Abdul Razak Baginda.[30]

Pan-Electric Industries scandal | 1980s  |  | Pan-Electric Industries was a Singapore-based company that specialised in marine salvage work, and had 71 subsidiary companies, including hotel and property interests, with a market capitalization of S$230 million.[31][32] The company collapsed in 1985 due to unsettled forward contracts, forcing the stock exchanges of both Singapore and Malaysia to shut down for three days.[33] At its demise, the company had a total debt of S$480 million, and all its shares held by 5,500 shareholders were found to be worthless overnight. As of 2000, it remains the largest corporate collapse in Singapore's history, and the only instance where the Stock Exchange of Singapore (SES) had to close.[31] The Malaysian Kuala Lumpur Stock Exchange was also forced to close for three days as a result.[34]

In the aftermath of the collapse, key people in the company such as Peter Tham, Tan Kok Liang, and Tan Koon Swan were prosecuted and given varying jail sentences. The collapse of the company shook public confidence in the SES, causing prices of stocks to plunge.[citation needed] New securities laws were introduced in March 1986 to ensure that stockbroking firms can protect themselves against credit risks.[31][35]

Deposit-taking co-operative scandal | 1980s  | 552,000 Depositors and RM1.5 Billion Involved  | The 1986 deposit-taking cooperatives (DTCs) was a scandal waiting to happen.

A year before the scandal erupted, Consumers Association of Penang (CAP) had already written to JPK to find out the control exercised over cooperatives and the protection given to depositors should a cooperative face financial trouble or a “run”. CAP’s investigations disclosed that malpractices in the cooperatives included directors using the cooperatives’ funds to buy land which they owned or controlled at above market price. Directors were also making the cooperatives buy the shares they owned in private companies at above market value. The cooperatives also gave big unsecured loans to directors, their relatives or their companies.

On 29 July 1986, CAP sent a memorandum on “The Need for Greater Control over Co-operatives” to Bank Negara Malaysia (BNM), the Ministry of Finance, Jabatan Pembangunan Koperasi (JPK), and the Ministry of National and Rural Development. The memorandum pointed out that unless the Co-operative Societies Act 1948 was amended and cooperatives activities strictly regulated, depositors may lose billions.

However, our early warning fell on deaf ears and the scandal exploded.

The DTCs fiasco which occurred the following month involved 24 cooperatives, 522,000 depositors and about RM1.5 billion in deposits.

It was triggered off by Koperasi Belia Bersatu Berhad (KOSATU) suspending payments to depositors who wanted to withdraw their savings in July 1986. The Essential (Protection of Depositors) Regulation 1986 promulgated on 20 July 1986 allowed BNM to freeze the assets of KOSATU and its key management and also to investigate into the affairs of the cooperatives . Other depositors became jittery and this led to a run on other DTCs. On 8 August 1986, the activities of 23 other cooperatives were also suspended. 17 accounting firms were then appointed to assist BNM in its investigations and to come up with a White Paper.

The White Paper on the DTCs indicated that the 24 DTCs had by November 1986, together lost approximately RM673 million through mismanagement or fraud. The White Paper revealed that a significant number of cooperatives suffered from bad management, either due to lack of expertise or professionalism or through imprudent, and in some cases, corrupt management.

This result in gross mismanagement of funds such as overinvestment in land and property, with nearly one-fifth of assets in housing development projects and fixed assets, some of which were purchased at the height of the property market.

There was also over-commitment in loss making or non-income generating subsidiaries and related companies with as much as 42% of total assets committed in loans or capital investments in such companies. The cooperatives also suffered from speculative investments in shares.

In certain cooperatives, incidents of fraudulent activities and conflict of interest led to imprudent lending of funds, including to directors and other interested parties.

Many cooperatives did not have borrowing powers or exceeded them. A number of them invested in assets or projects without approval of the JPK, or specifically against the approval of JPK.

In 1986, 5 directors of 3 DTCs were charged in court, and in 1987 a further 17 directors of another 5 DTCs were also charged.

The refund to the depositors of the 24 DTCs was made possible through 3 types of rescue schemes. These rescue schemes had provided for a full ringgit-for-ringgit refund by way of cash or a combination of cash and equity.

The rescue involved RM600 million in soft loans and commercial loans from Bank Negara Malaysia. BNM also paid RM15.6 million for professional fees incurred in the investigation and rescue exercise.

In 1988, 7 other ailing DTCs were investigated. 3 were operating in Sabah and 4 in Peninsular Malaysia. One of the 4 in the Peninsula was the Federation of Housing Cooperatives Ltd, in which the Cooperative Central Bank had a 78% interest.[36][37][38]

## References[edit]

1. ^ "1MDB: The playboys, PMs and partygoers around a global financial scandal. It is one of the world's greatest financial scandals". BBC. 9 August 2019. Retrieved 24 August 2021.
2. ^ "Shorenstein Journalism Award Winner Tom Wright Recounts Story of Global Financial Scandal". The Freeman Spogli Institute For International Studies, Stanford University. 6 November 2020. Retrieved 24 August 2021.
3. ^ "International Corruption – U.S. Seeks to Recover $1 Billion in Largest Kleptocracy Case to Date". Federal Bureau of Investigation. 20 June 2016. Retrieved 24 August 2021..
4. ^ "Malaysian taskforce investigates allegations $700m paid to Najib". The Guardian. 6 July 2015. Retrieved 24 March 2018.
5. ^ "Dismissal of Corruption Charges Against Malaysian Prime Minister Prompts Scorn". Time. 27 January 2016. Retrieved 27 August 2021.
6. ^ "Former Malaysia PM Mahathir calls for removal of PM Najib Razak". BBC News. 30 August 2015. Retrieved 27 August 2021.
7. ^ "Gov't 'gambling' on untested 1MDB". Malaysiakini. 18 October 2010.
8. ^ "1MDB faces fresh debt payment test". Free Malaysia Today. 27 February 2015. Archived from the original on 1 March 2015.
9. ^ "Jho says it ain't so: Malaysian tycoon denies role in 1MDB 'heist of the century'". Euromoney Magazine. April 2015.
10. ^ "Goldman Sachs Charged in Foreign Bribery Case and Agrees to Pay Over $2.9 Billion". United States Department of Justice. 22 October 2020. Retrieved 26 August 2021.
11. ^ "Malaysia's royal rulers urge quick completion of 1MDB probe". The Straits Times. 6 October 2015. Retrieved 1 March 2016.
12. ^ "Royal rulers deplore Malaysia's 'crisis of confidence'". Al Jazeera. Retrieved 1 March 2016.
13. ^ "Mahathir Picks Lim as Finance Minister, Returns Zeti to Council". Bloomberg.com. 12 May 2018. Retrieved 18 May 2018.
14. ^ "Former Malaysia PM Najib Razak banned from leaving country". BBC News. 12 May 2018. Retrieved 24 November 2020.
15. ^ "12 people on Malaysia's travel blacklist over 1MDB probe". The Straits Times. 18 May 2018. Retrieved 23 August 2021.
16. ^ "Malaysia's former first lady Rosmah Mansor's seized handbags damaged and government should pay, lawyer tells court". South China Morning Post. 10 June 2020. Retrieved 24 November 2020.
17. ^ "US DOJ says pursuing investigations related to Malaysia's 1MDB". The Star. Retrieved 22 May 2018.
18. ^ Singh, Sharanjit; Khairulrijal, Khairah N. Karim and Rahmat (28 July 2020). "Najib sentenced to 12 years' jail, RM210 million fine | New Straits Times". NST Online. Retrieved 28 July 2020.
19. ^ "Malaysia's 1MDB state fund still $7.8 billion in debt – government report". Reuters. 6 November 2020. Retrieved 11 July 2021.
20. ^ "How 'Insolvent' 1MDB's Debt Stacks Up and Who's Saddled With It". Bloomberg News. 6 November 2020. Retrieved 26 August 2021.
21. ^ "Over $1.6 billion in misappropriated 1MDB funds repatriated to Malaysia so far". Straits Times. 6 August 2021. Retrieved 6 August 2021.
22. ^ "Singapore to return $11 million in 1MDB-linked funds to Malaysia". Reuters. 10 September 2018. Retrieved 7 August 2021.
23. ^ "PI points finger at Malaysia No. 2 leader in new twist to Mongolian's murder". International Herald Tribune. 3 July 2008. Retrieved 3 July 2008.
24. ^ BERNAMA (25 June 2014). "Kami tak pernah kata bahan letupan C4 diguna untuk bunuh Altantuya". Utusan Borneo (in Malay). Retrieved 29 April 2020.
25. ^ "Policemen to die in Malaysian case". BBC News. 9 April 2009. Retrieved 9 April 2009.
26. ^ Tariq, Qishin. "Altantuya murder: Court of Appeal frees cops – Nation – The Star Online".
27. ^ "Federal Court overturns acquittal of two policemen for murder of Altantuya".
28. ^ "IGP says waiting for Australia's reply on Sirul's extradition". 16 January 2015.
29. ^ "Sirul ready to reveal all in Altantuya case – if he gets full pardon". The Star. 19 May 2018. Retrieved 20 May 2018.
30. ^ Nadeswaran, R. (16 December 2019). "'Najib ordered me to kill Altantuya' – Azilah's shocking allegation from death row". Malaysiakini. Retrieved 25 January 2022.
31. ^ a b c National Heritage Board (Singapore) (2006). "Pan-El crisis". In Tommy T.B. Koh; et al. (eds.). Singapore: The Encyclopedia. Singapore: Editions Didier Millet. p. 402\. ISBN 981-4155-63-2.
32. ^ Pan-Electric Liquidation, The New York Times, February 7, 1986.
33. ^ "Trading halt causes crisis in Singapore". The Globe and Mail. 3 December 1985. p. B15.
34. ^ Ahmad, Zakaria Haji (1986). "Malaysia in 1985: The Beginnings of Sagas". Asian Survey. 26 (2). University of California Press: 150–7. doi:10.2307/2644450. ISSN 1533-838X. JSTOR 2644450.
35. ^ "Pan-El – Biggest corporate collapse here to date". The Straits Times. 17 September 2000.
36. ^ "History of cooperative scandals".
37. ^ "Koon Swan saga: Will the truth emerge? | Free Malaysia Today".
38. ^ "Siapa Dalang Disebalik Kejatuhan Tan Koon Swan | mae".

## Further reading[edit]

* "Skandal kewangan lebih 3 dekad di Malaysia – The Malaysian Insider". Archived from the original on 14 November 2015. Retrieved 11 October 2015.
* "#KNOWTHETRUTH : 1MDB vs PERWAJA STEEL | My Nation News Portal". Archived from the original on 5 October 2015. Retrieved 14 October 2015.
* "Malaysia's mess is Mahathir-made | East Asia Forum". Retrieved 14 October 2015.
* "Tun Dr. Mahathir 2nd most corrupt PM in the world? | Kuala Lumpur Post". Retrieved 14 October 2015.
* "Op-ed | Mahathir going for 3-in-1 – Asia Institute Tasmania – University of Tasmania, Australia". Retrieved 14 October 2015.
* "Record of a spendthrift gov't". 27 June 2008. Retrieved 27 October 2015.

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