The allegations, laid out in a suit filed by financial consultancy Kroll on behalf of three liquidated entities linked to 1MDB, claim Standard Chartered allowed over 100 internal transfers between 2009 and 2013 that ultimately helped disguise the theft of public funds. The liquidators assert that these transactions - marked by obvious red flags - amounted to grave control failings that enabled large-scale embezzlement at the highest levels of the Malaysian government.
Standard Chartered, which insists it has not yet received formal legal documentation, has roundly rejected the claims. "Any claims by these companies are without merit and Standard Chartered will vigorously defend any lawsuit commenced by the liquidators," the bank said in a statement.
The bank further suggested that the suing companies had themselves previously been identified by the liquidators as shell entities, allegedly linked to fugitive financier Low Taek Jho, widely seen as the mastermind behind the scandal. Low, who remains at large, has consistently denied wrongdoing.
Jewellery and other luxury items
Transfers allegedly routed through Standard Chartered's accounts included payments to former Prime Minister Najib Razak, who is currently serving a six-year prison term following his conviction in one of several graft cases connected to 1MDB. Additional sums were reportedly used to purchase luxury goods and jewellery for Najib’s wife and stepson - accusations the family continues to deny. A spokesperson for the 1MDB Board welcomed the legal move, framing it as part of a broader push for accountability. "The Malaysian people were the true victims of this global fraud,” they said, “and all parties are determined to hold every facilitator to account - including financial institutions that failed in their most basic duties of vigilance and responsibility."
Standard Chartered is no stranger to regulatory scrutiny over 1MDB. In 2016, Singapore’s central bank fined its local branch S$5.2 million for money-laundering breaches tied to the scandal. Though investigators found significant lapses in customer due diligence, they stopped short of citing wilful misconduct.
Billions are still unaccounted for
This case adds to the bank’s legal woes, coming on the heels of a separate $1.9 billion lawsuit in London over alleged breaches of U.S. sanctions against Iran. The 1MDB affair, meanwhile, continues to echo through courtrooms worldwide, with at least six countries - among them Singapore and Switzerland - conducting investigations.
Since 2019, Malaysia has managed to claw back 29 billion ringgit ($6.92 billion) in 1MDB-linked assets. But with tens of billions still unaccounted for, legal pressure on institutions allegedly involved shows no signs of easing.
1Malaysia Development Berhad (1MDB) was conceived in 2009 with lofty intentions. With Najib at the helm and flamboyant financier Jho Low pulling strings in the shadows, it promised economic transformation. Instead, it became a cautionary tale of corruption without borders.
The scale of the fraud prompted the U.S. to launch its largest ever kleptocracy investigation. Low was the scheme’s maestro. Najib’s defence has long been that he was misled, duped into believing the funds were generous donations from the Saudi royal family. The courts, both at home and abroad, have not been persuaded. In 2020, he was convicted of corruption, abuse of power and money laundering.
The scandal’s ripples extended to many other financial titans, most notably Goldman Sachs, that have paid billions to settle investigations into their roles in facilitating 1MDB’s debt binge.
