1MDB: What Employers Can Learn

1MDB affects us all, with the national debt taking its toll on our quality of life. It’s an issue we simply cannot ignore. We have to know what happened. Over RM18 billion was misappropriated. That amount of misappropriation could take down hundreds of businesses!

Alright, so we know 1MDB is mostly about misappropriation of funds. But what we don’t realise is that misappropriation happens around us everyday. Now, before we learn on how we can handle our finance with extra care, we need to know what happened to 1MDB.

The four stages of 1MDB misappropriation

Good Star Phase

This is phase 1, happened between 2009 and 2011. RM5 billion worth of 1MDB bond issue was created. 82% of the money was somehow funnelled to, you guessed it, Mr. Jho Low / Low Taek Jho.

What’s a bond? It’s a debt instrument, so every time 1MDB issued a bond, it created a liability, so that’s why our national debt is the way it is now.

Aabar-BVI Phase

Now this time there are TWO bond issues totalling US$3.5 billion (about RM14 billion) in 2012! US$1.367 billion went to bank accounts in Switzerland and Singapore, which were controlled by Jho Low. This is most famous theft of 1MDB that made it Wall Street Journal reported in 2015, which also reported that our former PM received US$700 million in his AmIslamic Bank account.

Tanore!

A US$3 billion (RM12 billion) bond was issued in 2013, and US$1.26 flowed to accounts linked to Eric Tan Kim Lim Loon, who is a close friend of Jho Low.

Options Buyback

This one involved bank loans of US$1.225 billion in 2014 and RM0.85 billion was misappropriated and went to Jho Low.

So the total stolen, in USD terms, according to the US Department of Justice (DOJ), which tracks funds flowing through United States’ banking system, was US$4.507 billion.

Jho Low (right) the central character behind 1MDB. And Leonardo DiCaprio's there too.

Handling Your Money With Care

See, for us Malaysians who may live comfortably (just not as comfortable as Jho Low) we can learn three things about handling our money from those complex negative examples of money laundering, misappropriation and greed:

The authorities are always monitoring our money trails through the globally integrated banking system. So, you want to stay clean in your personal transactions.
Politically Exposed Persons (PEPs) are of special interest to the world’s financial authorities. You’d want to avoid any political entanglement… unless you really wish to serve with integrity, honour and transparency. And not to make yourself rich through corruption.
Complex money flows that appear opaque or blurry does not guarantee your personal privacy. So this is why you should always choose the path of simplicity and true equanimity/levelheadedness when organising your financial life.

This decade is already challenging enough, so it would be wise to heed a good financial planning guidelines to live clean, uncomplicated lives.

This article is adapted from Money Thoughts : What we can learn from 1MDB by Rajen Devadasen