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Najib Razak, Former Malaysian Prime Minister, Found Guilty in 1MDB Case - The Wall Street Journal

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Najib Razak, Malaysia's former prime minister, arrives at a court complex in Kuala Lumpur on Tuesday.

Photo: Samsul Said/Bloomberg News

KUALA LUMPUR, Malaysia—A court in Malaysia found former Prime Minister Najib Razak guilty of money laundering, abuse of power and criminal breach of trust in connection with a multibillion-dollar financial scandal that drove him from office in the country’s 2018 elections.

Tuesday’s verdict is the first in a string of cases against Mr. Najib over allegations he received hundreds of millions of dollars from a state investment fund called 1Malaysia Development Bhd., or 1MDB, which he launched in 2009. Mr. Najib pleaded not guilty and has denied wrongdoing.

U.S. investigators say more than $4.5 billion was stolen between 2009 and 2014 and laundered through a variety of bank accounts. In some cases, they say, the money financed Hollywood films and a luxury yacht, in addition to real estate, jewelry and artworks.

In a deal announced last week, the main banker for the fund, Goldman Sachs Group Inc., agreed to pay $2.5 billion to the Malaysian government for its role in the alleged fraud and guaranteed the recovery of $1.4 billion in assets allegedly stolen from the fund.

Goldman raised $6.5 billion for 1MDB through three bond sales in 2012 and 2013, much of which U.S. authorities say was stolen. U.S. prosecutors say the bank ignored warning signs in pursuit of fees that reached about $600 million.

The court’s decision Tuesday revolved around allegations that 42 million Malaysian ringgit, or around $10 million, was transferred from a former 1MDB unit called SRC International Sdn Bhd. into Mr. Najib’s personal bank accounts. Mr. Najib, who was present in court for the proceedings, was found guilty of all seven charges against him, each carrying a maximum prison sentence of 15 to 20 years.

Mr. Najib had a close relationship with Jho Low, a Malaysian financier and the alleged architect of the fraud that spanned many countries. Mr. Low’s whereabouts is unknown, and he has denied wrongdoing. The U.S. Justice Department has stripped Mr. Low of his custom-made yacht, a stake in New York’s Park Lane Hotel and $700 million in other assets, in civil-forfeiture settlements in which Mr. Low admitted no wrongdoing.

The judge rejected Mr. Najib’s defense that he was misled by Mr. Low and was under the impression that the money flowing into his account was a gift from a Saudi royal.

Mr. Najib suffered a historic election loss in 2018 amid widespread anger over the scandal, marking the first time his party was out of power since Malaysia’s independence from Britain in 1957. His opponents ran an anticorruption campaign centered on the revelations surrounding 1MDB, and his successor ordered sweeping investigations into it.

But political instability in Malaysia this year returned Mr. Najib’s party to power in a coalition led by Prime Minister Muhyiddin Yassin. The trial was seen as a test of whether Malaysia’s new government would uphold the rule of law or try to protect the former leader who governed the country for nearly 10 years.

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