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The global financial scandal that has spread from Malaysia to Hollywood

Shashank Bengali, Los Angeles Times on

Published in Business News

On Wall Street, two employees of the investment bank Goldman Sachs, which advised on three bond offerings that raised $6.5 billion for 1MDB, have been charged by federal prosecutors with paying bribes and kickbacks to Malaysian officials.

Goldman officials -- who have struggled to repair the bank's reputation since the 2008 financial crisis -- have painted the alleged misconduct as the actions of a few rogue employees. But the bank is bracing for more damaging allegations to emerge in a criminal trial in Malaysia, which is seeking more than $3 billion in fines.

How has the case affected Malaysia?

The Southeast Asian country of 30 million people has never experienced a scandal on this scale.

The slow pace of the investigation has given fodder to Najib and other critics who accuse Malaysian authorities of seeking political retribution. Najib's successor, Mahathir Mohamad, has pledged to crack down on a culture of corruption by strengthening the independence of investigating agencies.

Many Malaysians have closely followed each turn of the case against Najib, and the start of his trial next month will be a watershed.

 

"No prime minister has been put on trial for doing things like this, given the political culture that has prevailed here, along with the notion of deference to authority and unquestioning loyalty to people in power," said Chandra Muzaffar, a prominent political scientist. "What is happening in many ways is a turning point in our history."

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