1MDB
Reuters

What does 1MDB stand for and when was it set up?

It stands for 1 Malaysia Development Berhad. "Berhad" is a Malay word meaning "private" and is used to describe a limited company in Malaysia.

It was created as a sovereign wealth fund in 2009, not long after Nijib Razak became Malaysia's prime minister. The government said it was set up to promote economic development, to promote foreign direct investment and to turn Kuala Lumpur into a global financial hub.

How does it differ to other sovereign wealth funds?

Sovereign wealth funds are usually set up from a country's budgetary surplus, giving a government the chance to invest rather than let cash sit in a central bank.

But the difference with 1MDB was that it was not based on any surpluses. Rather, it was built on raising debt to acquire assets. These debts, through bond issues, increased to $11bn (£7.7bn) by March 2014 and fears naturally grew over how interest would be paid on these loans.

Some of the proceeds from bond issues were used to buy assets like power plants. Other funds went to joint ventures with international partners, such as Abu Dhabi and Saudi Arabia.

Explain the Saudi Arabia connection?

The Wall Street Journal reported that it had seen a paper trail that traces close to $681m from the fund into the personal bank account of prime minister Najib Razak, which came from the Saudi royal family.

Najib admitted receiving the sum but denies wrongdoing and says the money was not connected to 1MDB. He was cleared of wrongdoing by the Malaysian attorney general but there is criticism that the government is trying to bury the story.

His allies say that transfer was a political donation, paid in a way that is common for the ruling United Malays National Organisation.

Najib Razak
Malaysia's Prime Minister Najib RazakMOHD RASFAN/AFP/Getty Images

Who is involved?

A criminal investigation by the Attorney General of Switzerland is under way and in January it was reported that there were "serious indications" that about $4bn was misappropriated. The Swiss investigation is looking at five companies: PetroSaudi; SRC (which was a former 1MDB subsidiary); Genting and Tanjong, (which were Malaysian conglomerates); and ADMIC, which is a joint venture between 1MDB and Aabar Investments.

Also criticised is Goldman Sachs, which helped raise capital for 1MDB and arranged three bond sales in 2012 and 2013. These, according to the FT, included a transaction where it collected a fee worth nearly $300m on a £3bn issue. The FBI is reportedly investigating Goldman Sachs regional chairman Tim Leissner's connections to the Malaysian prime minister.

Where is it being investigated?

There are several other investigations under way, including ones in the US, Singapore and Hong Kong. The UK Serious Fraud Office launched a money-laundering inquiry in September 2015. Meanwhile, on 4 February, France announced that prosecutors would investigate claims that Najib took kick-backs as part of a $1.2bn arms deal.

Could it bring down Najib?

Najib remains adamant that he will not step down over the matter, and "that the government has its own way of solving the 1MDB issue", CNN reported.

However, Malaysia is a parliamentary democracy and thus Najib, who is also president of his party, would not be expelled unless parliament passes a vote of no confidence against him, his party removes him or the authorities charge him for corruption.

Malaysia demonstration
A protester wearing a pro-democracy group "Bersih" (Clean) mask in Kuala Lumpur, demanding the resignation of Prime Minister Najib RazakReuters

What are the consequences of the case locally?

The scandal is hurting the Malaysian economy, with Oxford Economics saying that it could spur a ratings downgrade. Malaysia is already suffering from a slide in the price of commodities and the currency has also tumbled.

Who is leading the charge against 1MDB?

The Malaysian government has been criticised for clamping down on media outlets reporting the story. British portal the Sarawak Report was blocked locally, with the government claiming that it violated internet laws. It has published reports and documents alleging graft and mismanagement at 1MDB.

The website is run by former BBC journalist and sister-in-law to former British prime minister Gordon Brown, Clare Rewcastle-Brown.

Is there any international impact?

Apart from damaging Malaysia's reputation globally, ties between Switzerland and Kuala Lumpur have been hurt with Switzerland being accused of "circulating misinformation" over the case.

Malaysia's minister of communications, Salleh Said Keruak, told The Guardian that the Swiss attorney general should have contacted his Malaysian counterpart first before telling the media about the probe.

He told the newspaper: "In certain Western media outlets, there exists a bias that it's the institutions and governments of developing ‎countries that don't play it straight, while Western governments do."

What has been the reaction in Malaysia among the media and the public?

Public opinion remains divided over Najib's image. Some remain confident their prime minister is not corrupt, while others doubt his ability to recover from the scandal. Malaysians took to streets in their tens of thousands at the end of August. Najib's critics called for his resignation in the two-day protest.

Najib has been the subject of satire on social media, although this has had consequences for his critics. One activist, Fahmi Eza is under surveillance by Malaysian police after he depicted the country's PM as a clown.

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