Introduction 1MDB 1MDB was was found founded ed on Januar January y 2009 2009 and it drives drives a sus sustai tainab nable le long-t long-ter erm m economic growth and development in Malaysia !he organi"ational goals of 1MDB include ma#or development in an array of di$erent economic sectors which include tourism% agribusiness and real estate 1MDB has attracted numerous leading &ey players in the international 'nancial growth mar&et in Malaysia which drive and sustain socio-economic growth in various strategic sectors of the economy
(n recen recentt years years%% 1MDB 1MDB has faced faced bac&la bac&lash sh from from whist whistle le blower blowers% s% local local and inte intern rnat atio iona nall mass mass medi media% a% agen agenci cies es and and the the citi citi"e "ens ns of Mala Malays ysia ia due due to its its unsc unscru rupu pulo lous us acti activi viti ties es whic which h led led to the the infa infamo mous us cor corrupt ruptio ion n scan scanda dal l !he !he mismanagement of the organi"ation)s funds and the lac& of transparency are some of the several issues that troubles the organi"ation also inhibit the economy growth of Malaysia in world ran&ing to *+ out of 1, countries from *0 !he organi"ation)s debt levels is soaring at an alarming rate as it is not able to settle its debts with its creditors
!hus% it is important to highlight the 1MDB issues to state the causes and the e$ects that will a$ect Malaysia as a sovereign sovereign nation .everal recommendations will be analy"ed and elaborated to help solve issues related to corruption within an organ organi"a i"atio tion n /rgan /rgani"a i"atio tional nal Behavi Behaviour our theori theories es will will be lin& lin&ed to the the issue issue to determine the reasons on why and how these serious issues occur in 1MDB even if it is under the Malaysian overnment)s control and supervision
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Company Background 1Malaysia Development Berhad 1MDB is a strategic development company which is fully owned by the overnment of Malaysia !he company was founded in year year 2009 2009 and it aims aims to drive drive strate strategic gic initi initiati atives ves for susta sustaina inable ble econom economic ic development for the country by forging strategic global partnerships and promoting foreign direct investment 1MDB)s ma#or role is to lead mar&et-driven initiatives to assist the overnment in propelling Malaysia towards becoming a developed nation in 2020 that is highly competitive% inclusive and sustainable 1MDB has a threetiered governance comprising of a .enior 3eadership !eam% Board of Directors and the Board of 4dvisors /ur 5rime Minister% Dato) .ri Mohammad 6a#ib !un 4bdul 7a"a& a"a& is the the 8hai 8hairm rman an of Boar Board d of 4d 4dvi viso sors rs%% !an .ri .ri Dato Dato)) .eri .eri 3odi 3odin n o& :amaruddin% the 8hairman of Board of Directors and 4rul :anda% the 5resident and roup ;
.?2*0 >.?2*0 billion #oint venture venture company which aimed to obtain foreign direct investment from the Middle ;ast to Malaysia 1MDB also signed a co-operation framewor& agreement with .tate rid 8orporation of
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8hina on 11 January 2010 !his collaboration is aimed to underta&e energy-based pro#ects in the .arawa& 8orridor of 7enewable ;nergy and then becoming its ma#or inve invest stor ors s @ollo ollowi wing ng that that%% on 1 Janu Januar ary y 20 2010 10%% 1MDB 1MDB sign signed ed a co-op co-oper erat atio ion n agreement with 4bu Dhabi @uture ;nergy 8ompany to e
1MDB Issues i.
Corruption scandal
!he purpose of 1MDB is to transform transform :uala :uala 3umpur into a global 'nancial ne. authorities are gathering information to determine if the matter will become a focus on any investigations into the 1MDB scandal !he countrys state fund that has been embroiled in corruption scandal since July% when ?C00 million was traced and transferred from the organi"ation)s fund to the personal ban& accounts all all .tr .treet eet Jour Journa nall .J .J has has repor eporte ted d that that old oldma man n .ach .achs s advi advise sed d organi"ation on three acuisitions which include a ?C+0 million acuisition on asset in 2012 4ccording to alani 201* and hitman 201*% in that speci'c purchase% oldman .achs helped with 'nancing through its 5rincipal @unding and (nvestment des&% which was e$ectively and consistently used by oldman)s own funds to pay for the deal oldman also earned ?,00 million in fees to help 1MDB sell ?,* billion in bonds oldman .achs is one of the culprits in the corruption scandal and the organi"ation is currently being investigated by the @ederal Bureau of (nvestigation and the >. Department of Justice 1MDB)s 1MDB)s corr corrupt uption ion scanda scandall also also includ include e other other indiv individu iduals als li&e li&e Jho 3ow% 3ow% a Malaysian 'nancier 4ccording to !he Malaysian (nsider 201*% 4 >:-based website revealed that the 1MDB 5etro.audi #oint company)s ?C00 million loan repayment to 5etro.audi in 2009 was a front and funds channeled to a 'rm allegedly owned by Jho 3ow% called ood .tar 3imited .arawa& 7eport 7eport reported that Jho 3ow was
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involved in ?C00 million loan straight after the signing of the agreement between 1MDB and 5etro.audi and copied n on every step !he ?C00 million had been loaned loaned from from 5etro. 5etro.audi audi 8aymans Eoldings Eoldings to the 1MDB #oint venture venture company according to copies of the 5etro.audi loan agreement that obtained by .arawa& 7eport
ii. Mismanagement of Organization’s Organization’ s fund 4 few months months after after the the incept inception ion of 1MDB 1MDB in 2009% 2009% the orga organi" ni"ati ation on drew drew cont contro rove vers rsy y wher where e boar board d memb member ers s of 1MDB 1MDB star starte ted d to comp compla lain in abou aboutt the the organi"ation)s dealings and activities (t)s vice activities causes it to accumulate a debt of up to hundreds of millions in Malaysian currency 4ccording to minutes of 1MDB board meetings% board members of 1MDB e
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Application of Teory to !ol"e te Issues ;veryone has their own beliefs regarding on what is right and what is wrong or what is good and what is bad !hese own beliefs will lead to the decision and acti action on of the the
pers person on
4ccor ccordi ding ng to :ohlb ohlber erg) g)s s
theo theory ry of cogn cognit itiv ive e
mora morall
development% people will develop over the years in their capacity to understand what what is righ rightt and and wron wrong g ;ver ;very y indi indivi vidu dual al are are di$e di$errent ent in cogn cognit itiv ive e mora morall development !here are three levels of moral development in the :ohlberg)s theory which are pre-conventional level of moral reasoning% conventional level of moral reasoning and post-conventional level of moral reasoning 5re-conventional level of moral reasoning states that people at this level haven)t yet developed the capacity to assume the perspective of others% leading them to interpret what is right solely with respect to themselves 4t conventional level of moral reasoning% people #udge right and wrong in terms of what is good for others and society as a whole 6e
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post-conventional level of moral reasoning that #udge right and wrong of something in a more comple< philosophical principles of duty% #ustice and rights !hey simply thin& of 'nding more money to develop the country through the unethical behavior of corruption to obtain the money !o !o prevent the unethical behavior and to supervise the behavior of the employees% the organi"ation should set up a code of ethics which are a document descri describin bing g what what an organ organi"a i"atio tion n stands stands for and the genera generall rules rules of condu conduct ct e
various areas of the organi"ation who assist an organi"ation)s 8;/ in ma&ing ethical decisions !his committee will develop and evaluate company-wide ethics policies ith this committee% a good behavior of the organi"ation can be practiced and maintained in the management of the organi"ation !he issues that happened in the scandal of 1 Malaysia Development Berhad is due to the unethical behavior of the management e
#ecommendations to resol"e te pro$lems !here are are several ways to resolve resolve the fund mismanagement issues issues or corruption corruption scandals that occur in an organi"ation /ne of the ways that is recommended to resolve the issues that occurs in 1MDB organi"ation is by doing a complete and professional professional internal investigation (nternal investigation will uncover the truths and facts about the corruption scandal that happens behind the scene (t might be a diGcult tas& as it can be costly% disruptive and time consuming Eowever% a well H run internal investigation can help detect and settle all the suspicious activities% speculations and unclear scandals that happens in 1MDB organi"ation (n cond conduc ucti ting ng an inve invest stig igat atio ion% n% it is impo import rtan antt to have have a good good plan planni ning ng%% consistent e$ective e
involv involved ed 4 typica typicall elemen elementt of an inter interna nall inves investig tigati ation on inclu include de colle collecti ction on and e
@urthermore% the arrest of whistle blowers that drew public attention to the 1MDB issues must be stopped in order to solve the 1MDB scandal histle blowing is good as it is needed to unmas& dangerous behaviours that needs to be stopped and it e
fraud (n the 1MDB issue% the scandal was reported independent publications% !he ;dge ;dge Malays Malaysia ia and !he ;dge ;dge @inanc inancial ial Daily Daily who also raised raised the iss issue ue on the corrupt corruption ion scandal scandal Eowever% Eowever% the local news channels channels bend facts which lead to mis#udgment or misunderstanding among neti"ens Moreover% .arawa& 7eport and all .treet Journal which reported the issues of 1MDB helped e
Conclusion (n conclusion% the crisis of 1MDB a$ect most of the Malaysian either physically or mentally% we welcome outsider)s help with a big heart not &nowing the after e$ect e let Malaysia to be e
Malaysia as they are the 'rst owner of the country country Eence Malays play a crucial part in Malaysia ;conomics (f C0 of Malays willingly to #oin hands in increasing the Malaysia economy% economy% we are sure sure worth worth the compete ;ven so% investigation investigation of the 1MDB corruption scandal is inconclusive and still ongoing even with the present present and obvious obvious evidences evidences and proofs proofs provided provided by whistle whistle blowers blowers through through independ independent ent media outlets !his case is heavily monitored by both the citi"ens of Malaysia and individuals and and entities outside outside of Malaysia !he corruption corruption scandal that that involved hundreds of millions of Malaysian 7inggit will have a negative impact on the image of Malaysia Malaysia (nvestors (nvestors are not con'dent con'dent in the Malaysian Malaysian mar&et mar&et and will avoid investing funds in Malaysia which led to the drop in the value of the Malaysian currency that will have a disruptive e$ect on the economy !he issue needs to be ta&en seriously as it involves &ey people in the government which will cause distrust and disharmony in the country (nvestigators on the issue must be uic&% intelligent and brave in solving the issue as there are people in the government who is trying to cause disturbance and disruption in the investigations !he integrity and rights of various anti-corruption agencies must be uphold as these agencies play a vital role in the chec& and balance system histle blowers% independent reporting channels and law enforces must wor& hand hand in hand hand to e
#eferences 10
@uentes% . 201+ 1MDB scandal coming to the surface surface 7etrieved from httpKLLwwwfreemalaysiatodaycomLcategoryLnationL201+L12L1=L1mdbscandal-coming-to-the-surfaceL
alani% > 201* A 201* A Goldman risk 7etrieved from httpKLLwwwbrea&ingview httpKLLwww brea&ingviewscomLmalaysia-mes scomLmalaysia-mess-puts-goldman-sachs-in-thes-puts-goldman-sachs-in-thehot-seatL212109C=article
.arawa& 7eport 201* Millions of cash go into Rosmah’s account 7etrieved from httpKLLwwwsarawa&reportor httpKLLwww sarawa&reportorgL201*L0CLm gL201*L0CLmillions-in-cash-go-into-rosmahsillions-in-cash-go-into-rosmahsaccount-how-come-e
!he Malaysian (nsider (nsider 201* Jho 201* Jho Low allegedly siphoned o !"#$%% !"#$%% million from 1MDB 1MDB 7etrieved from httpKLLwwwthemalaysianinsidercomLmalaysiaLarticleL#ho-low-allegedlysiphoned-o$-usC00-million-from-1mdb-says-website
Whitman, E. (2015). Najib (2015). Najib Razak 1MDB Corruption Scandal.
httpKLLwwwibtimescomLna#ib-ra"a&-1mdb-corruption-scandalhttpKLLwwwibtimescomLna#ib-ra"a &-1mdb-corruption-scandal-ususinvestigating-goldman-sachs-adviser investigating-goldman-sachs-advi ser-malaysian-21+1 -malaysian-21+1=19 =19
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Appendices
%O&'#(A(C' Board of Directors .hare on faceboo fac eboo& &.hare on o n twitter twi tter .hare on o n email ema il )B*% TA( TA( !#I DATO+ DATO+ !'#I ,ODI( -O AMA#/DDI( AMA#/DDI(
Cairman !an !an .ri Dato) .eri .eri 3odin is the 8hief ;niversity of 6ottingham in Malaysia .dn Bhd% @(D; @orum and the Minority .hareholder atchdog roup 4mong the many awards !an .ri 3odin received to-date include the 8hevalier De 3a 3egion D)Eonneur from the @rench overnment% the Malaysian /utstanding
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;ntrepreneurship 4ward% the Degree of Doctor of 3aws honoris causa from the >niversity of 6ottingham% >nited :ingdom% the >i!M 4lumnus of !he Iear 2010 4ward and !he Brand3aureate Most ;minent Brand (con 3eadership 4ward 2012 Ee graduated from the 8ollege of Business 4dministration% !he >niversity of !oledo% !oledo% !oledo% /hio% >nited >nited .tates of of 4merica% with with a Bachelor of of Business 4dministration 4dministration and Master of Business 4dministration in 19C2 and 19C= respectively
A#/, A(DA
0resident and %roup 'ecuti"e Director 4rul :anda brings a wealth of e: and the Middle ;ast Ee #oins 1MDB from 4bu Dhabi 8ommercial Ban& 4D8B% where he was ;:-uali'ed Barrister% with an 33B from the 3ondon .chool of ;conomics and an 33M from >niversity 8ollege 3ondon
)B*% DAT/ DAT/ !*A*#O, !*A*#O, A2#A, A2#A, IB#A*IM *A,MI
1=
Datu& .hahrol has over 1= years of e)s Director of /il% as Q ;nergy and @inancial .ervices) 6ational :ey ;conomic 4reas 6:;4% as well as handling the overnment)s overnment) s 7ole 7ole in Business .trategic 7eform (nitiative (nitiativ e .7( Ee is also the 5resident and 8hief ;niversity in the >nited .tates of 4merica
)B*% TA( TA( !#I DATO’ DATO’ 0AD/A 0AD/A I!M'' I!M'' I!MAI,
!an !an .ri Dato) 5adu&a 5adu&a (smee is is the roup roup Managing Director Director and and 8hief ;
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Ee sits on the Board of !E 5lantations Berhad% which is the investment arm of !abung !abung Ea#i involved involved in the cultivation cultivation of oil oil palm% including including processing processing and and mar&eting of crude palm oil and related products 3embaga !abung Ea#i is also involved in property development through its subsidiary% !E 5roperties .dn Bhd !an !an .ri Dato) 5adu&a 5adu&a (smee holds holds directorships directorships in a number of public and private private companies% including Ban& (slam Malaysia Berhad% its parent company B(MB Eoldings Berhad and .yari&at !a&aful Malaysia Berhad Ee was previously the 8hief ;: and a Member of the Malaysian (nstitute of 4ccountants
)B*% TA( TA( !#I DATO+ DATO+ O(% %IM */A */AT
!an !an .ri Dato /ng /ng has =0 years of e
>nion Eigh and 5rimary .chools% 5enang% the 4ssistant .ecretary of 5enang 8hinese irls Eigh and 5rimary .chools% 4ssistant !reasurer of 8hung Ewa Eigh and 5rimary .chools and Eonorary 5atron of 8hung 3ing Eigh .chool% 5enang and Butterworth Ee is actively involved in promoting promoting the local economy of 5enang 5enang Ee is the 5ast 8hairman of 7eal ;state and Eousing Developers 4ssociation% 5enang Branch% and is a member of the !rustee of Master Builders and Building Materials .uppliers 4ssociation% 5enang Ee was also a Pice-5resident of 5enang 8hinese 8hamber of 8ommerce from 199+ to 199 !an !an .ri Dato /ng /ng graduated with a Bachelor Bachelor of 8ommerce 8ommerce Eons from from >niversity >niversity of Manitoba% innipeg% 8anada in 19C,
A!*&I( 3.&A,I#AM
4shvin is the ;
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4shvin is an active member of the ;ntrepreneurs /rganisation and has held the position of Pice-5resident of Duty @ree /perators 4ssociation in Malaysia from 200=200, Ee obtained a Bachelor of .cience BsB4 with double Ma#ors in @inance and 4ccounting and a Minor in ;conomics from !he 4merican >niversity% ashington D8 Ee also attended the Monetary ;conomics Q Business .trategy .trategy .ummer 5rogram at the Earvard Business .chool
1C
