Banking giant JPMorgan Chase has agreed to hand over $330 million to resolve allegations it enabled the theft of billions from Malaysia’s government investment fund in a historic financial fraud case.
Malaysian officials filed suit against the bank’s Swiss division in 2021, accusing it of processing $800 million in suspicious transfers from the 1MDB state fund to a bogus business partnership.
Friday’s settlement announcement puts an end to all legal disputes stemming from JPMorgan’s involvement in the massive embezzlement scheme that drained over $4.5 billion from Malaysian coffers during a six-year period.
Swiss courts convicted two executives who ran the fake 1MDB PetroSaudi venture last year on charges including fraud, criminal mismanagement and money laundering.
The embezzlement operation launched in 2009 when businessman Jho Low and his network allegedly began siphoning money from the sovereign wealth fund.
Low’s team persuaded Malaysia’s leadership and fund managers they could deliver lucrative investment opportunities with guaranteed high returns.
Years passed before investigative journalists at The Wall Street Journal exposed the disappearing billions, revealing how funds flowed through JPMorgan’s Swiss operations disguised as legitimate energy transactions with supposed Saudi government backing.
The lawsuit filed by Malaysia in 2021 formed part of the country’s wide-ranging legal offensive targeting financial institutions and individuals who allegedly participated in the fraud.
Swiss authorities concluded their criminal investigation of JPMorgan by imposing a $3.7 million penalty on the bank for inadequate anti-money laundering safeguards during 2014 and 2015.
Prosecutors said the bank processed 43 questionable fund transfers worth approximately $214 million while failing to properly scrutinize the suspicious activity.
“We are committed to the highest standards in our operations and client transactions,” a JPMorgan representative said in a statement to The Post. “When issues arise, we address them head-on.”
The bank said that it “appreciate[s] the collaboration with the Malaysian Government in resolving past matters related to 1MDB, which have been thoroughly reviewed.”
“Since then, we’ve enhanced our controls, earning the trust of regulators in Switzerland and beyond. We are pleased to have these matters resolved and remain focused on delivering exceptional service to our clients.”
Swiss investigators concluded that JPMorgan failed to adequately investigate its business relationships with PetroSaudi despite publicly available information suggesting the venture’s managers were involved in the 1MDB theft.
The bank’s legal troubles represent just one piece of the sprawling 1MDB investigation that has become synonymous with international financial corruption on an unprecedented scale.
While JPMorgan managed to resolve the matter without admitting wrongdoing or entering guilty pleas, the bank agreed to transfer the settlement funds to Malaysia’s designated asset recovery program.
Stolen 1MDB money financed an extravagant spending spree that included high-end real estate purchases, valuable artwork, luxury yachts and even provided backing for the Hollywood production “The Wolf of Wall Street.”
The scandal ensnared multiple major banks, with Goldman Sachs bearing the heaviest financial consequences through settlements exceeding $5 billion across various jurisdictions. Goldman’s Malaysian subsidiary entered a guilty plea for violating federal anti-bribery statutes.
Goldman executives received prison sentences for their participation in the complex fraud that relied on elaborate documentation and offshore shell entities to conceal the stolen funds’ movement.
Malaysia’s former leader Najib Razak faced conviction on multiple charges related to the scandal, including money laundering, power abuse and breach of fiduciary duty.
Jho Low, identified by authorities as the operation’s chief architect, continues to evade capture by international law enforcement agencies pursuing the case.
