JPMorgan Chase has agreed to pay $330m to settle allegations that it facilitated the misappropriation of funds from Malaysia’s state investment fund, 1Malaysia Development Berhad (1MDB).
The scandal is considered one of the largest financial frauds in recent history.
The Malaysian government had filed a lawsuit against JPMorgan’s Swiss branch. It accused the bank of assisting in the diversion of $800m from 1MDB, to a fraudulent joint venture (JV), 1MDB PetroSaudi.
The joint venture’s leaders were convicted of fraud and money laundering by a Swiss court last year.
In a joint statement, JPMorgan and Malaysia confirmed that all issues related to 1MDB have been resolved. The bank agreed to contribute the settlement amount to a Malaysian asset-recovery trust.
The scandal dates back to 2009 when businessman Jho Low and associates allegedly began siphoning off over $4.5bn from 1MDB. Low and others reportedly misled Malaysia’s then-Prime Minister Najib Razak and fund officials about promising investment opportunities.
Razak was implicated in the scandal for allegedly diverting more than MYR2.67bn ($640m) from 1MDB funds into personal accounts.
As part of the same scandal, Goldman Sachs notably agreed to pay over $5bn in penalties for its involvement, with one of its Malaysian units pleading guilty to violating US antibribery laws.
The transactions involving JPMorgan’s Swiss unit were linked to oil deals purportedly supported by the Saudi government. The Wall Street Journal exposed the scheme after detecting billions missing from the fund, sparking broader legal actions against institutions involved.
Malaysia initially sought $800m in damages from JPMorgan, claiming dishonest assistance, a term used for aiding in breaches of fiduciary duty.
In addition to the settlement, Switzerland’s attorney general has concluded its criminal investigation into JPMorgan, imposing a fine of $3.7m for inadequate anti-money laundering measures in transactions from 2014 to 2015. JPMorgan stated it has since strengthened its controls.
