The controversy has had a huge impact in Malaysia, contributing to the downfall of a coalition that had ruled the country since its independence from Britain in 1957.
Goldman Sachs's role in the scandal is under growing scrutiny -- Malaysia's new government this week filed criminal charges, accusing the Wall Street firm and former employees of stealing billions, bribery and lying. Goldman says it will fight the accusations.
Here is a look back at the saga:
What is 1MDB?
1Malaysia Development Berhad (1MDB) is a state investment fund which Najib Razak launched in 2009 shortly after becoming Malaysia's prime minister.
Its portfolio has included power plants and other energy assets in Malaysia and the Middle East, and real estate in Kuala Lumpur.
The fund was closely overseen by Najib.
Whistle-blowers say Low Taek Jho -- commonly known as Jho Low, a jet-setting Malaysian financier close to Najib but with no official positions -- helped set up 1MDB and made key financial decisions.
Concerns escalated in 2014 as 1MDB slid into an $11-billion debt hole, and intensifying public scrutiny led to a string of revelations concerning missing funds.
The issue exploded in July 2015 when The Wall Street Journal published documents showing Najib received at least $681 million in payments to his personal bank accounts.
The US Department of Justice launched a probe due to claims that stolen Malaysian public money was laundered through the US financial system, and filed lawsuits seeking some $1.7 billion in assets allegedly purchased with the cash.
In its civil suits, the department said more than $4.5 billion was stolen from 1MDB by high-level officials at the fund and their associates between 2009 and 2015.
Tens of millions of dollars in stolen money was used in 2012 by Najib's stepson Riza Aziz, an aspiring film producer, to fund the Hollywood film "The Wolf of Wall Street", starring Leonardo DiCaprio.
Hundreds of millions were used, mainly by Riza and Low, to purchase high-end real estate in Beverly Hills, New York and London, a Monet painting for $35 million, a Van Gogh for $5.5 million, a $35 million Bombardier jet, a $100-million stake in EMI Music Publishing, and a $250 million yacht.
Najib desperately sought to contain the scandal, targeting critics and introducing repressive laws, but the allegations hit the popularity of his long-ruling coalition and contributed to its shock election loss in May.
A new government headed by veteran politician Mahathir Mohamad, who is 93 and in his second stint as premier, came to office and has reopened investigations.
Najib has been arrested and hit with dozens of charges, most linked to the alleged looting of 1MDB, and will go on trial next year. He denies any wrongdoing.
Goldman Sachs faces mounting questions about its role in the scandal as the bank helped 1MDB raise $6.5 billion through three bond issues in 2012 and 2013.
Malaysia's new government announced charges Monday against subsidiaries of Goldman and two of its former employees related to the controversy.
They are accused -- along with Low and a former 1MDB employee -- of misappropriating $2.7 billion from the bond issues, bribing officials to ensure they were selected to carry out the work and giving false statements to investors.
The two ex-bankers named in the charges are Tim Leissner, who worked as Southeast Asia chairman and managing director at Goldman, and Ng Chong Hwa, a managing director at the firm.
Both men had already been charged over the scandal in the US last month, with Leissner pleading guilty while Ng was arrested in Malaysia. Low remains at large and maintains his innocence.
Goldman has vowed to fight the charges.
What about the bonds?
Malaysia's finance minister has pledged to honour 1MDB debt obligations, meaning the government will have to make regular interest payments on the fund's borrowings to bondholders, and pay off the full amount when the bonds mature, in 2022 and 2023.
As part of their case against Goldman, Malaysia is seeking fines in excess of the $2.7 billion allegedly looted from the bonds as well as the $600 million paid to the bank in fees -- which would help the government cover the debts.
Authorities are also moving to claw back assets allegedly bought with stolen money and sell them off. Mahathir has said he wants to recover $4.5 billion allegedly taken from 1MDB, according to Bloomberg News.