‘ROSMAH OWNS ONE OF THE WORLD’S LARGEST COLLECTION OF PINK DIAMONDS – ONE GEM ALONE WORTH US$27 MILLION’: WORLD-WIDE ATTENTION ZOOMS IN ON NAJIB’S WIFE AMID ARREST OVER 1MDB-LINKED DEALS

KUALA LUMPUR, Malaysia—The wife of former Prime Minister Najib Razak was arrested by antigraft authorities Wednesday in connection with a multibillion-dollar financial scandal that brought down his government.

Rosmah Mansor, 66 years old, was taken into custody at the agency’s headquarters and was to be held overnight before being presented with formal charges in court for violating money-laundering statutes, the agency said in a statement.

The arrest follows a wave of criminal charges that have been leveled against Mr. Najib by the government of Prime Minister Mahathir Mohamad, which has opened investigations into 1Malaysia Development Bhd., or 1MDB, a state investment fund established by Mr. Najib in 2009.

The former first lady, who is known for her lavish spending, is seen by investigators as a central force in the scandal. Investigators and people close to her told The Wall Street Journal that she possessed extensive influence over decisions made by Mr. Najib when he was premier.

In civil lawsuits, the U.S. Department of Justice says at least $4.5 billion was misappropriated from 1MDB, which, if true, would make it one of the largest-ever financial heists. In addition to the U.S., Malaysia, Singapore and Switzerland have launched criminal investigations into 1MDB. The Swiss Attorney-General has said that around $7 billion originating from 1MDB and a former unit flowed through the global financial system between 2009 and 2015.

Mr. Najib tried to quash an investigation into the 1MDB scandal when it exploded in 2015 after reporting by The Wall Street Journal. But he was swept from office in May after Mr. Mahathir, his former mentor-turned-foe, campaigned on an anticorruption platform. Previously, Malaysia’s then-attorney general had cleared Mr. Najib in an earlier investigation into malfeasance at 1MDB.

Since July, Mr. Najib, 65 years old, has pleaded not guilty to 32 charges related to the scandal, including criminal breach of trust, money laundering and abuse of power. Some stem from a sum of more than $600 million that allegedly entered his personal bank accounts ahead of an election campaign in 2013 that his coalition narrowly won.

Then-Prime Minister Najib Razak and his wife, Rosmah Mansor, prepare to leave for an election nomination center in Pekan, Malaysia, on April 2018. Photo: Sadiq Asyraf/Associated Press

Mr. Najib has said the money didn’t come from 1MDB or public entities and described it as a “contingency fund” to aid his coalition in those elections. He and the state fund have repeatedly denied wrongdoing.

Mr. Najib is free on nearly $850,000 in bail and trials are due to begin in February. If convicted, the abuse of power counts are punishable by up to 20 years in prison, while the maximum penalty for money laundering is 15 years.

Ms. Rosmah’s lawyers said they weren’t informed of the nature of the charges or of her detention. Separately, Mr. Najib was questioned by police for three hours. No details were disclosed.

The Malaysian Anti-Corruption Commission has conducted several marathon rounds of questioning Ms. Rosmah in investigations related to 1MDB, including into SRC International Sdn Bhd., a former unit of 1MDB established in 2011 as a vehicle for overseas energy investments. SRC was placed under the Finance Ministry’s control in 2012.

Ms. Rosmah’s spending for years made her a lightning rod for anger over suspected corruption and Malaysians have singled her out for much of the blame for the scandal. Ms. Rosmah previously described criticism of her spending as politically motivated.

Ms. Rosmah has accumulated one of the world’s largest collections of pink diamonds, according to a Malaysian businessman who said he helped select some of the gems. One diamond she acquired was valued at $27 million, according to the U.S. Justice Department. A man U.S. investigators believe played a critical role in the 1MDB affair—and who has also described helping procure diamonds for Ms. Rosmah—has estimated her collection’s value at $350 million.

Raids on Najib residences have unearthed $28 million in cash stuffed into suitcases and more than $266 million worth of handbags, luxury watches, jewelry and other goods, police said.

The Malaysian investigation has also focused on Mr. Najib’s stepson, Riza Aziz, who faced four days of questioning by antigraft officials in July. A Justice Department lawsuit details how Mr. Riza, a onetime banker, allegedly received tens of millions of dollars from 1MDB, which U.S. officials say he used to buy property in London, Los Angeles and New York and to finance a Hollywood film company. Mr. Riza has denied any wrongdoing.

– WSJ