KUALA LUMPUR – Malaysia’s embattled Prime Minister Najib Razak appears to have for now weathered a storm over allegations that $700 million linked to a troubled state fund ended up in his personal bank accounts.
Several thousand supporters gathered on July 9 at a mosque in Taman Melati on the outskirts of Kuala Lumpur, where the prime minister prayed with leading allies and celebrated iftar, the meal marking the end of the daily fast undertaken by Muslims during Ramadan.
“Don’t listen to those nonsense on social media. Truth will prevail. I will not take the so-called millions that vanished from 1MDB,” Najib said, referring to 1Malaysia Development Berhad, the troubled state fund set up in 2009.
Najib chairs the 1MDB advisory board and had come under fire over 1MDB’s estimated $11 billion of accumulated debts long before the Wall Street Journal reported allegations of misallocation of funds on July 3. 1MDB is under official investigation for alleged mismanagement, with claims it paid over the odds for some of the assets it acquired during its six years of operation.
The troubles at 1MDB provided the rationale for a months-long campaign seeking Najib’s ouster, led by nonagenarian former Prime Minister Mahathir Mohamed, who is rumored to favor the elevation of Deputy Prime Minister Muhyiddin Yassin to the top job. In early July Muhyiddin said of the WSJ report that “this is a very serious allegation that can jeopardize [Najib’s] credibility and integrity as the prime minister and the leader of the Government.
However despite Mahathir’s recent outbursts on social media about the 1MDB allegations and his criticism of Najib, the incumbent appears to have the backing of the United National Malays Organisation (UMNO), the main party in Malaysia’s ruling coalition.
UMNO Secretary General Adnan Mansor said that the party was holding together, despite rumors of a split over Najib’s position. Mahathir, who celebrated his unofficial 90th birthday on Friday, remains an influential figure in party circles and continues to call for Najib’s ouster.
“UMNO is intact. We are united behind the prime minister to protect his [party] presidency. For those who wish to see UMNO disintegrate, it will not happen,” Adnan said, speaking at the iftar event attended by Najib.
On Friday, Deputy Finance Minister Ahmad Maslan joined those defending Najib, saying: “What kind of stupid prime minister would take RM2.46 billion in funds from a government agency into his personal account?”
Analysts agreed that Najib is unlikely to be ousted unless proof emerges that he was in direct control of the accounts to which the 1MDB money was allegedly transferred.
James Chin, a Malaysia politics expert at the University of Tasmania, said that UMNO’s internal set-up means that it will be difficult to force Najib to step down. “He will fight and as long as he has the support of divisional chiefs and the supreme council he will survive,” Chin told the Nikkei Asian Review.
Oh Ei Sun, a former Najib staffer and now senior fellow at the S. Rajaratnam School of International Studies at Singapore’s Nanyang Technological University, said that UMNO and the cabinet were most likely watching closely to see if Najib can survive, even if some members might prefer another leader.
“Malaysian politics can realign overnight depending on both distributive interests as well as momentary perception of ‘wind blowing toward one side or the other’ and thus ‘riding on the wind’, he said. The latest developments, including Najib’s vociferous denials of the allegations, must have convinced the cabinet that “it was still opportune to throw their support behind Najib at that point in time,” Oh told the NAR.
Najib’s travails are unlikely to provide an immediate boost to Malaysia’s three opposition parties, who dissolved their seven-year alliance last month after the Malaysian Islamist Party, known as PAS, said it would not work with the secular and ethnic-Chinese dominated Democratic Action Party.
Opposition leader Anwar Ibrahim is serving a five-year jail term on charges of sodomy,, leaving the alliance, which won a majority of the popular vote in the 2013 elections, rudderless and unable to capitalize on the government-linked scandals.
While PAS has backed calls by other opposition leaders for Najib to step down temporarily while investigations continue, Nurul Izzah, daughter of Anwar Ibrahim and a key opposition lawmaker, said that the 1MDB issue alone would not enable the opposition to revive its old alliance.
“I would assume genuine alliance would be predicated on key conditions and demands of structural reform,” Nurul told the NAR.
Meanwhile various investigations into 1MDB’s operations and the WSJ allegations continue. On Thursday, Malaysia’s auditor general submitted an interim review of 1MDB operations to lawmakers, part of an ongoing review of the troubled state development fund, while on Monday investigators froze six bank accounts in connection with their probe and confiscated documents related to the WSJ allegations, although they did not divulge the accountholder names or content of the seized documents.
On Wednesday, the prime minister’s law firm accused the WSJ of reporting a “plethora of convoluted, scurrilous and vague allegations” against Najib and gave the newspaper two weeks to respond, suggesting that legal action against the WSJ could follow.
Even if Najib refutes allegations of impropriety and holds on as prime minister, the troubles plaguing 1MDB look set to roll on.
It also emerged that businessman and socialite Jho Low has been called to face the parliament’s Public Accounts Committee examining 1MDB. Low, whose high spending and partying with celebrities in the U.S. and elsewhere was the subject of international media coverage in recent months, helped establish the troubled fund.
To Malaysia’s opposition, however, the publicity around Jho Low is symptomatic of the scandals that have developed around 1MDB. “With 1MDB, all you see is Paris Hilton cavorting with Jho Low, it’s so ‘in your face’,” said Nurul Izzah.
– by CK TAN, Nikkei staff writer and SIMON ROUGHNEEN, Asia regional correspondentShow