Malaysia’s Najib under investigation

Former Malaysian Prime Minister Najib Razak has been raided by police. Najib, who lost the Malaysian general elections earlier this month, has been accused of misappropriating funds from the 1Malaysia Development Berhad, a developmental organisation established in 2009.

Background

Malaysia is a federal constitutional monarchy located in Southeast Asia. It consists of Peninsular Malaysia and the states of Sabah and Sarawak. With a population of over 30 million, Malaysia is the 44th most populous country in the world. Malaysia has a long history of trade with India, dating back to the 1st Century. It was colonised by the British in the 19th Century and gained independence in 1957.

Malaysia’s government system is closely modelled on the Westminster parliamentary system and the legal system is based on common law. The head of state is the king, known as the Yang di-Pertuan Agong. He is an elected monarch, chosen from the hereditary rulers of the nine Malay states every five years. The head of government is the Prime Minister.

Malaysia’s most recent elections took place on May 9th. In a surprise result, Prime Minister Najib Razak lost the polls to his former mentor Mahathir Mohammed’s Alliance of Hope. Najib’s loss also meant the downfall of the Barisan Nasional’s (National Front) 61-year hold on power. Read more on these elections here.

Najib Razak

Najib Razak, born in 1953, is the son of Abdul Razak Hussein, Malaysia’s second Prime Minister, and the nephew of Hussein Onn, the country’s third Prime Minister. After studying Industrial Economics at Nottingham University, Najib joined Malaysian politics at the age of 22 in 1976. He has served as Deputy Energy Minister and Chief Minister of his home state Pahang, and as Youth, Education, and Defence Ministers at a national level.

Najib was first elected into office in 2009. He campaigned on the promise of economic and political reforms. He won a second term as Prime Minister in 2013. During his tenure, Najib has been criticised for suppressing dissent and silencing political opponents. In the last year, tens of thousands of protestors took to the streets calling for his resignation. Earlier this year, Najib introduced a controversial fake news law, which critics said could be used to stifle dissent.

Analysis

On 16th May, reports emerged that police had searched the house of the former Prime Minister Najib Razak. According to Najib’s lawyer, the police seized handbags, clothes, and gifts as evidence. The probe is most likely to do with the 1Malaysia Development Berhad scandal that has plagued Najib since 2015.

1Malaysia Development Berhad is a state-run strategic development company founded by Najib Razak in 2009. The organisation was meant to boost the Malaysian economy and “turn Kuala Lumpur into a financial hub.” However, in 2015, reports emerged that $700 million had been transferred to Najib’s personal accounts from 1MDB. The news was met with widespread protests. Najib dismissed officials within his own administration who criticised his handling of the affair, as well as the Attorney General.

In 2016, a new Attorney General cleared Najib of the accusation, saying that the deposit had been a personal donation from the Saudi royal family. Later the same year, the US Justice Department began an investigation and claimed that at least $4.5 billion had been misappropriated from the organisation. "The Malaysian people were defrauded on an enormous scale," Deputy FBI Director Andrew McCabe said at the time. Attorney-General Jeff Sessions called it “kleptocracy at its worst”.

Newly elected Prime Minister Mahathir has promised to push for further investigations into the case. Mahathir had resigned from Najib’s party in 2015 when the allegations first emerged. "We are slowly getting to the bottom of things and many of our senior officers are volunteering information accompanied, of course, by documents," Mahathir said earlier this week.

“The focus on corruption is important, because we need to get back money which is still in Switzerland, the US, Singapore and maybe Luxembourg. For this, we will contact the governments of the countries to recover the money there... The money belongs to Malaysia and it came from 1MDB. We will appeal for the money to be returned to Malaysia," he said. Mahathir has banned Najib and his wife Rosmah Mansor from leaving the country. Mahathir has said that he will soon pass power on to Anwar Ibrahim, leader of the Pakatan Harapan coalition.

Assessment

Our assessment is that Najib’s loss in the recent elections has left him vulnerable to criminal investigation and charges. As stated previously, we believe that the allegations of corruption against Najib could have been a key reason for the ruling coalition’s defeat this May. It is likely that Mahathir will continue to support the anti-corruption investigation. Mahathir may also focus on curbing the rising cost of living and other issues upsetting the average Malaysian.