Malaysia’s Najib Rebuffs Elite Pleas to Step Down

By John Berthelsen
Asia Sentinel
October 7, 2015

A long list of Malaysia’s most prominent and influential figures have reportedly gone to Prime Minister Najib Razak in recent weeks to appeal to him to step aside as his scandal-plagued administration brings serious harm to the economy and image of the country.

These include all three of Najib’s brothers, especially Nazir Razak, the chairman of the CIMB banking group. Others who have both publicly and privately appealed for him to at least step aside until investigations into the unexplained US$681 million in his AmBank personal account and the long-running 1MDB scandal are completed include Musa Hitam, the onetime deputy premier under Mahathir Mohamad; political veteran Tengku Razaleigh Hamzah; and Mahathir himself, who has almost daily called Najib a thief and criminal.

Insiders say Najib has agreed to hear their appeals, which have included offers of immunity from prosecution, but that his influential wife, Rosmah Mansor, has insisted he remain in office. Those trying to fix the problem are hampered by their own rivalries and past jealousies, betrayals and maneuverings.

Stuck in place

The inability to move out an unpopular and seemingly corrupt premier has exposed fundamental flaws in Malaysia’s governance at a time when the country occupies a key place on the international stage with the chairmanship of the Association of Southeast Asian Nations and a position as a key partner in the just-concluded Trans Pacific Partnership trade talks with Washington, which now must be ratified by the individual member states.

The prime minister returned over the weekend from a jaunt to London, New York for the opening of the United Nations General Assembly and Milan to show off Malaysian products and attend his wife’s Islamic fashion show. He was greeted on his return by a “hero’s welcome” that according to critics was manufactured with party funds.

He was also greeted by a statement on Tuesday, Oct. 6, by Malaysia’s nine powerful hereditary Sultans asking the government to complete the investigation into 1MDB as soon as possible, “take the appropriate stern action” against all found to be implicated and report the findings comprehensively and transparently. According to the statement, the Sultans worry that if the issue drags on, it could jeopardize the country’s economy and personal livelihoods.

It is unsure just how much effect that will have. The Sultans have considerable influence with the ethnic Malay community, which makes up more than 60 percent of the country, particularly in the kampungs, the rural villages that are the backbone of support for the United Malays National Organization. However, polls by the Merdeka Center in the past have shown that rural Malays have little understanding of the 1MDB scandal, in which the state-backed investment fund has RMB42 billion worth of liabilities, an unknown amount of that unfunded.

Defy the Sultans?

The rulers’ statement, while strong, only addressed 1MBD instead of naming the prime minister. A well-placed source told Asia Sentinel that a request had been relayed to the Sultans to ask them to demand that Najib step aside, but that an unknown number, led by the Sultan of Pahang, had balked, meaning they are divided over Najib’s fate. Sultans on Najib’s side, in addition to Pahang, are said to be Kedah and Terengganu. The result was the statement delivered Tuesday. The Council of Rulers convened today, Wednesday, Oct. 7, at the national palace, led by the Sultan of Perlis.

The former editor of the UMNO-owned New Straits Times group of newspapers, A. Kadir Jasin, a close confidant of Mahathir, said on his blog that Najib would be regarded as defying the Sultans if he doesn’t push forward an investigation of the matter immediately. Would the various bodies probing 1MDB rather defy the Sultans or the prime minister, who has fired and replaced the previous attorney general for allegedly preparing an indictment and has neutralized several other individuals, Kadir asked. “Unless Najib and his extremist supporters have ‘lost their minds’ and are disloyal to the [King], they would do as has been decreed,” Kadir said.

Dominic Puthucheary, a leading constitutional lawyer in Kuala Lumpur, called the Sultans’ statement “unprecedented” and said it can be expected to have a “material effect” on Najib’s tenure. “The rulers have the respect of the Malay community. The fact that they took it upon themselves to issue it has enhanced their own standing.”

However, asked if he thought it would bring down the prime minster, he said “I think he can be just a walking dead man. He is not yet a buried dead man.”

Still alive

The reason Najib yet breathes politically is illustrated by the fact that the crippled Parti Keadilan Rakyat, which leads the opposition, has virtually no chance of following through on its threat to introduce a vote of no confidence in the parliament. Wan Azizah, the wife of jailed opposition leader Anwar Ibrahim, and party president, has threatened to introduce the motion when parliament reopens on Oct. 19. But the opposition coalition controls only 88 of the 222 seats in parliament. And the House Speaker, Pandikar Amin Mulia, has said he would block such a move in any case, saying a no confidence vote would be a threat to democracy, an interpretation at odds with almost any country following the Westminster parliamentary model.

In any event, Najib, having poured millions of ringgit into jobs, sinecures and outright bribes, continues to enjoy the support of 192 UMNO cadres who see his continued tenure as their meal ticket. But as the crisis festers, Malaysia’s fiscal situation deteriorates. After the ringgit bottomed out on Sept. 28 at 4.4570, government intervention brought its value back to RM4.3200. Although GDP remains at a relatively healthy 4.9 percent fiscal revenues are going through the floor and inflation has risen from 0.1 percent in February to 3.3 percent in July and is expected to keep rising.

Later this month, Najib is faced with presenting a fiscal budget to the parliament. But analysts familiar with the country’s growing fiscal problems say it will be virtually impossible for him to present a spending plan that would meet obligations without borrowing. With international sources having lost confidence in the ringgit, borrowing costs are likely to skyrocket.