Malaysia’s Defiant Prime Minister: The 1MDB Purge

By Dhirenn Nair
The Diplomat
August 09, 2016

Despite a deepening scandal, Najib Razak has strengthened his position by purging his party and government of critics.

July 20, 2016 was a dies horribilis for Najib Razak, the embattled prime minister of Malaysia. For over a year, he had been battling accusations of financial mismanagement of the state fund 1 Malaysia Development Berhad (1MDB) and embezzlement for personal gain. Exposés by the Wall Street Journal and the Sarawak Report, an investigative journalism site which is blocked in Malaysia to “maintain national security,” first showed alleged financial mismanagement in the fund. Then came allegations that Najib had over $680 million in 1MDB-related funds transferred into his own personal account. The response of the Malaysian authorities was to investigate the Sarawak Report for leaking confidential government information.

Najib, on the other hand, claimed that the funds found in his personal account were a donation from Saudi Arabia; a portion of that “donation” was used to finance his coalition’s 2013 re-election campaign and the rest was returned to the donor(s). His claim was later corroborated by the Malaysian Anti-Corruption Commission and the attorney general, Apandi Ali; Saudi Arabia also confirmed that a political donation had been made to Najib. Legally, the prime minister had not done anything unlawful, for there are no existing political financing laws in Malaysia. It appeared Najib has dodged a bullet — but then came the announcement by the United States Department of Justice (DoJ) on July 20.

The Defrauding of 30 Million Malaysians

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On July 20, the DoJ announced that it had filed civil suits to seize assets linked to “more than $3.5 billion in funds… allegedly misappropriated by high-level officials of 1MDB and their associates.” In a press conference, the national deputy director of the FBI said that “the Malaysian people were defrauded on an enormous scale.”

The Justice Department’s Civil Forfeiture Complaints document makes repeated mentions of a “Malaysian Official 1,” who is said to have received $681 million in 1MDB related funds. In addition, “Malaysian Official 1” is also identified as a relative of Riza Aziz in the document. Riza Aziz is identified by name as one of the individuals involved in diverting more than $3 billion from 1MBD; he is also the step-son of Najib Razak. There is little doubt over the identity of “Malaysian Official 1″ — which Malaysian official is a relative of Riza Aziz and also had over $681 million deposited into his account?

The prime minister’s press secretary issued the following statement in response to the announcement from the DoJ:

“Malaysian authorities have led the way in investigations into 1MDB. The company has been the subject of multiple investigations within Malaysia, including by the Malaysian Anti-Corruption Commission, Auditor General, and bi-partisan Public Accounts Committee. After comprehensive review, the Attorney General found that no crime was committed. 1MDB is still the subject of an investigation by the Royal Malaysia Police.

We note the United States Department of Justice’s civil lawsuits brought against various assets. As previously stated, the Malaysian Government will fully cooperate with any lawful investigation of Malaysian companies or citizens in accordance with international protocols.

As the Prime Minister has always maintained, if any wrongdoing is proven, the law will be enforced without exception.”

The statement made no mention of “Malaysian Official 1″ and that was expected since Najib was not named in the DoJ document.

Still, this revelation brings Najib’s claim about the donation he received and also the findings and conduct of the attorney general and the MACC into question. The DoJ document disputes their accounts of where the $681 million found in the prime minister’s account came from.

Najib has not acknowledged or denied that he is indeed “Malaysian Official 1″ — probably a politically wise move, considering that he is not named in the document and that the suit brought forward by the DoJ only involved the seizure of property and is not a criminal case. However, considering the level of public dissatisfaction over his handling of the scandal since it was first exposed over a year ago and the immense foreign pressure from multiple foreign investigations into 1MDB, could Najib’s position be a jeopardy?

The Purge, Malaysian Style

Since news broke of the corruption allegations implicating Najib in the embezzlement of 1MDB funds, the prime minister has been shoring up support within his party, the United Malays National Organization (UMNO), and also his Cabinet. In the immediate aftermath of the initial allegations in July 2015, Najib fired his deputy prime minister and four other ministers. His deputy, Muhyiddin Yassin, had emerged as an unlikely critic of Najib’s handling of the fiasco. In announcing the Cabinet reshuffle, the prime minister said:

“I can accept differences of opinion and criticism as part of the decision-making process. But as a Cabinet minister, differing views and opinions should not be aired in public forums that can negatively impact the perception of the government and nation. It is also contrary to the concept of collective responsibility….The decision to replace Tan Sri Muhyiddin was a difficult one, but I was forced to do so to ensure the Cabinet is a united team.”

On the party level, the purge continued with the expulsion of Muhyiddin Yassin and Mukhriz Mahathir, who before being expelled was ousted as the chief minister of a northern state. Mukhriz is also the son of former Prime Minister Mahathir Mohammad, who has become Najib’s fiercest critic.

Najib also replaced the attorney general, Abdul Gani Patail, who had been heading a probe into alleged financial mismanagement at 1MDB. The official reason cited was Abdul Gani’s ill health, attributed to a kidney ailment, but there have been allegations that the attorney general was on the verge of bringing charges against the prime minister for siphoning off 27 million ringgit ($6.7 million) from a 1MDB linked company. The Sarawak Report reproduced the alleged draft charge sheet. The allegations were denied by the government and the new attorney general, Apandi Ali, who stated that the draft charge sheet was false and it was evidence of a plot to topple Najib.

As a result of the purge, Najib’s Cabinet is stacked with loyalists and he has a party of sycophants who have emboldened his resolve to weather this scandal. These sycophants have been rewarded with Cabinet positions (some promoted) and some have launched attacks on the DoJ’s actions, pledging full support to the prime minister and repeating the mantra that Najib has not been named and has done no wrong. At the recent World Islamic Economic Forum in Jakarta, the prime minister noted that Muslim states:

”…..have seen the devastating results of foreign intervention in the Muslim world, often based on incomplete, wrong or partisan information. We must make clear that we reject it. And reject those who, out of political motivation, call for foreign powers to intervene in their own country.”

Considering the timing of his statement railing against foreign meddling based on partisan information, it is difficult not to relate it to the recent DoJ announcement; indeed Najib’s supporters have alleged that the DoJ’s investigation has been based on false partisan information. Najib has ensured that his party is full of sycophants who will not question his authority.

A Fragmented Opposition

Najib has dealt with opposition politicians the same way he has dealt with critics from within: by silencing them. An opposition politician who divulged the contents of a Parliamentary Accounts Committee audit into the troubled fund was charged under the Official Secrets Act 1972 for exposing information without approval. However, political persecution is the least of the Federal Opposition’s worries. The coalition of opposition parties failed to galvanize public support against Najib when news first broke of the $681 million in his account. Ironically, as public anger against Najib grew, the Federal Opposition further disintegrated, continuing the process that began following the 2013 General Elections, which saw the Opposition win the popular vote but not a parliamentary majority due to a first-past-the-post system rife with gerrymandering.

The opposition coalition crumbled in June 2016 due to fundamental differences between the the Islamist PAS and the secular, Chinese-dominated, DAP, two of the three parties that made up the coalition. The Islamist party’s resolute position on introducing hudud, a part of Sharia law which deals with criminal matters, was the bone of contention. The collapse of the coalition has meant that despite the enormous pressures on Najib, the opposition is too weak themselves to oust the embattled prime minister. This was evident in the results of the recent state election in Sarawak and two subsequent parliamentary by-elections. The infighting between opposition parties led to multiple cornered fights which resulted in the splitting of opposition votes and victories for Najib’s coalition.

Strength Amid Scandal

The disunity among opposition parties has been a boon for Najib. Having already rid his own party of critics and facing an opposition in disarray, the prime minister is well positioned to survive this second phase of uproar over the 1MDB scandal. Barring a foreign intervention, Najib appears poised to lead his party and coalition into the next general elections, due before August 24, 2018 . At that time, the inability of opposition parties in devising a seat sharing agreement and a coherent common policy platform will likely lead to the reelection of “Malaysian Official 1.”

Dhirenn Nair is a graduate in International Relations from the University of Nottingham, Malaysia Campus