No end in sight to scandals surrounding out-of-control Malaysian prime minister

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By GIS/Defense & Foreign Affairs Staff

Malaysian Prime Minister Najib Razak on June 27 dismissed Deputy Prime Minister Muhyiddin Yassin and four other ministers in a cabinet reshuffle, and replaced the Attorney-General, in a bid to stifle questions over a graft scandal at debt-laden State investment fund 1Malaysia Development Bhd.

The Deputy Prime Minister had called on the Prime Minister to explain why 1MDB had debts of more than $11-billion and was being investigated for financial mismanagement and graft.

Malaysia's Prime Minister Najib Razak on a golf outing with President Barack Obama in Hawaii on Dec. 24,2014. / Hugh Gentry / Reuters
Malaysia’s Prime Minister Najib Razak on a golf outing with President Barack Obama in Hawaii on Dec. 24,2014. / Hugh Gentry / Reuters

After Prime Minister Najib Razak came into office in 2009, he created the 1Malaysia Development Berhad (1MDB). It was a fund designed to turn Malaysian capital, Kuala Lumpur, into a financial hub.

1MDB garnered national attention in early 2015, after it missed $11-billion in payments to banks and bondholders. The Wall Street Journal reported that more than $1-billion was transferred to Prime Minister Najib’s personal bank accounts through a series of complex international financial transactions.

Leaders of 1MDB began to resign from the fund. Former Prime Minister Mahathir Mohamad began to criticize the fund for its lack of transparency and Prime Minister Najib’s lavish lifestyle. Najib responded that he believed former Prime Minister Mohamad was attempting to commit political sabotage.

A parliamentary inquiry into the situation revealed that billions of dollars were missing from the fund.

The Attorney General and an anti-corruption commission ran the investigation, raided 1MDB, and confiscated documents.

However, Prime Minister Najib, in July 2015, removed Attorney General Tan Sri Datuk Seri Panglima Abdul Gani bin Patail for health reasons. He replaced Abdul Gani with Tan Sri Datuk Seri Panglima Mohamed Apandi Ali in June 2015.

Attorney General Apand Ali announced, in January 2016, that the money which had gone to Prime Minister Najib’s personal accounts was a personal donation from the Saudi Royal Family, and most of it was returned.

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The Public Accounts Committee, a bipartisan organ of the Malaysian Parliament, began an investigation. It called for the abolishment of the 1MDB advisory board, which was chaired by Prime Minister Najib. It was discovered that Prime Minister Najib’s credit cards were, in September 2014, overdrawn by $1,039,369.91 in jewelry purchases.

Six foreign authorities began to investigate, and the Singapore police froze two bank accounts linked to 1MDB.

The Malaysian opposition parties formed a new alliance, called the Alliance of Hope, to challenge the suspected corruption, but progress was staunched because opposition leader Anwar Ibrahim was jailed on sodomy charges. There were protests in support of and in opposition to Prime Minister Najib.

The Wall Street Journal, in March 2016, reported that Prime Minister Najib spent $15-million on jewelry, clothes, and a car in the United States, Malaysia, and Italy. It also accused him of using the funds to upkeep a political machine to keep him in office.

A website and newspapers extensively covered the scandal, but the Malaysian Government blocked access to these sites.

Chief Secretary Ali Hamsa announced on June 23, 2016, the resignation of the Chief Commissioner of Malaysian Anti-Corruption Commission Abu Kassim Mohamed, leader of an investigation of Prime Minister Najib. The Commissioner cited a desire to take up another opportunity.

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