What’s Behind Malaysia’s Pile of Missing Money?

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What’s Behind Malaysia’s Pile of Missing Money?

A financial scandal implicating Malaysia’s prime minister has gripped the country.

The focus of the 1Malaysia Development Berhad (1MDB) financial scandal is constantly shifting. Politicians and civil society groups across Malaysia expect extraordinary allegations of financial irregularities at the fund, established by Prime Minister Najib Razak, to be independently investigated and justice delivered.

But increasingly, public anger is being misdirected through the media lens and politicians obsessed with a battle royale between Najib and his nemesis Mahathir Mohamad, whose desire to see Najib ousted and his son Mukhriz promoted within government ranks has been well documented.

This point was driven home by former deputy prime minister Musa Hitam, who described the 90-year-old Mahathir as a “political terminator,” arguing he would succeed one way or another in driving his third prime minister from office.

The other two were Malaysia’s first prime minister, the well-respected Abdul Rahman, who stepped down after the race riots of 1969 — and Najib’s predecessor, Abdullah Ahmad Badawi, forced out of politics in 2009.

Najib and 1Malaysia Development Berhad (1MDB) have strenuously denied allegations that around US$700 million was channeled into two of Najib’s AmBank accounts, the largest tranche – US$681 million – was reportedly transferred ahead of the May 2013 general election.

Both Najib and 1MDB are also blaming Mahathir  – Malaysia’s longest serving leader with 22 years in the job – for stirring up trouble to suit his own political designs. This is not without reason. But predictably, Najib is blaming everyone but himself.

He is also threatening to sue the Sarawak Report and the Wall Street Journal (WSJ) – which broke the story – and he may well win himself a tidy sum of money regardless of the truth behind this scandal. Truth, however, is not necessarily a defense in defamation and libel.

To win, he merely has to prove his reputation has been damaged by allegations that hundreds of millions of dollars were siphoned off into bank accounts that bear is name. As such, a victory in the courts would not necessarily prove those reports wrong.

The reports are sensational and have led to increased calls for Najib’s resignation. Relative documents have been passed to Malaysia’s attorney-general in regards to the allegations and the cash-strapped fund, which already owes more than $11 billion to creditors.

Ken Brown, Hong Kong Bureau chief for the WSJ, has stood by the report, saying that “the trail we have ends at bank accounts with the PM’s name on it.”

“We were very careful and we believe the investigation and documents we have are solid and come from a reliable investigation and not a political investigation,” he told CNBC in an interview.

Predictably, a witch hunt was launched into who leaked leaked the information to the WSJ and the Sarawak Report. But that probe may have been gazumped by well known blogger and self-exiled government antagonist Raja Petra Kamaruddin.

He has named three central bank officials he says are under investigation on suspicion of having leaked confidential information — Nurshamsiah Mohamad Yunus, Shamsuddin Mahayidin, and Abdul Rahman Abu Bakar.

He also claimed the allegations were part of a wider plot to remove Najib and that he may not have been the ultimate beneficiary of the money. Meanwhile the Citizens For Accountable Governance Malaysia (CAGM) claims the money was part of the “system of greasing” the election machinery established by Mahathir.

“CAGM can confirm, based on court documents in our hands, that millions from Najib’s Ambank accounts were actually used to ‘back up’ Barisan Nasional (BN) component parties in the run-up to the 2013 general elections,” CAGM chairman Mohamad Zainal Abidin said.

Still, Mahathir’s political ambitions, threats of law suits, witch hunts and blame are sideshows to the main game and the biggest threat to the United Malays National Organisation (UMNO), which has ruled since independence in 1957, through the BN coalition.

Najib’s failure to confront the allegations squarely and honestly remains his biggest hurdle. Further allegations include that hundreds of thousands of US dollars were also deposited in the account of his wife Rosmah Mansor, who remains a deeply unpopular and divisive figure in Malaysian life.

“Instead of preaching integrity of public servants or quoting religious edicts to salvage his dilapidating image, it is imperative that Najib, Rosmah and family members declare their assets publicly, and make known their banking details which have now come under serious scrutiny,” said Cynthia Gabriel, executive director of the Center to Combat Corruption & Cronyism.

Luke Hunt can be followed on Twitter @lukeanthonyhunt