US Lawsuits Deepen Malaysia’s 1MDB Scandal

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US Lawsuits Deepen Malaysia’s 1MDB Scandal

Malaysian premier Najib Razak is believed to be linked to the stolen funds.

Malaysian Prime Minister Najib Razak has effectively abandoned his bureaucrats linked to the long-running scandal involving 1Malaysia Development Berhad (1MDB), saying they would have to fend for themselves against legal action launched in the United States.

“The civil suits brought by the U.S. Justice Department regarding 1MDB must be given space and opportunity for the judicial process to be carried out. Any individual who has been named must clear their own names,” Najib wrote in a social media post.

Najib is unnamed in the suits but is reportedly referred to as Malaysian Official 1 in the American lawsuits. Those who have read all the court documents say he is referred to 36 times.

The United States is suing for the return of $1 billion in assets from $3.5 billion allegedly misappropriated by the fund, which has also accumulated losses of $11 billion. Recent reports also claim a secret deal was hatched between Najib and a Chinese state company to pay off those debts.

Of this, Najib has faced allegations that almost $700 million was transferred from the fund he founded in 2009 to his personal bank accounts ahead of elections in 2013.

U.S. lawsuits also say money was moved between an account held by Malaysian Official 1 and Eric Tan Kim Loong, a business associate of financier Low Taek Jho, a confidante of Najib.

Also named was Najib’s stepson and founder of Red Granite Pictures, Riza Aziz. Perhaps ironically, Red Granite produced the Oscar-nominated film The Wolf of Wall Street.

Najib denies any allegation of wrongdoing.

“The government will fully cooperate in this case and, God willing, sooner or later we will know the truth. As has often been emphasized, the government will ensure that no public money has been misused,” he added.

Real estate acquisitions in New York, Beverly Hills and in the U.K. are among the assets targeted by U.S. Attorney-General Loretta Lynch, alongside a private jet.

Her actions, announced last week, were a watershed moment for a prime minister who has ignored calls for his resignation despite facing so many breathtaking scandals within such a short period of time. That includes controversy surrounding a jailed opposition leader as well as Najib’s response to the separate downings of two airliners operated by the state-owned carrier Malaysian Airlines, which left 537 people dead.

Also in the mix are two French Scorpene submarines, the death of a Mongolian model and an investigator from the Malaysian attorney-general’s office, as well as losses incurred by the 1MDB investment fund.

But Najib’s refusal to stand aside is also complicated by a lack of clean alternatives capable of challenging him for the top post in Malaysian politics. Too many of Najib’s cabinet and coterie are now tainted by scandal in one form or another and efforts to force the prime minister out of office by the country’s former and longest serving leader, Mahathir Mohamad, are little more than a damp squib. Much of the corruption which afflicts Malaysia today began to flourish under Mahathir’s administration and while one admires his tenacity, the 91-year-old is simply not a serious contender to lead his country out of an unprecedented political bog.

The time is ripe for the ruling United Malays National Organization (UMNO) to groom a fresh batch of young leaders who are not the children, relatives, or proxies of the same leaders who have monopolized power since independence in 1957. After all, it is their generation that will have to live with the eventual legal findings of courts in the United States and also in France where legal action is underway over the $1.25 billion sale of the two French submarines.

Additionally, 1MDB is under investigation by another five countries, including Singapore and Switzerland, for money laundering.

For UMNO, finding alternatives is a difficult ask but one which would go a long way in restoring a modicum of confidence in a country which desperately needs a much improved political class.

Luke Hunt can be followed on Twitter @lukeanthonyhunt