Malaysia appears almost in a state of suspended animation – on the surface – over allegations on July 3 by the Wall Street Journal and Sarawak Report that the state-backed investment fund 1Malaysia Development Bhd had directed nearly US$700 million into Prime Minister Najib Razak’s personal accounts prior to the 2013 election.
“We have never had a disclosure like this before,” said Ambiga Sreenavasan, the former head of the Malaysia Bar Council, who is an increasingly influential figure in the opposition. “We would expect some response, that there would be a complete statement. Everybody is waiting to see what is going to happen.”
One well-placed Kuala Lumpur lawyer said bringing down the prime minister is a long shot. Najib, he said, has survived a decade of scandals as defense minister and prime minister. “Malaysia has a huge carpet and there are a lot of bumps under it. This is going to be a bigger bump than before. But it’s still a bump under the carpet,” he said.
Others disagree. The slow drip of support away from Najib within his United Malays National Organization, while not public, is increasing as party leaders fear that the massive corruption implied by the revelations will destroy the party’s 60-year hold on power. But despite anger throughout the country, internal dissent means that there is no unified opposition that could bring the government down.
Muhyiddin Yassin, the 68-year-old UMNO Deputy President and Deputy Prime Minister who has been waging a behind-the-scenes campaign against Najib in league with former Premier Mahathir Mohamad, is said by friends to be increasingly confident that “the Teflon prime minister,” as one source said, will be forced to stand down.
If Najib does go, and Muhyiddin displaces him with Mahathir at his back, the outlook is probably ominous for those closest to the prime minister, particularly Khairy Jamaluddin, the son-in-law of former Premier Abdullah Ahmad Badawi, who Mahathir also deposed, at least partly because he was so angered by what he felt was Khairy’s undue influence. When Badawi fell, Khairy in effect became one of Najib's closest advisers. Najib’s wife, Rosmah Mansor, is also likely to become a target.
“This time it’s different [from previous scandals],” a source with close ties to the party said. “This time there is evidence that the money went into [Najib’s] account. That is against the law. The party leaders know that.”
Officials of Arab-Malaysian Bank, or AmBank, where the money was directed according to the Journal and Sarawak Report, were said to be holding an emergency meeting on July 6 to determine strategy. While bank secrecy laws protect disclosure of Najib’s alleged account, the accounts are legally accessible to investigators and Bank Negara, the country’s central bank.
Although Najib has threatened to file suit against the Wall Street Journal for its allegations, that is highly unlikely. Attorney-General Abdul Gani Patail said he had seen the documents of the companies affiliated with 1MDB that directed the money to Najib’s account.They were given to him by a task force made up of members of the Malaysian Anti-Corruption Commission, the police and Bank Negara.
Patail also acknowledged that a special multi-agency task force had raided the companies linked to 1MDB - SRC International Sdn Bhd, Gandingan Mentari Sdn Bhd and Ihsan Perdana Sdn Bhd – that were said to have channeled the funds into Najib’s accounts.
Najib, said a western observer, “has flatly got to say ‘those aren’t my accounts.’ And he hasn’t. Can he control the various investigations? That’s crucial.”
With that in mind, Patail’s careful statement that he had seen the documents and that the three companies had been raided is significant. For years, there have been few officials as loyal to UMNO as Gani Patail. He has done the government’s bidding, going back to 1999 when he was the lead prosecutor in a spurious sodomy case against now-jailed opposition leader Anwar Ibrahim. That verdict has been universally condemned by human rights organizations across the world. If he is showing some independence, that is an ominous sign for Najib.
Najib has preserved the loyalty of the two thirds of the 60-member UMNO Supreme Council and most of the party’s 191 division chiefs plus the cabinet. The allegation that the money from Najib’s personal account was steered to buy the 2013 election in the face of a strong challenge by the opposition is an indication of how he was able to preserve that loyalty.
As Asia Sentinel reported in March, a river of money flows from government coffers to UMNO cadres from various government agencies including the Village Security and Development Committee, to which the cadres are appointed. They are also appointed to four propaganda agencies under the Ministry of Information Communications and Culture, which have offices in each of Malaysia’s 13 states and three federal territories. The bulk of the money to support these agencies comes from the 1MDB Foundation, from which more than RM1 billion was siphoned off, purportedly for charity work.
The question is whether, in the face of the devastating charges and the lack of a Clinton-like denial [I did not have sex with that woman], he can manage to replicate the repeated votes of confidence he has wrung from UMNO leaders in the past.
According to several sources in Kuala Lumpur, the revelations might speed a realignment of the country’s long-standing political structure. That was signaled by a statement of seeming support for Najib on Saturday by Harun Din, the spiritual leader of the fundamentalist Parti Islam se-Malaysia, or PAS, which for the past seven years has been an integral part of the Pakatan Rakyat opposition coalition.
Najib later thanked Harun for his remarks. PAS has been pulling away from the opposition coalition for more than a year with its leader, Abdul Hadi Awang, delivering an ultimatum last month that made effectively dissolved the coalition. Hadi is said to believe that an alliance with UMNO would capture the 60 percent of ethnic Malay voters, ensuring that Malays would dominate the country’s political apparatus into the future.
Somewhat more doubtfully, a meeting is expected to be held tomorrow, July 7, among a possible new coalition that would include moderate members of PAS who were pushed out of party leadership positions last month by Hadi and the conservatives. Others are expected to be officials of the Chinese-dominated Democratic Action Party.
Nazir Razak, Najib’s brother, has been seeking for several weeks to put together a unity coalition but that effort has been given little chance of success by political analysts, although the deteriorating political situation could revitalize it, sources said. But the chances of building a strong coalition seem to be slim at the moment. There is really no major opposition that can capitalize on the implosion going on in UMNO.