For the first time since he began the theft of vast amounts of Malaysian government funds, beginning at least in 1999 when he was named defense minister for the second time, Prime Minister Najib Razak’s kleptocratic career may finally be in danger.
It is rare, if ever, that a foreign head of state and an ally of the United States government has been hit with charges as devastating as those released on July 20 by US Attorney General Loretta E. Lynch against suspects in what she called an “an international conspiracy to launder funds misappropriated from a Malaysian sovereign wealth fund.”
Although he is identified only as “Malaysian Public Official No. 1,” it is clear that Najib is the target of what Lynch called “the largest single action ever brought” under the US’s Kleptocracy Asset Recovery Initiative.
The US Justice Department investigation is a damning indictment of the entire structure surrounding 1MDB. It found that from 2009 through 2015, more than US$3.5 billion in funds belonging to 1MDB were misappropriated from an entity ostensibly created by the Malaysian government to promote economic development in Malaysia through global partnerships and foreign direct investment, and intended to be used for improving the well-being of the Malaysian people.
“Instead, as detailed in the complaints, 1MDB officials and their associates allegedly misappropriated more than $3 billion,” Lynch said.
Where Najib goes from here is anybody’s question. He has done what might be called a brilliant job so far of maneuvering to stay out of the law’s clutches after more than a year and a half of deeply detailed allegations of corruption by opposition figures and particularly by Clare Rewcastle Brown, the editor of Sarawak Report. He might pull it off again, although doubts are growing.
The Prime Minister’s Office in Putrajaya issued an astonishing statement saying that “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.”
In fact, as has been universally reported everywhere but in Malaysia’s kept press, officials have sought to thwart every single domestic attempt to bring an investigation into activities surrounding 1MDB, including firing Attorney General Abdul Gani Patel when his office was on the eve of writing an indictment of Najib and replacing him with Mohamed Apandi Ali, a United Malays National Organization lawyer and lackey who, according to the Prime Minister’s office statement, “after a comprehensive review…found that that no crime was committed.”
One extremely well-wired analyst in Kuala Lumpur called the Justice Department’s statement a “game-changer.” Another said he had conversations overnight with some of UMNO’s most powerful mandarins, including senior supreme council members and members of the administration, who think Najib will be unable to twist his way out of this, as he has so often in the past.
“They are realistic and said they were already getting calls and messages from colleagues looking for escape routes from the sinking ship Rosmah,” he said, referring to Najib’s imperious wife Rosmah Mansor. “Once the exodus begins, it will come to a crescendo fast. That’s how UMNO works. The question is, who will be the first Brutus? Mark my words – they will soon be scrambling to outdo each other in distancing themselves from both Najib and Rosmah.”
If it happens, it will be a long and excruciating fall for a man who as recently as last November was playing golf in Hawaii with US President Barack Obama and who reveled in speaking at the United Nations as the head of a moderate Muslim nation that was supposedly a democratic bulwark in Southeast Asia.
But Najib began a career of deep corruption almost as soon as he became defense minister for the second time in 1999 under then-Prime Minister Mahathir Mohamad. He set out to modernize the Malaysian military, reportedly suborning bribes all the way along, with much of the money being poured into the coffers of the United Malays National Organization, buying him loyalty from the cadres that has endured to this day.
As Asia Sentinel reported in 2007, “if three separate contracts over the past several years are any yardstick, Najib Razak, who became defense minister in 1999 and kept the portfolio when he became deputy prime minister, appears to have mastered the game [of profiting off of defense contracts] far beyond the expectations of any previous defense leaders. Opposition figures say three contracts, one for Russian Sukhoi jet fighters, a second for French submarines and a third for navy patrol boats, appear to have produced at least US$300 million for UMNO cronies, Najib’s friends and others.
The biggest of those was a US$1 billion contract with the French munitions giant DCN for two Scorpene submarines that produced US$141 million in bribes that were funneled to UMNO, and another €36 million (US$39.6 million at current exchange rates) routed through a shell company in Hong Kong that went to a close friend of Najib. As Asia Sentinel detailed in a prizewinning series of articles in 2012, that contract resulted in what had been the biggest scandal in Malaysian history until this one came along. It featured the murder of Altantuya Shaariibuu, a Mongolian translator and party girl who reportedly had been passed from Najib to Abdul Razak Baginda, the agent on the submarine purchase. Altantuya, who by her own admission was asking for US$500,000 in blackmail funds, was shot in the head on October 19, 2006, and then blown up with C4 explosives available only from Malaysia’s military. Two of Najib’s bodyguards were convicted of the killing.
The current scandal began in 2009, when Jho Taek Low, a Penang-born wunderkind and friend of Najib’s family, created the mechanism by which 1MDB was born. According to the US Justice Department complaint, it grew into a hydra-headed monster that resulted in money laundering over much of the planet as Jho Low and his friends looted hundreds of millions of dollars of funds to pay gambling debts and blaze a trail across Broadway marked with the purchase of magnums of Cristal champagne lavished on blondes.
The complaint spelled out in detail what had long been suspected, that US$681 million that mysteriously turned up in Najib’s personal bank accounts in Kuala Lumpur’s Ambank in March of 2013 was not a donation from a mysterious Saudi prince to defend Malaysia as a moderate Muslim nation in a war with extremism but rather was stolen from 1MDB through a series of shell transactions. Hussain Najadi, the founder of Arab-Malaysian Bank Bhd. which became Ambank, was gunned down on the street in July of that year. His son, Pascal Najadi, has repeatedly accused unknown figures of assassinating the father because he was complaining loudly about UMNO corruption and the movement of money through Ambank.
“The Department of Justice will not allow the American financial system to be used as a conduit for corruption,” Lynch said. “With this action, we are seeking to forfeit and recover funds that were intended to grow the Malaysian economy and support the Malaysian people. Instead, they were stolen, laundered through American financial institutions and used to enrich a few officials and their associates. Corrupt officials around the world should make no mistake that we will be relentless in our efforts to deny them the proceeds of their crimes. ”
Assistant Attorney General Andrew Caldwell called it case that imitated art, with stolen money being poured into the production of The Wolf of Wall Street, “a movie about a corrupt stockbroker who tried to hide his own illicit profits in a perceived foreign safe haven. But whether corrupt officials try to hide stolen assets across international borders – or behind the silver screen – the Department of Justice is committed to ensuring that there is no safe haven.”
Stolen money that is subsequently used to purchase interests in music companies, artwork or high-end real estate is subject to forfeiture under U.S. law,” said U.S. Attorney Decker. “Today’s actions are the result of the tremendous dedication of attorneys in my office and the Department of Justice, as well as law enforcement agents across the country. All of us are committed to sending a message that we will not allow the United States to become a playground for the corrupt, a platform for money laundering or a place to hide and invest stolen riches.”
The complaints alleged that the members of the conspiracy diverted more than $3.5 billion in 1MDB funds. “Using fraudulent documents and representations, the co-conspirators allegedly laundered the funds through a series of complex transactions and fraudulent shell companies with bank accounts located in the Singapore, Switzerland, Luxembourg and the United States,” according to Lynch’s statement. “These transactions were allegedly intended to conceal the origin, source and ownership of the funds, and were ultimately processed through U.S. financial institutions and were used to acquire and invest in assets located in the United States.”
In seeking recovery of more than $1 billion, the complaints detail the alleged misappropriation of 1MDB’s assets as it occurred over the course of at least three schemes, the statement said. In 2009, the complaints allege that 1MDB officials and their associates embezzled approximately $1 billion that was intended to be invested to exploit energy concessions purportedly owned by a foreign partner. Instead, the funds were transferred through shell companies and were used to acquire a number of assets including high-end real estate and hotel properties in New York and Los Angeles, a $35 million jet aircraft, works of art by Vincent Van Gogh and Claude Monet, an interest in the music publishing rights of EMI Music and the production of The Wolf of Wall Street.