The Secret of Malaysian PM Najib’s Staying Power

Given the wide array of scandals nipping at his heels, eroding electoral support and powerful foes inside his own ruling party it might be reasonable to question how Malaysian Prime Minister Najib Tun Razak manages to fend off his critics and stay in power.

But there he is. Defying the expectations even of his rivals, Najib retains his hold on the machinery of the United Malays National Organization, with some of his staunchest foes giving up on their dreams of booting him out of the premier's job. The latest to throw in the towel is Deputy PM and UMNO Vice President Muhyiddin Yassin, say sources in Kuala Lumpur.

The 67-year-old Muhyiddin, who hardly qualifies as a reform candidate himself, is not the only one to attempt the overthrow. Former Prime Minister Mahathir Mohamad has been trying to do the same thing since August of 2014 with the help of former Finance Minister Daim Zainuddin and an army of bloggers led by A. Kadir Jasin, the former editor of the New Straits Times newspaper group. The opposition, led by the Democratic Action Party’s Tony Pua and Rafizi Ramli of the Parti Keadilan Rakyat, has clearly delineated major scandals, only to be investigated by officials for sedition and other charges. Rafizi has spent the weekend in jail for alleged sedition.

Najib has been under fire from within his own party because of the loss by the national ruling coalition of the popular vote in the 2013 general election for the first time since 1969 although it maintained power through gerrymandering. He is also the author of a long string of scandals going back to his period as defense minister. He has undergone scathing criticism for allegations of vast mismanagement of the 1MDB state investment fund, which has billions of ringgit in unfunded liability. His wife's profligate spending, which seems impossible to inventory adequately from a husband who has spent his life in public service, has also enraged critics.

The money river flows

The reason that Najib is unassailable, however, is the unceasing river of money that flows from government coffers to UMNO cadres. Thus the unanimous confidence vote in early March, when the prime minister called together 160 of the 191 UMNO division chiefs to a party meeting in Kuala Lumpur. That was followed a strong confidence vote from other component Barisan parties. It is money that not only appears at election time, to pay for lunches or small items like tin roofs for constituents' whose kampung houses leak, but pays them wages between elections.

The payments are made through 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 propaganda agencies comes from the 1MDB Foundation, from which more than RM1 billion was siphoned off, purportedly for charity work, a well-placed source told Asia Sentinel.

In addition there are contracts, such as the "Cowgate" one handed to Sharizat Abdul Jalil, the minister for women, family and community that in 2012 resulted in accusations that funds meant for a cattle project resulted in personal use of RM250 million to pay for condominiums, vacations and a Mercedes-Benz, among many other irregularities. Rafizi, the PKR minister, has been charged with violations of the banking and financial securities act for revealing the details of the scandal in addition to a wide range of other charges including those mentioned above for sedition.

The money also flows to Barisan partners, who have made an even bigger mess of things. In 2007, the Malaysian Chinese Association was handed the chance by the Barisan to develop the Port Klang Free Zone, but which because of corruption ended up with unfunded liabilities of billions of ringgit because of cost overruns and crookedry resulting from the fraudulent valuation of land underlying the project. Five people have been arrested, none of them prominent MCA figures.

Thus money politics is hardly new but Najib is a master of it. He was the country’s longest-serving minister for defense, first from 1991 to 1995, then from 2000 to 2008, when he became prime minister. As defense minister, he oversaw the modernization of the country’s military to the tune of billions of dollars. Three contracts in particular stand out. One was for the purchase of navy patrol boats, a second for Russian Sukhoi jet fighters and the third was the notorious purchase of Scorpene submarines. Together, those contracts are said to have produced at least US$300 million for UMNO cronies and others, in addition to the amount that probably rubbed off on Najib himself.

Military procurement

All three of the contracts, which were approved under Najib and have been widely cited by the opposition, fit well into the patronage scale. Bringing the three together, and taking a new look at their associations, is instructive. As Asia Sentinel reported in 2012, documents seized from the French munitions firm DCN by investigators showed that the purchase of the submarines and an attendant €114.9 million [US$125.1 million at current exchange rates] “commission” was okayed by former Premier Mahathir, The commission, according to the documents, was to be steered through a dummy company called Perimekar Sdn. Bhd. that was wholly owned by Najib’s close friend, Abdul Razak Baginda.

“In Malaysia, other than individuals,” the documents showed, “the ruling party [UMNO] is the largest beneficiary [rather than Perimekar, the company to which the commission was directed]. Consultants [agents or companies] are often used as a political network to facilitate such transfers and receive commissions for their principals.”

Najib was called “the driving force” behind Malaysia’s military modernization program by the US-based think-tank Foreign Policy in Focus. In addition to the submarines, the shopping list, the think tank reported, “includes battle tanks from Poland, Russian and British surface-to-air missiles and mobile military bridges, Austrian Steyr assault rifles and Pakistani anti-tank missiles…and an unspecified number of Russian Suhkoi Su-30 fighter aircraft.”

It was the Sukhois that have become the second controversial purchase brokered by Najib. The deal, worth US$900 million (RM3.2 billion), was through a Russian state company, Federal State Unitary Enterprise 'Rosoboronexport' in 2003. IMT Defence Sdn. Bhd. was appointed the local agent for the Russian company and received 12 percent of the purchase price -- US$108 million (RM380 million). The principal figure and chairman of IMT Defence was Mohamad Adib Adam, the former chief minister of Malacca, previous Land and Development Minister and a longtime UMNO stalwart.

A third military scandal was reported by Malaysia’s Auditor General, in a report tabled in Parliament in 2007, which alleged that a contract to build naval vessels given to PSC-Naval Dockyard, a subsidiary of Penang Shipbuilding & Construction Sdn Bhd, which was owned by another UMNO crony, Amin Shah Omar Shah, resulted in the payment of RM24 billion (US$6.52 billion at current exchange rates) .

All of these contracts, under Najib’s sponsorship, are believed to have steered vast amounts of money to UMNO to be used to maintain the party in power. The standard kickback paid on each of these contracts is 10 percent to 15 percent. That has poured vast amounts of money into UMNO coffers to maintain the party’s position as the premier political institution in Malaysia. The cadres have Najib to thank for much of it. It is little wonder they want to do him the favor of maintaining him in power to protect their own.