By Editorial Board
BACK IN January, Malaysia’s autocratic-minded prime minister, Najib Razak, tried to decree the end to a scandal involving the appearance of $681 million in his personal bank accounts. After an attorney general he installed reported that the money was a donation from the Saudi royal family, and did not involve wrongdoing, Mr. Najib declared: “The matter has been comprehensively put to rest.” Malaysians who argued otherwise, officials suggested, risked prosecution under the country’s draconian sedition law.
Fortunately for the rule of law in Malaysia, the strongman’s gambit failed. Revelations about alleged misappropriation of funds from a Malaysian state investment fund set up by Mr. Najib continue to pour forth, and investigations in half a dozen nations appear to be gathering momentum. Malaysia’s scandal appears likely to implicate financiers in the United Arab Emirates, Saudi Arabia, Singapore and the United States as well as some big Western banks. Perhaps most important, the chances that Mr. Najib will himself face legal and political consequences are steadily growing.
At the center of the scandal is a fund established by Mr. Najib in 2009 called 1Malaysia Development Bhd., or 1MDB. The entity has borrowed $11 billion, and Swiss authorities are saying that as much as $4 billion may have been improperly diverted. According to the Wall Street Journal, more than $1 billion entered Mr. Najib’s personal accounts between 2011 and 2015, including the $681 million transfer, most or all of it originating with 1MDB.
Mr. Najib has insisted the funds were not for his personal use, but were used to legally fund his party’s 2013 election campaign. According to the Journal, millions were transferred to party officials. But at least $15 million was used for personal expenses, including lavish spending on clothes, jewelry and a car. Moreover, the newspaper reported that $150 million went from 1MDB to a Hollywood production company set up by Mr. Najib’s stepson, who invested it in “The Wolf of Wall Street” and other films.
Mr. Najib’s strategy for combating the allegations relies almost entirely on repression. Last year he fired a deputy prime minister and the previous attorney general — according to one report, shortly before criminal charges were to be brought against him. At least 15 people have been charged under the sedition law, which Mr. Najib once promised to repeal; opposition leader Anwar Ibrahim has been imprisoned for more than a year on trumped-up sodomy charges. The government has blocked news websites, deported foreign journalists and even banned yellow T-shirts used by anti-corruption campaigners.
Increasingly, it looks like a losing effort. Even if Malaysia’s investigators are blocked, those in other countries appear likely to move forward and expose how money was diverted. The Malaysian economy is meanwhile sputtering, and former prime minister Mahathir Mohamad has formed a coalition to seek Mr. Najib’s ouster.
All this ought to sway the Obama administration, which has cultivated Mr. Najib even amid the growing evidence of corruption and his repressive response. Last month the State Department objected to the government’s crackdown on the media, but President Obama, who invited Mr. Najib to a round of golf in 2014, has met with him twice more since November without commenting on the mounting scandal. It’s past time for the administration to distance itself from a ruler who appears headed for well-deserved disgrace.