Malaysia Leader Under Pressure From U.S. Lawsuit Over 1MDB Assets

By JAKE MAXWELL WATTS in Singapore and YANTOULTRA NGUI and CELINE FERNANDEZ in Kuala Lumpur, Malaysia
Wall Street Journal
July 21, 2016

Prime Minister Najib Razak faced fresh calls to resign Thursday after the U.S. moved to seize more than $1 billion of assets allegedly siphoned from a development fund he founded. But with elections likely years away, Malaysia’s well-entrenched leader looked set to easily weather the latest storm.

The U.S. Justice Department filed a civil lawsuit Wednesday seeking to seize assets it said were part of “an international conspiracy to launder money’’ misappropriated from 1Malaysia Development Bhd., or 1MDB.

Authorities in Singapore, Malaysia’s wealthy neighbor, followed on Thursday by saying they had seized bank accounts and placed restrictions on property transactions worth a combined 240 million Singapore dollars (US$178 million) as part of their own probe into 1MDB.

A request for comment from Mr. Najib’s office went unanswered on Thursday. Earlier, his office said it would fully cooperate with any lawful investigation in line with international protocols.

In the wake of the U.S. announcement, Malaysian opposition lawmaker Tony Pua said his country had “become the global laughingstock.”

Other opponents of Mr. Najib called for his resignation.

“It would be better for the prime minister to step down,” said Kamarul Azman Habibur Rahman, who was expelled from Mr. Najib’s ruling United Malays National Organization (UMNO) this year for criticizing the leader’s handling of Malaysia’s own 1MDB investigations. “If he refuses to step down he is only going to put the party in jeopardy.”

Mr. Najib has been prime minister of this Southeast Asian country since 2009 and is fairly secure in the post due to a divided opposition, weak media and the effective sidelining of opponents within his party.

The UMNO has been at the center of every government since independence in 1957, and remains popular with the Malay Muslim majority through its control of public spending and patronage. The ruling coalition, the National Front, won an important state election in May.

In the past year The Wall Street Journal, citing Malaysian and global investigations, has reported how investigators have traced hundreds of millions of dollars that originated at 1MDB that have been spent to buy artwork, high-end properties and fund a Hollywood movie.

Investigators found that over $1 billion was transferred to Mr. Najib’s personal bank accounts, the majority originating from 1MDB and moving via a web of intermediaries.

In April a parliamentary committee in Malaysia found that billions of dollars had gone missing from 1MDB and recommended that the fund’s senior management face a criminal investigation, but spared Mr. Najib.

Investigations ordered by Mr. Najib into graft allegations at 1MDB were undermined by political pressure and a lack of transparency, according to documents and interviews with people involved, the Journal reported in May.

Mr. Najib’s office has said it believes the Journal’s reporting is part of a politically motivated campaign to unseat him.

Mr. Najib, who was until May the chairman of 1MDB’s board of advisers, has denied any wrongdoing. The Malaysian attorney general has cleared him of wrongdoing, saying the funds that went into Mr. Najib’s account were a legal political donation from Saudi Arabia, and that most of the money was returned. Saudi Arabia’s foreign minister said in April he was “aware” of a “genuine donation” to Mr. Najib, but didn’t elaborate.

“The past one year has demonstrated [that] news such as this does not resonate a lot, especially in the rural areas where Mr. Najib’s government is deriving most of its support,” said Oh Ei Sun, Mr. Najib’s former political secretary and a fellow at the Nanyang Technological University in Singapore.

Mr. Najib’s ruling coalition won a comfortable victory in 2013 and doesn’t face a new election until 2018 at the latest. In the interim, the most popular opposition politician, Anwar Ibrahim, is behind bars on a sodomy conviction that he has said was politically motivated.

“Politically, Mr. Najib’s position is stable. Most of his opponents in his party have already been dismissed. Meanwhile the opposition is divided among themselves for lack of leadership and common goals,” said Ibrahim Suffian, head of independent polling organization Merdeka Center.

Malaysia has traditionally kept a close rein on the mainstream press. Two of the country’s most-read newspapers, The New Straits Times and The Star, controlled by parties in the ruling coalition, focused Wednesday on the government response to the U.S. legal case and for much of the day positioned other stories above their 1MDB coverage online.

Malaysian social media was polarized. Many Twitter and Facebook users latched on to references in the U.S. complaint to “Malaysian Official 1,” who allegedly received hundred of millions of dollars in funds siphoned from 1MDB. A person with direct knowledge of the investigation told the Journal that “Malaysian Official 1” is Mr. Najib.

Yet the litmus test for Mr. Najib’s hold on power remains the mood in his party. If he can keep the factions moderately happy, “then he will be in power a long time,” Mr. Oh said.

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  1. #1 by Bigjoe on Sunday, 24 July 2016 - 4:19 am

    You can hear the Supreme Council members, especially the weakest ones and dependent on Najib going over board to defend Najib to the extent it does not match the facts, making stuff up. Clearly they are shaken. It’s likely behind the scene, those shouting the loudest are working furiously trying to distanced themselves from Najib to survive.

    Gerakan Youth has admitted Najib is Malaysian Official No. 1. The person most important to ask if Najib is not Malaysian Official No. 1 is KJ. Yes, UMNO has something tp salvage. No. UMNO must die.

  2. #2 by boh-liao on Sunday, 24 July 2016 - 5:05 am

    WHAT a rubbish headline fr WSJ, a foreign newspaper dat knows nothing abt our loving culture here
    MOO is much loved here by cabinet members, top gomen officials, n red shirts, who immediately declared their UNDYING love n eternal support 2 MOO
    Our UmnoB/BN voters, fr rural n urban areas, r still so happy 2 remain poor n subsidised 2 ensure dat MOO n his loved ones hv billions of donation $$ 2 spend
    There’s NO need 2 get upset over some billions when d nation is so rich with trillions
    If necessary, our UmnoB/BN voters r happy n prepared 2 tighten their belts 2 pay higher GST 2 finance their beloved supreme leader’s lifestyle here n overseas

    Our brilliant AG will easily lynch Loretta E Lynch, a piece of cake or nyonya kuih

    Our experienced n colourfully titled msm editors R smart n stick 2 strict professional ethics NOT 2 publish rubbish in our national newspapers 2 misinform rakyat, esp those in rural areas
    They concentrate on facts n lynching POO (Penang OO)
    Kudos 2 them n some well deserved pats fr MOO

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