By Bridget Welsh
Malaysiakini
Jul 10, 2015

COMMENT As Prime Minister and Finance Minister Najib Razak faces explosive allegations of embezzlement, corruption and electoral manipulation that go to the very core of his leadership and the legitimacy of his government, the country is plunged into yet another crisis.

Sadly crises have become common developments of the Najib government, whose responses to 1MDB even before the revelations by The Wall Street Journal (WSJ) brought to the fore questions of economic mismanagement which has undermined the reputation of the Malaysia’s financial institutions.

For many, the issue at hand is what Najib will do – he has already done serious damage to the country and unfortunately every day he stays in office, his leadership negatively affects the country’s reputation. Not only is Malaysia’s international credibility is on the line, its currency, access to foreign capital and future economic prosperity are at risk.

Unlike his father, Malaysia’s second premier Abdul Razak Hussien, Najib has apparently chosen to put himself first rather than the country. During his tenure, Najib has distinguished himself from Dr Mahathir Mohamad in his effectiveness in using the country’s political institutions to strengthen his personal position. He has indeed taken the office of the prime minister to a new low.

Najib deserves a fair and impartial investigation of the allegations made by WSJ. This can be done if he opts to go on leave during the investigation period and appoints respected impartial individuals to lead the investigation. Neither of these have been done so far, as the approach has been to issue denials, thus raising suspicions of a potential cover-up, and this sends conflicting signals about the investigation.

In a ‘fox guarding the hen house dynamic,’ members of the task force assigned to investigate are neither impartial nor distant from developments. In some cases, their job was to review these bank transactions and as such should also be subject to an independent investigation in their failure to act before the WSJ report. The lack on impartiality of the task force does not build credibility, especially in international markets.

Najib’s decision to hold onto power and stay in office compromises any investigation due to the inherent conflict of interests involved and this assures that any departure will be an even harder landing for himself, his family, his political party, Umno, and worst of all, the country.

A divided Umno

Najib’s decision to stay put as PM also indicates that other leaders will now have prominent roles in shaping the course of history. Increasingly Najib will have less control over what happens to his political future.

The main determinant of developments ahead will be Umno itself. Meetings have already been held with division chiefs who wield considerable power within Umno, with the numbers split into three camps – those in Najib’s camp influenced by personal loyalty and his generous patronage; those opposed to Najib cheered on by Mahathir but hesitant for an open challenge due largely to the largesse and levers of power they face; and those in the middle, waiting to be sure to land on the ‘safe side’ as this is the side that protects their political and economic survival.

Najib currently does not command a confident majority of the divisions, but relies heavily on those in the middle to stay in office. Over the next few weeks, this middle group will determine Umno and Najib’s future; they will determine whether the party’s and country’s interests are more important than any one individual’s interests.

At issue is whether the funds were used for the interests of the party or for ‘personal gain’. The alleged amounts in Najib’s bank account have created shockwaves, as Umno leaders know that even in the massive election giveaways in GE 2013, this sort of money did not all go down the patronage network.

As Najib has been a public figure since entering politics at the age of 23, his immediate family’s opulent lifestyle – best embodied by reports of his wife’s jewelry and shopping expeditions – has long been subject of criticism and questioned.

Sharp contrasts have been made between Najib’s wealth and his father’s in recent past. Key will be whether Umno decides that Najib as prime minister, the country’s leader, crossed the line of acceptability in the reported alleged embezzlement. Umno does not appear to have a moral compass, but it is said that even among alleged thieves there is a sense of honour.

The evaluations and investigation will be crucial in shaping perceptions, with potential efforts at discrediting the charges, ‘containment’ and ‘cover-up’, further reducing Najib’s ground and eroding Umno’s national standing.

A Pandora’s box has been opened that could put Umno under even more scrutiny, with pre-election deals closely examined and future deals canceled altogether, affecting the financial bottom-line of Umno’s now wealthy businessmen. The reality is that Umno is seen as already infected with the cancer of corruption, but the decision will be whether to opt for needed surgery for the party’s survival.

The young and old

The important individuals swaying these division chiefs will be senior leaders within Umno – those who have national standing and the groomed new generations of leaders in the party. The backroom meetings have been ongoing and will continue with the clamour of grassroots, as public denials of wrongdoing are not as easily dismissed in discussions behind closed doors.

Most attention has centred on Mahathir, who has been demonised by the very people he groomed and mentored in politics for his relentless attacks on Najib. Yet there are others who have influence and they recognise the seriousness of these issues for Malaysia’s standing beyond self-interest.

These individuals include former deputy prime minister Musa Hitam, former Back Benchers Club chairperson Shahrir Samad, and the longest serving parliamentarian Tengku Razaleigh Hamzah, among other statesman leaders. One of the most important of these senior leaders is Abdullah Ahmad Badawi, who continues to wield considerable support among many current division chiefs within the party. These senior leaders now have the choice whether to lead and to move the country out of the crisis it is facing.

A third group inside Umno are the younger leaders. Umno Youth is sharply divided over Najib’s leadership, reflecting the pattern within Umno itself. A recent resignation in Johor connected to the ‘Nothing2Hide’ forum is illustrative.

Those in the cabinet representing the youth appear to remain loyal to Najib and in this loyalty are showing their political stripes, but the explosive revelations have widened differences inside this key party organ.

It is after all Umno’s younger leaders that have the most to lose if Najib’s leadership continues its declining trajectory, as their political (and economic) futures will be damaged. Some believe that Najib can weather this crisis, having faith in the ‘dodge and deny’ dynamic, but others realise that the majority of Malaysians see the crisis for what it is – one of the most damaging political events for Umno in the country’s history.

Internationally, Najib’s credibility has been seriously damaged and domestically, he has the lowest public support recorded in polling of any premier. Umno leaders are rightly asking themselves, do they want the person who represents their party to be a potential electoral liability.

The situation today is not just about Najib – it is about Umno, its future as the ruling party and self-touted role in protecting the nation. Umno stakeholders can take the country blindly down a path towards greater uncertainty and decline, one filled with increasing international disdain and disappointment with a weakening economy and major trust deficit from its people, or it can be on the right side of history.

Opportunity for opposition

Out of every crisis there is opportunity. Claims of the opposition in a ‘mess’ reflect the frustrations the electorate about the lack of a viable political alternative and the reality that the opposition has not lived up to public expectations.

Today, former opposition leader Anwar Ibrahim remains in jail and the fight within the opposition has been about who to replace him rather than to push forward the principles of reform that won support for the opposition in the first place. Power and personality struggles have paralysed effective opposition leadership.

The 1MDB crisis provides an opportunity for the opposition to regroup. The responses to the scandal reveal those who are genuinely interested in reform. To date, the defence of Najib by PAS’s appointed ‘spiritual leader’ Haron Din showed a lack of moral principles, and an effective endorsement of corruption and embezzlement.

The response by PAS president Abdul Hadi Awang was even worse, as his ‘call for witnesses’ revealed a complete lack of understanding of banking and modern electronic transactions – another indictment of how inappropriate these leaders are for moving Malaysia forward. By not standing up decisively on the right side of history, they have blatantly revealed that they cannot be part of an alternative leadership.

Members within PAS are increasingly recognising how much of a mistake they made in electing leaders who are more grounded in practices of Umno rather than the moral principles PAS was originally based on.

Beyond serving to weed out those who were not with the reform agenda, the scandal serves as common ground to reaffirm principles of institutional integrity, anti-corruption, public accountability and good governance. The scandal comes at a time of a weakening currency, rising inflation from the Goods and Services Tax (GST) and arbitrary reduction of subsidies – in short when ordinary people are hurting.

Despite many citizens not understanding the details of the 1MDB scandal itself, Malaysians are increasingly negative about contemporary conditions, especially those with lower incomes, and recognise that the government is not doing enough to improve their lives. They want optimism and hope. They want leaders they can be proud of and trust.

The test now will be whether the opposition will focus on shared interests for the nation or continue to disappoint. So far, the opposition has engaged in the latter, with a lack of unity and unable to focus on the core issues involved. The pattern has been to go-it-alone, with PKR questioning the results of the 13th general election (as it has done in the past) and others focusing on the 1MDB money trail.

The dominant mode has been to attack, to score points for personal or individual party gain. There appears to be little collaboration and focus on what Malaysia needs – a clear path toward greater reform, political stability and economic confidence.

Perhaps darker days ahead

This crisis will reveal the capability, character and mettle of opposition and Umno leaders alike. New alliances are likely to form as well. In this mix, old responses of using ‘divide and rule’ (aka an Umno alliance with ulama PAS), demonising ‘chauvinist’ parties, fueling ethnic and racial tensions are also possible.

The defensive destructive political repertoires of the past will cast a shadow on the promise of the future. In this evolving dynamic, leaders will consistently be tested about whether they are on the right side of history.

Frustration and cynicism has set in among many in Malaysia. Cries that there is nothing that can be done reflect the deepening sense of a lack of political efficacy post-GE 2013.

This current scandal will mark a turning point for the public as well, one in which demands for reform will be pitted against calls for complacency, democracy over denial, good governance over greed. At issue will be Malaysia’s future.

The government’s defensive response to the WSJ reports by using threats and fear has not worked. Malaysians are no longer afraid of speaking out, of calling a spade for what it is. A younger generation’s view of politics is being shaped and one can be sure they want leaders in office who represent their ideals and dreams.

Ordinary Malaysians in their judgements and assessments hold history in their hands. More than any group, the Malaysian public will serve as the country’s moral compass, by calling for truth and accountability, by asking for the dignity of the country to be restored and by reminding its leaders across the political divide that individuals in office represent and serve them, not themselves.

The current scandal may indeed appear to be one of Malaysia’s darkest times, and it cannot be ignored that there is the potential for even darker days ahead in the evolution of this crisis. But there are choices that can be made at multiple levels that can put the country on the right side of history.

BRIDGET WELSH is Senior Research Associate of the Center for Democratic Studies at National Taiwan University, an Associate Fellow of The Habibie Center and a University Fellow at Charles Darwin University.