Jeevan Vasagar and Michael Peel
Financial Times
February 2, 2016

Malaysia’s government has been battered by international allegations of corruption on a grand scale — yet at home prime minister Najib Razak appears as secure as ever.

While Kuala Lumpur is under pressure from global regulators, with both Switzerland and Singapore shining a light on alleged misconduct, the prime minister’s tightened grip on power has raised concern about growing authoritarianism.

Over the past six months, as controversy raged over $680m transfers into his bank account, Mr Najib has replaced the country’s attorney-general and sacked a critical deputy prime minister. Meanwhile, his administration has imposed travel bans on opponents and rushed through legislation Malaysia’s bar council describes as a “lurch towards an authoritarian government”.

The new attorney-general ruled last week that Mr Najib had no case to answer over the funds transferred into his bank account. The country’s anti-corruption commission says it will appeal against the decision.

But for the prime minister’s most famous predecessor, the latest events are part of the same pattern.

“I think the attorney-general is under the control of the subject of the investigation, the prime minister,” Mahathir Mohamad, Mr Najib’s patron-turned-enemy, told the Financial Times.

Mr Mahathir dismissed the attorney-general’s explanation that the funds transferred came from Saudi royals as “a lot of nonsense” and vowed to “continue to expose the wrong things that he [the prime minister] has done”.

Mr Najib’s supporters and some independent observers, however, question Mr Mahathir’s credentials as an anti-corruption campaigner, saying the patronage networks now being exposed flourished under his rule.

Mr Najib appointed Mohamed Apandi Ali attorney-general in July, soon after reports of the transfers emerged, when Gani Patail, the previous occupant of the post, was suddenly retired on grounds of ill-health.

Mr Apandi subsequently declined to prosecute 1MDB, the state investment fund Mr Najib’s opponents allege is linked to the mysterious transfers, saying there was no case to answer.

In response to that move, Malaysia’s central bank made clear it had recommended criminal charges over 1MDB’s allegedly inaccurate or incomplete disclosures relating to more than $1.8bn in assets held in the Cayman Islands. 1MDB denied wrongdoing.

But there are further links between the 1MDB controversy and what critics see as Mr Najib’s bid to seize ever more levers of power.

Mr Najib replaced Muhyiddin Yassin, the deputy prime minister who had been one of his most prominent critics over the 1MDB affair, at the same time as he removed Mr Patail.

The government has also slapped travel bans on opposition MPs who investigated 1MDB, as well as temporarily shutting The Edge, a news organisation that has led domestic reporting of 1MDB.

Khairuddin Abu Hassan, a former official in Mr Najib’s ruling United Malays National Organisation, was banned from travel and then detained in September just before he was about to leave for the US to brief the Federal Bureau of Investigation on the 1MDB affair and its alleged US links.

He had already reported his concerns to authorities in the UK, Switzerland and Hong Kong.

Matthias Chang, Mr Khairuddin’s lawyer and a former political secretary to Mr Mahathir, was also detained. Both have since been released.

The prime minister’s allies deny he is seeking to stifle investigations into 1MDB, but say he has seen off what they describe as politically motivated attempts to topple him.

The ousting of critics comes as the government faces public pressure both over the 1MDB allegations and economic troubles that have sent oil revenues and the value of the Malaysian ringgit plunging.

New national security legislation, rushed through parliament in December, gives Mr Najib authority to declare a state of emergency without the consent of Malaysia’s king, removing what critics describe as a “basic check” on government power.

The government insists the act was a response to growing security and terrorist threats.

The prime minister has repeatedly emphasised the need to focus on counter-terrorism, particularly in the wake of bomb attacks in Jakarta last month and the arrest a day later of a Malaysian man said to be planning a suicide bombing in Kuala Lumpur.

However, many critics see the legislation as part of a crackdown on dissent following massive anti-government street protests in Kuala Lumpur last year.

The government knows that it is facing strong economic headwinds and therefore it has to step up its security,” says James Chin, director of the Asia institute at the University of Tasmania. “After the Arab Spring, governments know that street protests can lead to much bigger things.”