Warwick ASEAN Conference

The Fall of Malaysia’s Ex-Prime Minister

On the 28th of July, former Malaysian Prime Minister -Datuk Seri Najib Tun Razak- was slapped with a 12-year jail sentence coupled with a RM210 million ($49million) fine. As the High Court judge -Mohamad Nazlan Mohamad Ghazali- read out a verdict of guilty on all charges, Datuk Seri Najib sat silently in the dock at the end of the first of five graft trials linked to scandal-tainted state fund 1MDB. For a very long time, it was widely understood within Southeast Asia that if you have "made it to the number one political office", you will be granted immunity from abuse of power prosecution. Datuk Seri Najib, therefore, made history when he became the highest-ranking official in Malaysia to ever be convicted in court. 

Malaysia's ex-PM Najib guilty in 1st trial for 1MDB looting ...
Malaysia's ex pm -Najib- guilty in 1st-trial for 1mdb looting
Who is Datuk Seri Najib?

Datuk Seri Najib descended from the aristocrats and is the son of Malaysia’s second prime minister, who presided over contentious affirmative-action laws. His pedigree is deeply woven into Malaysia's political, economic, and social fabric. Even after leading his political party -United Malays National Organisation (UMNO)- to historic defeat and being charged, Datuk Seri Najib has still managed to rebound as a popular figure. This status of Datuk Seri Najib is what makes the high court ruling so extraordinary and so unexpected. 

Those who have not heard about the ‘wonders’ Datuk Seri Najib has done for Malaysia, or have not been following one of the most talked-about trials in Malaysia will no doubt have many queries regarding this news. What is 1MDB? What has Datuk Seri Najib done to deserve such a sentence? Is it possible for a former prime minister to face such harsh punishments? Carry on reading to find out more about the specifics of Datuk Seri Najib’s crookery, how he was able to evade justice for so long, and the events that are now slowly leading to the extinction of Datuk Seri Najib’s status. 

What is the 1MDB scandal? 

 1 Malaysia Development Berhad was founded just 4 months after Datuk Seri Najib was elected to be Malaysia’s prime minister in 2009, it was established by Datuk Seri Najib who served as its chairman. The 1MDB scandal has left a permanent stain - the epithet of a global kleptocracy- on Malaysia’s international reputation. 1MDB was originally set up to finance infrastructure and other economy linked deals in Malaysia, it was meant to be nothing more than a Malaysian state fund. Datuk Seri Najib claimed that the aim of 1MDB was to drive economic growth through joint ventures that bring foreign direct investment into Malaysia, with a focus on fields of energy, real estate, tourism, and agribusiness. This fund, however, ‘mysteriously’ veered into lavish spending. The US Department of Justice (DOJ) alleges that a horrific figure of US$4.5 billion was siphoned from 1MDB between 2009 and 2014, leaked financial documents also clearly implicate 1MDB to be the hub of fraudulent activity from the outset.

Vast sums were borrowed through government bonds and siphoned into bank accounts in Switzerland, Singapore, and the US. Approximately US$731m appeared in the personal bank account of Datuk Seri Najib just ahead of the 2013 election, this money is alleged to have been used to pay off politicians, Datuk Seri Najib’s credit card bill and fund the lavish shopping habits of his wife -Rosmah Mansor. The 1MDB fund is also alleged to have funded the ostentatious lifestyle of one of 1MDB’s ‘consultants’ - Jho Low. Despite only being a consultant for a state fund, he was able to afford a $35m private jet, a $260m yacht, and an apartment once owned by Jay Z and Beyonce; he threw lavish birthday parties for himself, one of which even had Britney Spears jump out of a cake! It has also been alleged that theWolf of Wall Street movie producer -Riza Aziz- -Riza Aziz- who is the stepson of Datuk Seri Najib, has been receiving US$248million into Swiss bank accounts from 1MDB. This ludicrous spending on unnecessary luxuries, coupled with both Datuk Seri Najib and Jho Low’s heavy involvement with the 1MDB state fund clearly indicated that the 1MDB fund was not being used for its original purpose. Despite the indisputable amount of evidence against the legitimacy of 1MDB, the alleged embezzlement of 1MDB money between 2009 - 2012 went unchallenged till 2015.

Why was the 1MDB scandal allowed to continue for so long? 

On the 4th of July in 2015, former Malaysian Anti-Corruption Commission (MACC) chief commissioner Tan Sri Abu Kassim Mohamed suggested charging Datuk Seri Najib with offences related to 1MDB and its former subsidiary SRC International Sdn Bhd in a 1MDB special task force meeting. On the 7th of July, that 1MDB taskforce announced a freeze order for six accounts which had direct links to the 1MDB state fund. It was just as the MAAC was about to issue a warrant for Datuk Seri Najib’s arrest when Datuk Seri Najib went on the offensive. The week following this is known by many as the "Week of the Long Knives". The attorney general then -Tan Sri Abdul Gani Patail- who had been leading the investigation was fired. The deputy prime minister and 1MDB critic-Muhyiddin Yassin- also met with a similar outcome after he publicly asked Datuk Seri Najib to explain the corruption scandal surrounding the state fund. The MACC offices were also raided, the raid led to the arrests of four officials. National institutions like Attorney-General’s Chambers, the police, the MACC, and Bank Negara were defanged and tamed with the dissolution of the high powered 1MDB task force.

In early 2013, Datuk Seri Najib had received US$800 million into his bank account. He claims these funds were nothing more than a generous donation from the late King Abdullah of Saudi Arabia . Datuk Seri Najib even cited the late Saudi King’s pledge of support in early 2010 as the main premise of his belief. Datuk Seri Najib did, however, conveniently forget to mention that King Abdullah never articulated the form of support he would be willing to provide Malaysia with. Despite the lack of substantive evidence, the MACC still concluded in August 2015, that the US$800 million that had allegedly entered Datuk Seri Najib’s accounts were from donations and not 1MDB. In 2016, the Datuk Seri Najib-appointed attorney general then cleared Datuk Seri Najib of all wrongdoing and said the issue had “comprehensively been put to rest”. 

How did foreign powers contribute to the outcome of the 1MDB scandal?

Despite the declaration of Datuk Seri Najib’s innocence, on the 29th of January 2016, Swiss prosecutors requested assistance from Malaysian authorities, as they believed around US$4 billion had been stolen from Malaysian state-owned companies. According to the statement issued by the Swiss attorney general's office, "a small portion" of the cash had been transferred into Swiss accounts held by former Malaysian officials as well as current and former officials from the United Arab Emirates. Datuk Seri Najib’s government, however, refused to cooperate with the investigations in Switzerland. On the 1st of February, Singapore's Commercial Affairs Department (CAD) and the Monetary Authority of Singapore (MAS) issued a joint statement, stating that a "large number" of bank accounts in relation to a probe into 1MDB have been seized. The central bank governor of Malaysia -Dr. Zeti Aktar Aziz- also stated that Bank Negara has initiated administrative punitive action against 1MDB after they failed to provide documents on its finances abroad. Despite this, Datuk Seri Najib and his government continued to remain complacent. 1MDB continued to deny the growing number of allegations concerning the misappropriation of funds; despite the insurmountable amount of evidence other nations involved had against 1MDB, the chairman of the Public Accounts Committee (PAC) -Hasan Ariffin- issued a statement in April, claiming that there was no evidence which indicated any wrongdoings or abuse of power by Datuk Seri Najib. 

In April 2016, Swiss authorities expanded its investigation into 1MDB to two former officials who were in charge of the Abu Dhabi sovereign funds. Singapore's Attorney-General's Chambers also received a request for legal assistance from Switzerland with regard to 1MDB. In May 2016, MAS announced that it had ordered the closure of Switzerland's BSI Bank in Singapore -one of the banks involved with the 1MDB scandal- over "serious breaches of anti-money laundering requirements, poor management oversight of the bank’s operations, and gross misconduct by some of the bank’s staff". This was a very significant move, as it indicated both the belief other nations had towards the allegations surrounding 1MDB and the determination of those nations to put an end to possibly one of the largest heists of the century. This was further emphasised when MAS ordered the Singapore branch of Falcon Bank to cease operations for serious failures in anti-money laundering controls and improper conduct by senior management. MAS also imposed fines on DBS and UBS banks for breaches of its anti-money laundering requirements. It was no coincidence that this had come after "supervisory examinations by MAS into 1MDB-related fund flows" that took place through the three banks from March 2013 to May 2015. A similar level of determination to quell the 1MDB scandal was also present within the US; US authorities had plans to file criminal charges against Jho Low, the US Justice Department also produced files that claim that nearly US$30 million of funds had been stolen from 1MDB, and was used to buy jewelry for the wife of Datuk Seri Najib. Malaysia was facing growing pressure from foreign powers to launch another investigation into both 1MDB and Datuk Seri Najib, nothing significant, however, occurred until 2018.

The ‘dethroning’ of Datuk Seri Najib

With so much influence over the Malaysian government and its political affairs, how did Datuk Seri Najib lose all his power? Whilst the “Week of the Long Knives” in 2015 may have quashed investigations into 1MDB practices, it could not remove the allegations against 1MDB from the minds of the Malaysian people. Not everyone was convinced by Datuk Seri Najib’s declaration of his innocence. Mahathir Mohamad, a former Prime Minister who had helped Datuk Seri Najib to power, continued to be outspoken on the issue. Convinced he was the only person able to act, he announced he would run against Datuk Seri Najib in the general election in 2018. In May 2018, Mahathir Mohamad defeated his former protégé Datuk Seri Najib in the general election. The result upended Malaysian politics, unseating the ruling coalition for the first time since the country’s independence. Mahathir pledged to recover the billions of dollars lost in the 1MDB scandal, thereby exposing Datuk Seri Najib’s involvement to renewed scrutiny. 

"I didn't benefit from 1MDB, because I believe that 1MDB was created to do something good for the country"- Datuk Seri Najib

Within days of Datuk Seri Najib’s fall, properties linked to him were searched by the police. They seized 1,400 necklaces, 567 handbags, 423 watches, 2,200 rings, 1,600 brooches, and 14 tiaras, most of which were thought to belong to Rosmah; these luxury items are believed to be worth a total of RM1.1 billion ($273m). In June 2018, Datuk Seri Najib and his wife, Rosmah, were then blacklisted from leaving Malaysia. The nation was determined to make Datuk Seri Najib pay for his manipulation and corruptive ruling. Datuk Seri Najib was charged with 42 counts of criminal breach of trust, money laundering, and abuse of power. In one of his trials, Datuk Seri Najib is accused of diverting US$700 million from SRC International – a former subsidiary of 1MDB – into his personal bank accounts. For this, he faces seven charges (three counts of criminal breach of trust, three counts of money laundering, and one count of abuse of power). This trial began on April 3, 2019, exactly 10 years after he was first sworn in as prime minister, and he has recently been found guilty of all charges.

The verdict came days after Goldman Sachs reached a settlement with Malaysian authorities related to its underwriting of three bond offerings that raised US$6.5bn for 1MDB. The bank will hand over US$3.9bn; they will be paying US$2.5bn in cash and promising to return at least US$1.4bn in assets linked to the bonds. Judge Nazlan has sentenced Datuk Seri Najib to 12 years of jail and an RM210m fine; if Datuk Seri Najib fails to pay this fine, he will be sentenced to an additional 5 years. His defense counsel, however, has requested to appeal to the charges. As of now, there are still 31 pending charges laid against Malaysia’s ex-prime minister. The fall of Datuk Seri Najib in the court of law is an extremely rare occurrence within Southeast Asian politics, it will undoubtedly go a long way in assisting Malaysia in its long battle against corruption.

Conclusion

The 1MDB crisis spurred an outcry that helped drive Datuk Seri Najib’s party from the government in 2018, this was the first time that the long-suffering opposition won a general election. The revolution, however, was short-lived; the new cabinet collapsed less than halfway through its five-year term, largely because its two leaders, Tun Dr. Mahathir Mohamad and Datuk Seri Anwar Ibrahim, were unable to bury decades of rivalry. Nevertheless, the conviction of Malaysia’s former prime minister -Datuk Seri Najib Razak- will still provide many Malaysians with a renewed sense of hope. Despite Malaysia’s recent political developments, Datuk Seri Najib’s conviction has demonstrated that the climate for change and the voice of the people must be heard. 

Najib's much-awaited trial begins today (April 3) at 2pm | The Star
Najib's much-awaited trial
Wolves
The wolves at 1MDB's door-

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