Malaysia’s Najib Razak fights for political life amid 1MDB claims

by Michael Peel in Kuala Lumpur

http://www.ft.com/intl/cms/s/0/4dc0e70a-22f6-11e5-9c4e-a775d2b173ca.html#axzz3f44yvWTE

Malaysia’s Prime Minister Najib Razak faces a struggle for survival amid growing fallout from allegations that hundreds of millions of dollars were channeled from a state development fund into his personal bank accounts.

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Investigators of the escalating scandal at 1Malaysia Development Berhad have passed the country’s Attorney-General evidence relating to transfers totaling almost $700m shortly before the last elections.

Mr Najib has denied taking money for personal gain and has denounced the accusations as “a concerted campaign of political sabotage to topple a democratically elected Prime Minister”.

The Financial Times has not been able to independently verify the allegations. They have added to turmoil in Malaysian politics at a time when Mr Najib’s United Malays National Organisation faces a grave challenge to its near six-decade hegemony.

Analysts say the claims, reported on Friday by the Wall Street Journal and the Sarawak Report website, are potentially fatal for Mr Najib’s career. They appear to make the first direct link between the premier and the long-running scandal over how 1MDB racked up debts of more than $11bn.

Professor James Chin, Director of the Asia Institute at the University of Tasmania, said the fresh claims showed how Mr Najib “can’t seem to shake off the scandal” of the 1MDB affair.

“If indeed the money is in an account bearing his name and he is the owner of the account, he’s toast,” Prof Chin said. “We will get to the truth soon, because the amount is large, and most governments around the world have strict reporting systems for large financial transactions.”

The Attorney-General said at the weekend that he had received documents relating to the latest allegations about 1MDB, which was the subject of four separate official investigations. The fund had denied it had given money to Mr Razak and — like him — had claimed it was the victim of a plot.

The most serious of the latest claims against Mr Najib is that two transfers totaling US$681m were made via a series of companies linked to 1MDB to an account in his name just before the tight 2013 parliamentary elections.

The opposition won the popular vote in those polls, but the design of the electoral system meant the United Malays National Organisation ended up with most seats.

If indeed the money is in an account bearing [Najib Razak’s] name and he is the owner of the account, he’s toas.t– James Chin, Director of the Asia Institute at Tasmania University

Mr Najib set up 1MDB in 2009 and chairs its advisory board, but the fund has come under increasing scrutiny over its investments and financial dealings, particularly with some prominent Gulf companies.

The pressure on the Prime Minister has grown further because Mahathir Mohamad, the influential former premier of more than 20 years, has called on his successor to step down over the fund’s activities. Two opposition parties have also called for Mr Najib to stand aside pending an investigation into the latest claims.