1MDB CLOCK TICKS DOWN ON NAJIB: SCANDAL TO BURST OPEN AMID ELECTION BATTLE? ALL EYES ON JHO LOW, U.S. CRIMINAL ACTION

As embattled Malaysian leader Najib Razak faces snap elections in coming months, the billion-dollar graft scandal surrounding state fund 1MDB threatens to resurface. finews.asia parses the details.

Singapore has shut the book on 1MDB, a scandal which shut down two banks in the city-state and led to charges against private bankers over money-laundering and other crimes. Switzerland, where banks also willingly helped launder money from 1MDB, is conducting criminal proceedings as part of a six-country probe led by American prosecutors.

The U.S. alleges that $4.5 billion was pilfered from 1MDB and used for everything from luxury real estate to a diamond necklace for first lady Rosmah Mansor – or «kleptocracy at its worst,» as U.S. prosecutor Jeff Sessions called it in December.

The only place where the scandal has barely rippled is Malaysia itself, which might have noticed several billion missing from its public purse. Why? Malaysia quashed an auditor’s report into the affair, and lawmakers were blocked in court recently from attempting to make its contents public.

Close Race

Nearly two years on from when the scandal first surfaced, Prime Minister Najib Razak is expected to call an election in coming months, which has put 1MDB back into the headlines. Najib enjoys wide popularity, in part because the Malaysian opposition is in such pitiful shape that is has been forced to enlist a former PM – Mahathir Mohamad. 

Mahathir is no silver bullet: at 92, he was forced to pledge to serve no longer than two years if elected, and he is hobbled with his own scandal over foreign exchange losses in the 1990s. Nevertheless, the sprightly former PM has managed to unite a fractured opposition along a common goal: ousting Najib. The PM has admitted lapses at 1MDB, but denied he was involved in any wrong-doing.

A poll conducted last month showed a surprisingly close race: 18 percent of voters want Mahathir, while 21 percent support Najib, who has curried favor with voters with measures tax cuts and ditching highways tolls.

Najib Spooked

If 1MDB is hotly-debated in Malaysia’s political classes, it likely doesn’t register as much with rural voters, a potentially powerful swing bloc. Millennials are another voter block to watch out for: disillusioned young Malaysians have united behind #UndiRosak, a hashtag which encourages spoiling ballots instead of voting for either candidate.

A defeat for Najib and his party would almost certainly expose what has until remained under cover on 1MDB, and the PM and his ruling party appear spooked by the close race. Electoral officials are attempting to rush through changes to voting maps, which are expected to bolster Najib’s standing.

The fund itself set aside a dispute over a bond deal gone sour with Abu Dhabi last year. Malaysia hasn’t cooperated with Switzerland, for example, in gathering evidence in the probe.

Private Bankers’ Fate?

Several factors could still blow open the scandal: Sessions’ comments two months ago indicate a harsher tone than Najib’s September visit to President Donald Trump would indicate. Whether and how U.S. prosecutors follow through will dictate Najib’s agenda.

Investigators may yet turn up Interpol-sought Jho Low, who is believed to be the linchpin of the opaque money movements out of Malaysia and into a host of luxury projects and investments.

And what of several private bankers including Swiss banker Hanspeter Brunner? Banca della Svizzera Italiana’s former top banker in the region is sitting tight until Singaporean authorities decide whether to levy charges. The city-state has been undaunted by rank or nationality before, and Swiss and Singapore officials worked in lockstep on the investigation.

A spokeswoman for Singapore’s white-collar crime unit, the CAD or Commercial Affairs Department, declined to comment to finews.asiainquiries about the fate of Brunner and his former deputy Raj Sriram.

– https://www.finews.asia