NAJIB'S ARMAGEDDON COULD COME AS EARLY AS NEXT WEEK

Pressure is growing on Malaysia’s leader before a planned no-confidence vote next week over his role in a troubled state investment fund that is under investigation at home and abroad.

Prime Minister Najib Razak’s hold on power has been considered secure due to his control of the powerful United Malays National Organization, which represents most of the country’s majority ethnic group. Mr. Najib is unlikely to lose the Oct. 19 no-confidence vote, which his allies may even block, people familiar with the matter say.

But other developments threaten his survival.

One is the value of Malaysia’s currency, the ringgit, which has fallen 17% against the dollar so far this year. Although the oil-exporter’s currency has recently recovered with a bounce in crude prices, a resumed fall could increase the pressure on Mr. Najib from Malaysia’s business sector.

“If the ringgit falls to something like 4.80 or 5 ringgit to the dollar” from 4.13 ringgit on Monday, that could add pressure on him, saidJames Chin, a Malaysian academic who heads Asia Center at the University of Tasmania in Australia.

The prime minister also faces political risk from the continuing investigations.

Swiss authorities in August opened a criminal probe involving the state investment fund, 1 Malaysia Development Bhd. U.S. investigators from the Federal Bureau of Investigation and the U.S. Justice Department, meanwhile, have begun looking into Mr. Najib’s assets, The Wall Street Journal reported last month.

Mr. Najib’s office couldn’t be reached on Monday to comment.

Institutions buckle under the pressure of being forced to cover up for Najib

Other issues have emerged, including a deepening fissure between Malaysian institutions over how to handle the problems surrounding 1MDB.

The country’s central bank on Friday said it recommended in August that the attorney general begin criminal proceedings against 1MDBfor allegedly breaking foreign-exchange rules, but that the attorney general had declined to act on the matter. The attorney general didn’t respond to a request to comment.

A day earlier, the attorney general’s office said it continued to head a multiagency task force investigating 1MDB, which includes the central bank, the police and Malaysia’s anticorruption agency.

Malaysian government investigators this year traced $700 million into Mr. Najib’s alleged bank accounts through agencies, banks and companies linked to 1MDB, the Journal reported in July.

The government investigation hasn’t detailed what happened to the funds that went into the prime minister’s alleged personal accounts, most of which it determined were received ahead of national elections in 2013.

Nothing can be hidden

Mr. Najib has denied any wrongdoing or taking money for personal gain. Malaysia’s anticorruption agency said the funds came from an unspecified Middle East donor. Mr. Najib hasn’t commented on the investigations, and 1MDB says it hasn’t been contacted by overseas investigators but stands ready to cooperate.

The 1MDB affair has embroiled Mr. Najib in political controversy. He fired Malaysia’s deputy prime minister, who questioned his handling of the case, and suspended a newspaper, though a court later lifted the suspension.

Tens of thousands of people demanding his ouster took to the streets of Kuala Lumpur in August. His government has detained critics under security laws on allegations of trying to sabotage the country.

Frustrations are building elsewhere, too. The country’s nine sultans last week called for a swift and transparent investigation of the allegations surrounding 1MDB. The sultans, the ceremonial heads of Malaysia’s states who take turns serving as the country’s king, still exert a strong influence in Malay communities.

Sultan Ibrahim Ismail of Johor has been particularly critical, urging the government to be more transparent in a recent speech.

“In this modern day, nothing can be hidden,” he said while presiding over the opening of a new mosque.

Gerrymandering

United Malays National Organization, which has ruled Malaysia uninterrupted since independence from Britain in 1957, is the key to the country’s politics.

Years of gerrymandering have increased the importance of Malay-majority rural areas, providing the party with an outsize influence over Malaysia’s parliament. Its National Front coalition, which also includes smaller ethnic-Chinese and Indian parties, comfortably held on to control of the legislature in 2013 despite losing the popular vote.

Whoever runs the organization effectively runs the country, and as president of the party Mr. Najib cut off any challenge to his leadership earlier this year by delaying party elections until mid-2018.

One potential Najib challenger, say the people familiar with the matter, is Muhyiddin Yassin, a politician whom Mr. Najib fired as deputy prime minister in July after Mr. Muhyiddin raised questions about the transparency of the debt-laden fund’s affairs. Mr. Muhyiddin remains as deputy president of United Malays National Organization. He couldn’t be reached for comment and hasn’t commented publicly on the matter.

On Monday, he urged party members to raise their concerns at the organization’s general assembly in December, local media reported, but stopped short of directly calling on Mr. Najib to resign. - http://www.wsj.com/