Malaysia's Mahathir Says Enough Evidence to Reopen 1MDB Probe

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(May 12): Malaysian Prime Minister Mahathir Mohamad said Saturday there was enough evidence to reopen a probe into a multi-billion dollar scandal at a state fund, as his predecessor Najib Razak was slapped with a ban on leaving the country.

Mahathir, who was prime minister from 1981 to 2003 and defected to the opposition in order to stand as their candidate for premier, repeatedly called Najib a “thief” on the campaign trail and pledged to revisit the 1MDB issue. His shock election win on Wednesday brought the Barisan Nasional coalition’s 61-year rule to an abrupt end.

“We have placed certain restrictions on a number of people who may be involved in wrongdoing or in making wrong decisions," Mahathir told reporters on Saturday in Kuala Lumpur. He confirmed he had ordered the travel restrictions on Najib, and cited “whatever little information that justifies ourselves taking action, including detention, arrests or even preventing them from going abroad.”

Mahathir said he was instructing the auditor-general to remove any restrictions on publicizing the details of a report from a local investigation into 1MDB, and planned to replace the attorney-general, though he did not name a candidate for the role.

“I’ve given instructions to the police to remove the restrictions placed on it by the Official Secrets Act,” he said. “They will then submit the report to me. I will then study it.”

The U.S. Department of Justice claims billions were siphoned from 1MDB, which was first set up in 2009 to support infrastructure in Malaysia. Najib faced allegations that some of the money ended up in his personal accounts before an election in 2013. He acknowledged around $700 million appeared in his accounts but said it was a donation from the Saudi royal family and most of it was returned. He was cleared by the attorney-general of wrongdoing, though some global probes are ongoing.

“We want to do it as quickly as possible,” Mahathir said of any resumed investigation. “It is a very complex thing because it involves a lot of people, it involves a lot of decisions made, and the money you know has to be investigated as to the money laundering. We have to contact America, Switzerland, Singapore.”

Najib said earlier Saturday he was planning to take a short break with his family in order to consider his future, but later said on Twitter he would respect the immigration department order. Media reports had said Najib intended to fly with his wife to Indonesia.

New Appointments

Mahathir on Saturday named Najib’s former deputy Muhyiddin Yassin as home affairs minister. Muhyiddin was sacked by Najib in July 2015 after he called for greater clarity on the 1MDB investigations and was later expelled from Najib’s party, the United Malays National Organisation.

Former central bank Governor Zeti Akhtar Aziz meanwhile was named to a "council of elders" by Mahathir. She had been uncharacteristically blunt in her criticism of 1MDB, and the central bank had urged criminal proceedings at least twice against the fund.

“The whole set up is made up of a group of prominent people including Zeti, they have some expertise,” Mahathir said. “If necessary they can choose some other experts to work with them whether as part of their group or a kind of subsidiary.”

Still, moving against 1MDB and Najib may not be so straightforward.

“Malaysia attorney general’s office and investigating authorities have previously announced that they found no wrongdoing on the part of senior political leaders in the previous government,” said Robson Lee, a Singapore-based lawyer at Gibson, Dunn & Crutcher LLP. “So this would be a threshold that have to be resolved in any review by the new government.”

Separately, Najib announced Saturday he would step down as president of UMNO and as chairman of the broader Barisan Nasional coalition, but said he would stay an active party member.

Former deputy premier Ahmad Zahid Hamidi will become acting UMNO president, Najib said at a briefing at the party’s headquarters in Kuala Lumpur. Former defense minister Hishammuddin Hussein, who is Najib’s cousin, will be acting deputy president.

“Maybe this will give us a chance to improve on whatever weaknesses and flaws we must tackle,” Najib said. He added party members should back the new leadership “so that UMNO and Barisan Nasional will re-emerge as parties that have the confidence and trust of the people.” After his comments he was surrounded and hugged by crying party members.

Read more: Malaysia’s 1MDB Spurs Voter Backlash, Global Probes: QuickTake

Najib separately said on Twitter on Saturday that he and his Barisan Nasional colleagues were committed to respecting the will of the people and facilitating a smooth transfer of power.

“The best interests of Malaysia and its people will always be my first priority and I intend to continue serving them in whatever capacity I can.” - Bloomberg