Malaysia’s PM Says He’s Serious About Good Governance

KUALA LUMPUR, Malaysia— Malaysia’s prime minister said Thursday he is serious about good governance and vowed to “fully cooperate” with a U.S. investigation into a $3.5 billion scandal involving a state fund he headed.The comments by Prime Minister N...
Malaysia’s PM Says He’s Serious About Good Governance
Malaysian Prime Minister Najib Razak, center, arrives for an Eid al-Fitr open house event in Kuala Lumpur, Malaysia, Thursday, July 21, 2016. (AP Photo/Vincent Thian)
The Associated Press

KUALA LUMPUR, Malaysia—Malaysia’s prime minister said Thursday he is serious about good governance and vowed to “fully cooperate” with a U.S. investigation into a $3.5 billion scandal involving a state fund he headed.

The comments by Prime Minister Najib Razak were his first since the U.S. Department of Justice revealed in Los Angeles on Wednesday that it has initiated action to seize about $1.3 billion of the missing $3.5 billion allegedly used to buy assets in the U.S. by people close to Najib.

“Allow the process to take its course, but I want to say categorically that we are serious about good governance,” Najib told reporters. His statement, however, is going to carry little weight with his detractors who accuse him of being behind the alleged misappropriation of the funds.

Najib has consistently denied allegations of wrongdoing.

The state fund, known as 1MDB, was created in 2009 by Najib shortly after he took office to promote economic development projects. Instead, U.S. prosecutors said, fund officials diverted more than $3.5 billion through a web of shell companies and bank accounts in Singapore, Switzerland, Luxembourg and the United States.

The Justice Department says it wants to seize some $1.3 billion of that money, which officials were able to trace through the U.S. financial system. It says the forfeiture demand is the largest single action it’s taken.

The money was used to pay for luxury properties in New York and California, a $35 million jet, art by Vincent Van Gogh and Claude Monet and helped finance the Hollywood film, “The Wolf of Wall Street,” according to the DOJ complaints.

“In seeking to seize these forfeited items, the Department of Justice is sending a message that we will not allow the United States to become a playground for the corrupt,” said Eileen Decker, the U.S. Attorney in Los Angeles. “And we will not allow it to be a platform for money laundering or a place to hide and invest in stolen riches.”

Najib said he viewed the U.S. action seriously but pointed out that it was limited to the individuals named in the complaints. He said his government will “fully cooperate” with U.S. authorities.

The complaints identify by name several people closed to Najib. Among them is Najib’s stepson, Riza Shahriz Abdul Aziz, who co-founded movie production studio Red Granite Pictures, and businessman Low Taek Jho, who is close to Najib’s family. The complaint describes Riza as a relative of an unnamed “Malaysian Official 1” whose approval was needed for the fund’s financial commitments.

“We have to establish facts first. This is a civil action, this not a criminal action. Those people involved will have their say through the court process in the United States,” Najib said.

Opposition leaders have taken “Malaysian Official 1” to mean Najib.

“It does not take a rocket scientist to figure it out. It’s our prime minister,” Ambiga Sreenevasan, an activist lawyer, said at a news conference Thursday, which was also addressed by former Prime Minister Mahathir Mohamad, a one-time Najib mentor and now one of his biggest critics.

Mahathir called for a peaceful rally to demand the prime minister’s removal.

The rally should “demand the removal of the kleptocrat who has stolen money from the government,” said Mahathir. The time has come to set up an independent tribunal to find out the identity of “Malaysian Official 1,” he told reporters.

The U.S. has now joined several other countries, including Switzerland and Singapore, where similar investigations are ongoing into the workings of 1MDB fund. Also Thursday, Singapore said it had seized assets worth 240 million Singapore dollars ($176 million) in its probe on possible money laundering linked to 1MDB.

Allegations against 1MDB have gained steam over the months, but Najib has steadfastly denied any involvement or wrongdoing. He also remains firmly in political control of the country, thanks largely to the apparently unwavering support of ruling party members despite a few voices of dissent. The opposition is too weak in Malaysia to dislodge him.

“He is still politically safe. There isn’t any immediate or real challenge to his leadership,” said Wan Saiful Wan Jan, who heads the think tank Institute for Democracy and Economic Affairs.

However, the U.S. complaints are by far the biggest threat to Najib’s credibility — and hence stability — that could reinvigorate the opposition and ruling party members who are secretly opposed to him.

The Malaysian attorney-general also rushed to defend Najib.

“To date there has been no evidence from any investigation conducted by any law enforcement agencies in various jurisdictions which shows that money has been misappropriated from 1MDB,” Mohamed Apandi Ali said in a statement.

He added that there have been no criminal charges pressed against any individuals for misappropriating funds from 1MDB. Mohamed Apandi also expressed “strong concerns at the insinuations and allegations” of criminal wrongdoing against Najib. He said that the prime minister has not been named a defendant in the DOJ complaints.

Mohamed Apandi had already cleared Najib of criminal wrongdoing in January, saying $681 million found in his bank accounts was a donation from the Saudi royal family and not from 1MDB, with most of it returned.