After Malaysia’s Political Earthquake, A Massive Corruption Probe
Investigations target former prime minister and long list of officials, companies, and institutions in multibillion dollar graft scandals.
Malaysian Prime Minister Najib Razak, who appeared untouchable until a surprise election last week ended his coalition’s six-decade grip on power, now faces a new corruption investigation launched by those who defeated him at the ballot box. Malaysian police early Thursday raided the former leader’s house and other properties early Thursday searching for documents related to charges in a multibillion dollar scandal involving the state development fund, 1MDB. His alleged role in what has been described as one of the greatest thefts in corporate history — the $4.5 billion which the U.S. Justice Department alleges he helped steal from the fund — could be laid bare. Najib has denied any wrongdoing. As Malaysian corruption investigators prepare to cooperate with counterparts from at least six other countries, including the U.S. FBI, it won’t just be Najib who has cause to be nervous. Prosecutors have named a large number of high-power players on their list of alleged co-conspirators, including some at PetroSaudi, the firm accused of helping launder $1 billion from the 1 Malaysia Development Fund (1MDB), and the alleged grand facilitator, Low Taek Jho, as well as the international financial institutions that prosecutors say helped him do it. But for Clare Rewcastle Brown, the journalist who first broke open the 1MDB scandal, the case is only the beginning of what could emerge about a government administration she alleges stole from just about every fund it controlled. “I think what’s going to be the untold story, what’s going to be fascinating and new is all the other [cases],” said Rewcastle Brown, a veteran investigator who worked for the BBC before founding  — a London-based investigative reporting website committed to uncovering graft and environmental crimes in Malaysia. “You become wearily used to these people in positions of authority making absolutely blatant and unsustainable lies and getting away with it,” she said. Rewcastle Brown has uncovered documents suggesting scams involving billions dollars during Najib’s rule from a swath of government funds other than 1MDB. These have included an alleged $2.5 billion fraud at the The Employees Provident Fund, a mandatory savings and retirement system, through to a firm owned by a convicted Hungarian fraudster. A series of scandals have also rocked the Federal Land Development Authority (FELDA), which spent more than $500 million, twice the market rate, for a non-controlling stake in a company owned by a friend of Najib. The company has since tanked. The mismanagement of FELDA, which has included many more corruption allegations, is particularly startling given that it is an asset palm oil farmers in rural strongholds of Najib’s Barisan Nasional coalition had contributed to for generations, only to see more than $2 billion wiped from their stock price. Rewcastle Brown’s investigations also say Sarawak state governor Abdul Taib Mahmud and Sabah Chief Minister Musa Aman illegally obliterated forests in their states in order to enrich themselves. All funds and individuals named have denied the allegations against them. Early in the 1MDB scandal, with Najib's Attorney General, Mohamed Apandi Ali, said the nearly $700 million in his account was a gift from the Saudi royal family. A coalition with the ruling coalition at the time told The Wall Street Journal the accusations against the then-prime minister were politically motivated. Mahathir moved swiftly following his Pakatan Harapan coalition’s victory in the May 9 poll, announcing his plan to investigate numerous corruption allegations including 1MDB at a press conference after he was sworn in the next day. “We are not seeking revenge. What we want to do is to restore the rule of law,” he said. Since then, Apandi Ali, who cleared Najib after it was revealed about $700 million had allegedly flowed from 1MDB into the former prime minister’s bank account, has been placed on a leave of absence. The former attorney general has also been placed on a no-fly list along with senior officials from the Police, Treasury, and the Malaysian Anti-Corruption Commission (MACC), according to the , as well as Najib and his wife Rosmah Mansor — whose opulent displays of wealth have caused public outrage. Officials from the MACC sidelined by Najib while investigating 1MDB have been brought back into the fold. Mahathir has not only promised investigations but, perhaps more importantly, institutional reforms focused on a separation of powers. But some observers have raised doubts about the true depth of Mahathir’s dedication to reform given that much of Malaysia’s political landscape took shape during his own prior rule. Wong Chin Huat, a political scientist at the Penang Institute think tank, believes 92-year-old Mahathir understands that genuine reform is required for him to satisfy the expectations of his electors and secure his political legacy. “On one hand you would have clear political pressure coming from the ground and not just his coalition to prosecute wrong doers in 1MDB, the FELDA Global Ventures and other prominent corruption scandals,” he said. “On the other hand what distinguishes this from a political witch hunt would really be institutional reforms including the split of the attorney general chambers so that the functions of public prosecution will be taken out and given to an independent non-partisan officer.” Wong said the new government’s establishment of a five-person Council of Eminent Persons tasked with institutional reform in the financial and economic sectors was a step in the right direction. “It’s only a person like him [Mahathir], someone who came from the system, would have the ability to dismantle it,” Wong said.