Why Na­jib's prime min­is­ter­ship is over

An im­pres­sive wield­ing of the pow­ers of pa­tron­age has kept Malaysia’s Na­jib Razak out of legal trou­ble so far, but a loom­ing money laun­der­ing in­ves­ti­ga­tion by the US Depart­ment of Jus­tice looks likely to fi­nally sink him

The Myanmar Times - - Front Page - JAMES CHIN news­room@mm­times.com Pro­fes­sor James Chin is di­rec­tor of the Asia In­sti­tute at the Univer­sity of Tas­ma­nia.

LAST week the US Depart­ment of Jus­tice (DoJ) an­nounced that it was tak­ing ac­tion to seek “the for­fei­ture and re­cov­ery of more than US$1 bil­lion in as­sets” re­lated to 1Malaysia De­vel­op­ment Ber­had (1MDB). This ac­tion will likely start the process that will even­tu­ally lead to the re­moval of Na­jib Razak, Malaysia’s sixth prime min­is­ter.

Ac­cord­ing to the DoJ, from 2009 to 2015, more than US$3.5 bil­lion in 1MDB funds was al­legedly sent from one fi­nan­cial in­sti­tu­tion to another around the world, to hide the ori­gins of the fund and, per­haps more im­por­tantly, to hide the ul­ti­mate ben­e­fi­cia­ries. Al­though the DoJ did not name Na­jib di­rectly (he is thought to be “Malaysian Of­fi­cial 1”), two of those named were di­rectly con­nected to Na­jib.

The first is Riza Aziz, Na­jib’s step­son. Riza is in­fa­mous in Malaysia for be­ing one of the pro­duc­ers of the Martin Scorsese film The Wolf of Wall Street. The DoJ filed for­fei­ture claims against the roy­al­ties from the film, sug­gest­ing that it was funded by 1MDB money.

The sec­ond is Low Taek Jho, bet­ter known as Jho Low, an eth­nic Chi­nese busi­ness­man from a wealthy fam­ily in Pe­nang. Jho Low is in­fa­mous for par­ty­ing with Paris Hilton and singer Usher. More im­por­tantly, Jho Low, has ad­mit­ted to be­ing an “ad­viser” to the Tereng­ganu In­vest­ment Author­ity (TIA) be­fore it was taken over and re­named 1MDB. The al­le­ga­tions are that Low was the mas­ter­mind be­hind the com­plex deals be­tween 1MDB and Abu Dhabi fi­nanciers, which lead to an even more com­plex sys­tem of pay­ments around the world. The trans­ac­tions are so com­plex that fi­nan­cial au­thor­i­ties in three coun­tries (Sin­ga­pore, Switzer­land and Lux­em­bourg) are still in the process of try­ing to fol­low the money trail.

While the US DoJ may be the first to openly ac­cuse 1MDB of money laun­der­ing, Sin­ga­pore was in fact the first coun­try to take ac­tion. In May, the Mone­tary Author­ity of Sin­ga­pore, Sin­ga­pore’s de facto cen­tral bank, or­dered the clo­sure of BSI Sin­ga­pore, part of a Swiss pri­vate bank. The Sin­ga­pore BSI branch was a key conduit for 1MDB. More ac­tions against fi­nan­cial in­sti­tu­tions in Sin­ga­pore, Switzer­land and Lux­em­bourg can be ex­pected in the near fu­ture.

What the DoJ and oth­ers are hop­ing for now is for one of the main ac­tors to turn into a wit­ness for the pros­e­cu­tion. There is a strong like­li­hood that one of the bank em­ploy­ees or even a for­mer em­ployee of Gold­man Sachs, who ar­ranged the 1MDB bonds, will tell all in re­turn for stay­ing out of jail. Even Jho Low may talk if there are the right in­cen­tives.

But it is cer­tain that Na­jib will have to go. The ques­tion is not if, but when. Po­lit­i­cally it will be im­pos­si­ble for him to carry on. The Malaysian elite pride them­selves as hon­ourable mem­bers of the in­ter­na­tional com­mu­nity. Se­nior mem­bers in the United Malays Na­tional Or­gan­i­sa­tion (UMNO), the rul­ing party, can­not ac­cept a leader who will very soon be a pariah in Western cap­i­tals.

Thus far, there is no “smok­ing gun” and Na­jib’s clever use of his mas­sive pow­ers of pa­tron­age has al­lowed him to deny all links to the 1MDB money. This is no longer the case. The de­tailed pa­per trail pro­vided by the DoJ will pre­sum­ably show how 1MDB money ended up in the hands of Aziz and Low. It is ex­pected to also dis­prove Na­jib’s claims that the money was a “do­na­tion” from a Saudi royal. The DoJ doc­u­ments will, in all like­li­hood, ef­fec­tively de­stroy the ex­cuses given by Na­jib thus far.

UMNO can­not af­ford to keep Na­jib since the next gen­eral elec­tion is due in 2018, less than two years away. Plan­ning for elec­tions in Malaysia for the rul­ing coali­tion usu­ally takes up to 12 months.

There ap­pears to be only two vi­able op­tions for Na­jib. First, he can go for a snap elec­tion. His UMNO party and the rul­ing Barisan Na­sional coali­tion is rel­a­tively strong for the sim­ple rea­son that the op­po­si­tion is in com­plete dis­ar­ray. An­war Ibrahim, the de facto leader of Malaysia’s op­po­si­tion, is still in jail for sodomy. The op­po­si­tion is now un­of­fi­cially led by Ma­hathir Mo­hamad, Malaysia’s long­est serv­ing prime min­ster (1981-2003).

It was Ma­hathir who largely cre­ated a po­lit­i­cal sys­tem that shielded the in­cum­bent leader of UMNO from any real chal­lenge. This has been used ef­fec­tively against Ma­hathir, so much so that he was forced to re­sign from UMNO this year and take on Na­jib from out­side UMNO. Al­though Ma­hathir’s past as an au­thor­i­tar­ian leader is not forgotten, there may be enough con­sen­sus among op­po­si­tion forces that they must get rid of Na­jib to over­ride Ma­hathir’s past sins.

If Na­jib wins a snap elec­tion, he would still have to give up the prime min­is­ter­ship, but that would mean he can largely name his re­tire­ment terms and “pro­tec­tion”. And he could set the timetable for his de­par­ture.

The sec­ond op­tion is for Na­jib to ne­go­ti­ate his de­par­ture now with the UMNO se­nior lead­er­ship. This is some­thing that has been done many times pre­vi­ously, the most re­cent in 2008. At that time, then-prime min­is­ter Ab­dul­lah Badawi was able to ne­go­ti­ate a re­tire­ment pack­age in re­turn for mak­ing way for Na­jib. Even then, it took more than six months of ne­go­ti­a­tions and the orig­i­nal timetable for Badawi’s re­tire­ment was pushed for­ward to early 2009.

No mat­ter which op­tion Na­jib pur­sues, there is lit­tle doubt that in Malaysia’s po­lit­i­cal cir­cles he is a po­lit­i­cal dead man walk­ing.

– East Asia Fo­rum

The United Malays Na­tional Or­gan­i­sa­tion can­not af­ford to keep Na­jib since the gen­eral elec­tion is less than two years away.

Photo: EPA

A woman looks at a por­trait of Malaysian Prime Min­is­ter Na­jib Razak in Kuala Lumpur, Malaysia, on May 25, 2016. Na­jib could soon be em­broiled in a US Depart­ment of Jus­tice in­ves­ti­ga­tion into money laun­der­ing.

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