US$700 mil. cash in ac­count looms over Malaysian PM

The China Post - - COMMENTARY - BY DAN MARTIN

It’s Malaysia’s US$700 Mil­lion ques­tion: who trans­ferred mas­sive amounts of cash into Prime Min­is­ter Na­jib Razak’s per­sonal bank ac­counts, and where is the money now?

But with Na­jib re­fus­ing to an­swer and con­cern that in­ves­ti­ga­tions have been stalled, thou­sands of protesters plan to de­mand his ouster this week­end, putting them on a po­ten­tial col­li­sion course with po­lice.

The demon­stra­tion could ex­pose the breadth of public anger over Malaysia’s big­gest po­lit­i­cal scan­dal in mem­ory.

The Wall Street Jour­nal’s rev­e­la­tion last month of Na­jib’s mys­te­ri­ous wind­fall has rocked his gov­ern­ment and sent for­eign in­vestors flee­ing Malaysian as­sets over the po­ten­tial po­lit­i­cal un­cer­tainty.

“You will see a sea of yel­low in the streets this week­end,” said Wong Chin Huat, a leader of civil so­ci­ety al­liance Ber­sih, re­fer­ring to the group’s col­ors. “Peo­ple re­al­ize the coun­try and econ­omy are in a sad state and it’s be­ing brushed aside by the gov­ern­ment.”

Malaysia’s lead­ing pres­sure group has brought out tens of thou­sands for past demon­stra­tions that ended in clashes with po­lice, most re­cently in 2012.

Po­lice have de­clared the rally illegal, but Wong said at least 100,000 peo­ple are ex­pected to press for Na­jib’s ouster over the scan­dal in the two-day rally. “By hook or by crook, we will march,” he said.

Malaysians have been trans­fixed by months of al­le­ga­tions that hun­dreds of mil­lions of dol­lars dis­ap­peared from deals in­volv­ing heav­ily in­debted state in­vest­ment com­pany 1Malaysia De­vel­op­ment Ber­had (1MDB), which Na­jib launched in 2009. On July 2, the Wall Street Jour­nal re­ported that nearly US$700 mil­lion was de­posited into Na­jib’s per­sonal bank ac­counts be­gin­ning in early 2013.

Na­jib ini­tially re­jected the Jour- nal re­port, and both he and 1MDB ve­he­mently deny any wrong­do­ing.

But mem­bers of his cab­i­net and Malaysia’s anti-graft agency now ac­knowl­edge the trans­fers, call­ing them “po­lit­i­cal do­na­tions” from uniden­ti­fied Mid­dle Eastern sources, say­ing there was noth­ing im­proper but giv­ing no fur­ther de­tails.

The ac­counts have since been closed and the where­abouts of the money is un­known. The of­fi­cial ex­pla­na­tions are widely re­jected by the public, said Malaysia pol­i­tics re­searcher James Chin. “Na­jib’s cred­i­bil­ity is de­stroyed. None of these ex­pla­na­tions are be­lieved, so he is dig­ging his heels in,” he said.

Al­leg­ing a “po­lit­i­cal con­spir­acy” by un­named op­po­nents, Na­jib re­cently sacked or re­as­signed of­fi­cials who were in­ves­ti­gat­ing the scan­dal, and purged Cab­i­net mem­bers who called for an­swers.

A news­pa­per known for its 1MDB re­port­ing has been sus­pended for three months and Na­jib last week sparked free-speech con­cerns by say­ing his gov­ern­ment would step up In­ter­net reg­u­la­tion. This was to pre­vent any­one “be­ing crim­i­nally de­famed, and so that the In­ter­net does not be­come an un­governed space dom­i­nated by in­sults and un­truths,” he said in a speech. Na­jib’s of­fice did not re­spond to AFP re­quests for com­ment.

Eco­nomic ‘cri­sis’ Loom­ing

The sit­u­a­tion has ac­cel­er­ated an ex­o­dus by for­eign in­vestors al­ready wor­ried about Malaysia’s econ­omy who now fear the scan­dal is dom­i­nat­ing Na­jib’s at­ten­tion, said Chua Hak Bin, head economist for Asian emerg­ing mar­kets at Bank of Amer­ica Mer­rill Lynch. “The gov­ern­ment is fo­cused on (po­lit­i­cal) sur­vival, but the econ­omy is in dan­ger of slip­ping into cri­sis as a re­sult,” said Chua. “In­vestors can’t see the endgame, and that’s wor­ry­ing.”

The ring­git cur­rency has fallen 13 per­cent since the Wall Street Jour­nal rev­e­la­tions. It has dropped more than 30 per­cent over the past year to an 18-year low, partly on fears the energy-ex­port­ing coun­try’s eco­nomic growth will be hit by fal­ter­ing oil prices. China’s re­cent cur­rency de­val­u­a­tion has added fur­ther pres­sure. Ma­hathir Mo­hamad, who led Malaysia from 1981-2003 and still casts a long shadow, has fiercely at­tacked Na­jib over the scan­dal.

He warned on his widely read blog re­cently that the “econ­omy will col­lapse”, harm­ing Malaysian con­sumers, un­less the scan­dal is ex­plained and con­fi­dence re­stored.

Po­lit­i­cal an­a­lysts say Na­jib will likely use his gov­ern­ment’s lever­age over key in­sti­tu­tions to thwart in­ves­ti­ga­tions, and is ex­pected to see off any in­ter­nal chal­lenges within his rul­ing United Malays Na­tional Or­gan­i­sa­tion (UMNO).

Less clear is the im­pact on the next elec­tions, which are due by 2018. In power since 1957, the gov­ern­ment is al­ready los­ing sup­port over re­cur­ring cor­rup­tion scan­dals, and UMNO’s use of racially di­vi­sive pol­i­tics.

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