PENANG, Sept 13 — Since reports first surfaced alleging that hundreds of millions of dollars had been transferred into the personal accounts of the Malaysian prime minister, investigations into the scandal have met stiff government resistance.
Now, they are on life support.
Investigators have been sidelined, the publications of a crusading news organisation have been suspended, and a deputy prime minister who asked too many questions was fired.
Faced with what they see as stonewalling at home, opponents of Prime Minister Datuk Seri Najib Razak, some from within his own party, are going global, prodding foreign governments and agencies to investigate allegations of graft and money laundering they say are related to the case.
Some international inquiries have begun.
The Swiss authorities have opened an investigation into assets linked to a sovereign wealth fund that Najib leads.
The Hong Kong police say they are looking into deposits made at a branch of a Swiss bank there. And a state investment fund in the United Arab Emirates is reportedly seeking clarification over a debt payment of more than US$1 billion (RM4.306 billion) that was promised by the sovereign wealth fund but may not have been delivered.
John Pang, a senior fellow at the S. Rajaratnam School of International Studies in Singapore, says moves by foreign law enforcement agencies could create pressure for more robust Malaysian investigations, which he describes as verging on moribund.
“I don’t think that anyone thinks international efforts will unseat Najib alone,” Pang said.
“The hope is that they will embolden, support or fortify the investigative efforts at home.”
Toward that end, a relatively junior member of Najib’s party, Khairuddin Abu Hassan, has been touring the globe, dropping off documents at the offices of law enforcement agencies.
“This is the biggest financial scandal we’ve ever had in our country,” Khairuddin said in an interview in Penang.
“But those who are involved in the investigation of this case are being arrested and questioned by the police.”
Khairuddin seems to have the backing of influential politicians and disgruntled officials.
In what he calls a “road show” for justice, he has traveled to Switzerland, Britain, France, Hong Kong and Singapore over the past three months to deliver packets of information related to the sovereign wealth fund at the center of the scandal.
The fund, called 1Malaysia Development Berhad (1MDB) is chaired by Najib.
Najib’s critics say the fund has lost large sums of money and taken on expensive debt.
The government has struggled to explain the spaghetti-like complexity of its financial transactions across the globe, including funds held in offshore tax havens. The most explosive revelation was the nearly US$700 million transferred to Najib in 2013 from entities reported to be linked to 1MDB.
Najib has denied wrongdoing, saying he had “never taken funds for personal gain,” but has not specifically explained where the money came from.
Khairuddin declined to specify who is assisting him in his investigative efforts, but many in Malaysia suspect that he is being fed tips and documents by a range of people unhappy with Najib, including Tun Dr Mahathir Mohamad, a former Malaysian prime minister waging a campaign to unseat Najib.
In his road show, Khairuddin is sometimes accompanied by his lawyer, Matthias Chang, a former senior adviser to Mahathir.
Chang traveled to Bern, the Swiss capital, with Khairuddin in August, and they dropped off documents pertaining to money laundering at the attorney general’s office there, the two men said.
The Swiss investigation, which was underway before the pair visited, is moving forward.
In early September, the Swiss authorities said they had frozen tens of millions of dollars in Swiss accounts related to the case.
They are seeking the cooperation of the Malaysian authorities, a spokeswoman for the attorney general’s office said.
In Hong Kong, Khairuddin filed a police report accompanied by a photograph of a document that he says contains Najib’s handwritten notations indicating that RM1.125 billion was transferred into Credit Suisse accounts in the city.
The documents list four companies as the beneficiaries of the accounts, but Khairuddin said Najib had signatory powers over them.
He said the photo came from an “insider” in Najib’s circle who is now disenchanted.
The Malaysian government called the accusations “baseless and politically motivated lies.”
“The Prime Minister does not control any Credit Suisse bank accounts in Hong Kong, whether in his name or the name of the companies mentioned,” the government said in a statement emailed to The New York Times.
“This latest bid to smear and criminalize the prime minister via Dr Mahathir’s discredited henchman Khairuddin Abu Hassan is the most desperate yet,” the statement said.
“It will fail, because the allegations are false.”
Credit Suisse declined to comment on the matter.
The Hong Kong police said an investigation was underway and confirmed they had received information about “some bank deposits.”
In Malaysia, the central bank and the anti-corruption commission are still officially investigating, but the case has been stymied by transfers of vital officials and an aggressive police investigation into leaks to the news media.
Last month, the police raided the offices of the anti-corruption commission, ostensibly to investigate a leak.
In a purge that stunned the nation in late July, Najib removed the attorney general and fired several Cabinet ministers, including the deputy prime minister, who had publicly raised questions about the issue.
A parliamentary committee investigating the fund was gutted when Najib promoted vital members to more senior posts in the government.
In August, the government disbanded a task force investigating 1MDB.
And the deputy head of the powerful Special Branch of the police was removed from his post, a move he attributed to his insistence that the investigation into the sovereign wealth fund be “conducted transparently”.
The Malaysian authorities have also frozen the accounts of Khairuddin using a law that seeks to prevent money laundering and the financing of terrorism.
The notice served to Khairuddin did not elaborate on the allegations against him.
Najib’s government also has a high degree of control over the police, the bureaucracy and the news media.
In July, the government suspended the license of The Edge Financial Daily and The Edge Financial Weekly, sister publications that were taking a leading role in investigating the scandal.
One of the leading sources of leaks and information on the scandal has been The Sarawak Report, a website based in Britain beyond the government’s reach.
The government sought an international arrest warrant for the website’s founder, Clare Rewcastle-Brown, but Interpol, the international police agency, rejected the request.
In July, the government blocked access to The Sarawak Report in Malaysia, but bulletins are widely circulated over social media.
It was The Sarawak Report, along with The Wall Street Journal, that first reported the transfer of nearly US$700 million into what were believed to be Najib’s accounts.
The government’s anti-corruption commission, in its investigation, confirmed that the money had gone into Najib’s accounts, but said it had come from an unidentified donor in the Middle East, not 1MDB.
Pang, the expert in Malaysian politics, says the international investigations are warranted.
“Massive sums of Malaysian public money have been moved around the world and hundreds of millions have gone inexplicably into the private accounts of individuals,” he said.
“It says something about the state of global financial oversight that no red flags were raised, or that if they were, nothing has been done about it until now.” — New York Times
