In 2009, Malaysian prime minister Najib Razak explained why the government was taking over the investment fund 1Malaysia Development Berhad (1MDB). ”By doing this, the country’s wealth can be distributed evenly among the people irrespective of race,” he wrote in a letter to a parliament member who questioned the reasons for the move. It would also encourage foreign direct investment, he said.
But the Wall Street Journal now reports (paywall) that nearly $700 million from 1MDB has been wired into Najib’s personal accounts. The article cites documents apparently uncovered by investigators conducting a government probe.
1MDB describes itself as a “strategic development company wholly owned by the government of Malaysia” and says its role is to “assist the government in propelling Malaysia towards becoming a developed nation that is highly competitive, sustainable and inclusive.” It also says on its website:
We leverage on our unique public-private dynamics, to find fresh approaches that will unleash new areas of opportunity and growth… Our strategy is to make long-term investments that can significantly impact the economy.
Those investments haven’t worked out very well, as 1MDB has amassed $11 billion in debt—leading to increased scrutiny.
Najib quickly denied any wrongdoing following the WSJ report and said ”political sabotage” was at work. In a press release, 1MDB denied the money transfers took place: ”In reference to media reports published earlier today, 1MDB wishes to make clear that the company has never provided any funds to the prime minister. To suggest otherwise, as some media outlets have done, is highly irresponsible and a deliberate attempt to undermine the company.”
Malaysia-based media outlets reporting on 1MDB have faced pressure from the authorities. The Edge had used leaked emails in its extensive reporting on 1MDB’s financial transactions and investments. But last week it agreed to no longer refer to the emails after home minister Ahmad Zahid Hamidi threatened action, citing press licensing laws for publishing false news. He contended the leaked emails had been tampered with to show 1MDB in a bad light.
According to the Wall Street Journal, the investigation documents mark the first time the prime minister has been directly linked to the probes into 1MDB. Investigators outlined what they believe to be the movement of cash among banks, companies, and government agencies before it ended up in Najib’s personal accounts.
Opposition leaders today called on the prime minister to answer the allegations. Lim Guan Eng, chief minister of Penang and secretary general of the Democratic Action Party, said: “Najib should file a suit in the US against the publication to clear his name if necessary. But first, he must explain. Failing which, he has to resign.”