1MDB Affair: Malaysia’s Prime Minister Speaks Out on U.S. Lawsuits

Malaysian Prime Minister Najib Razak said Thursday that his administration was “serious about good governance,” as at least two countries began seizing assets linked to money misappropriated from beleaguered state fund 1Malaysia Development Berhad (1MDB).

Najib spoke in Kuala Lumpur, a day after the United States Justice Department (DOJ) filed a dozen lawsuits seeking the forfeiture and recovery of over $1 billion in assets allegedly paid for with stolen 1MDB money.

Although the U.S. lawsuits did not name Najib, he has been scrutinized for the past year over alleged corruption associated with the state fund. The prime minister was behind the launch of 1MDB in 2009, an investment vehicle that was established to spur development in Malaysia. He chaired the fund’s advisory board until its dissolution two months ago.

The U.S. authorities linked Najib indirectly to questionable dealings associated to what they called “a global conspiracy” to launder money stolen from 1MDB.

A person involved with the U.S. investigation told the Wall Street Journal (WSJ) on Wednesday that Najib was in fact “Malaysian Official 1” (MO1) who figured prominently in court papers filed by the DOJ.

Nearly $700 million from a bond sale by 1MDB in 2013 (1MDB) was transferred to a bank account held by "Malaysian Official 1," according to court documents.

On Thursday the prime minister urged people not to jump to any conclusions, adding it was important to note that the lawsuits were civil, and no criminal charges had been filed.

“Those people involved will have their say through the process in the United States,” Najib told reporters. “I want to say categorically that we are serious about good governance so anything that is against the law, we want the process to take its course.”

Elsewhere, authorities in Singapore announced Thursday that they had seized assets totalling $240 million (U.S. $177 million) – of which $120 million (U.S. $88.5 million) was from a close ally of Najib’s, Low Taek Jho and his immediate family.

“Appropriate actions will be brought against those who have broken Singapore’s laws,” the Singaporean Attorney General’s Chambers, the Commercial Affairs Department of Singapore police, and the Monetary Authority of Singapore, said in a joint statement.

In Switzerland, the Swiss Federal Office of Justice announced that it had some valuable works of art that had been identified in the U.S. lawsuits as being linked to laundered 1MDB money, Reuters reported. The works seized by Swiss authorities included a drawing by Van Gogh valued at $5.4 million, and two paintings by Monet valued at $92.5 million.

‘Malaysia will always uphold the rule of law’

In Kuala Lumpur, a spokesman for Najib said the Malaysian government would cooperate with international investigations into the 1MDB case.

“As the prime minister has always maintained, if any wrongdoing is proven, the law will be enforced without exception,” Tengku Sariffuddin said in a statement.

Separately, Malaysian Attorney General Mohamed Apandi Ali came to Najib’s defense.

“I wish to clarify that at no point in the civil claim filed by the U.S. Department of Justice is the prime minister named as a defendant or has been alleged to have committed any criminal wrong,” he said.

In January, Apandi cleared Najib of any wrongdoing over $681 million that was transferred into the prime minister’s personal account in March 2013.

According to a statement issued from Apandi’s office, he also “expressed his strong concerns at the insinuations and allegations that have been made against the prime minister of alleged criminal wrong doing” in relation to the U.S. lawsuits, adding that a Malaysian police investigation into alleged mismanagement at 1MDB was ongoing.

“As the public prosecutor, the attorney general will not hesitate to initiate proceedings against the perpetrators of criminal acts provided there is sufficient evidence to do so. Any wrongdoing must and will be punished. Malaysia will always uphold the rule of law,” the statement from the AG’s office said.

Police Inspector-General Khalid Abu Bakar, who heads a special-task force investigating 1MDB, declined to comment on the lawsuits but said that police had nearly finished the first phase of their investigation, including taking statements from more than 25 people.

“For the second phase, we will send our officers overseas to obtain documents, to record statements from witnesses who are outside of the country and it will take time,” Khalid told a press conference in Kuala Lumpur.

For its part, 1MDB issued a press release saying that U.S. justice officials and investigators from other foreign agencies had not contacted it over their investigations, but that would “fully cooperate” with those probes “subject to international protocols.”

Among a web of allegations contained in the U.S. lawsuits, the DOJ said it had traced funds that flowed between an account held by MO1 and Tan Kim Loong, a business associate of Low. Also identified in the lawsuits was Najib’s stepson, Riza Aziz, the founder of movie company Red Granite Pictures.

“To Red Granite’s knowledge, none of the funding it received four years ago was in any way illegitimate and there is nothing in today’s civil lawsuit claiming that Red Granite knew otherwise,” the company said in a statement.

“Red Granite continues to cooperate fully with all inquiries and is confident that when the facts come out, it will be clear that Riza Aziz and Red Granite did nothing wrong.”

The Swiss government says it has seized this painting by Monet, valued at $57.5 million, and two other major works of art following an announcement that the U.S. government sought  to recover assets valued at more than $1 billion, and which was  allegedly paid for with money stolen from Malaysia’s 1MDB. [Courtesy U.S. Department of Justice]

Malaysians react

Malaysian opposition figures Thursday seized on the news of the lawsuits filed by the U.S. government.

Najib’s fiercest critic, former Prime Minister Mahathir Mohamad, called for a referendum and rally to demand Najib’s removal from office because, he said, Malaysia’s current leader had refused over the past 12 months to give in to such popular calls.

“Malaysians are timid. In other countries, millions would take to streets,” Mahathir told a news conference. “I think we should have a peaceful rally to demand his removal.”

Opposition leader Wan Azizah Wan Ismail called on the Malaysian cabinet to advise the king to order a royal commission of inquiry into the allegations around 1MDB.

“I believe the Malaysian people want Najib to go on leave as prime minister to avoid suspicion of abuse of power to halt or hinder the full investigation on this very serious issue,” said Wan Azizah, the president of the People’s Justice Party (PKR) and wife of jailed opposition leader Anwar Ibrahim.

Calls for Najib’s ouster have grown since the Wall Street Journal broke a story in July 2015 about $681 million of 1MDB-linked money ending up in Prime Minister Najib’s personal bank accounts. Since then, the WSJ and other media have reported on lavish spending linked to the prime minister.

Najib has consistently denied any wrongdoing.

Bersih 2.0, a grassroots coalition advocating clean government, urged Najib to resign immediately to allow for independent investigations to be held without executive interference.

Dzulkefly Ahmad, director of strategy for the National Trust Party, urged the supreme council of Najib’s party, the United Malays National Organization, to save the UMNO “they claim to love” and save the nation by sacking the prime minister.

“If you disappoint and fail the nation again, rest assured that you will be assigned to the dustbin of history as the traitors of the nation,” Dzulkefly told BenarNews. “The supreme council is the last bastion to get rid of Najib, the man who single handedly usurped all powers and is responsible for bringing this failing nation into a tail-spin and to the abyss of self-destruction.”

Haireez Azeem Azizi contributed to this report.