Report Links Malaysian PM to State Investment Fund Scandal

A Malaysian financial scandal deepened Friday after a U.S. newspaper claimed it had obtained documents showing hundreds of millions of dollars transferred to Prime Minister Najib Razak’s personal bank account from a troubled state fund.

Citing bank transfer forms and flow charts prepared by government investigators, The Wall Street Journal said nearly $700 million moved through government agencies, banks and companies linked to the 1 Malaysia Development Bhd. (1MDB) investment fund before being wired into Najib's accounts.

The original source of the money is unclear and the government investigation doesn’t detail what happened to the money that went into Najib’s personal accounts, the paper said.

Najib in a statement described the claims in the report as “false allegations,” and “part of a concerted campaign of political sabotage to topple a democratically elected Prime Minister.”

He said he had never misused public funds and vowed to use the law against those continuing to mount attacks against him over the financial scandal without any basis.

“Let me be very clear: I have never taken funds for personal gain as alleged by my political opponents – whether from 1MDB, SRC International or other entities, as these companies have confirmed.”

Calls to step down

Opposition lawmakers and critics seized on the WSJ report to call for the prime minister to step down or to go on leave until the allegations are resolved, Agence France-Presse reported.

Wan Azizah Wan Ismail, the leader of the opposition Parti Keadilan Rakyat or People’s Justice Party, and the wife of jailed former opposition leader Anwar Ibrahim, demanded that Najib declare his assets publicly.

The 61-year-old Najib accused former prime minister Mahathir Mohamad of stoking the latest corruption allegations.

Mahathir, once Najib's patron, has previously called on the prime minister to step down over the 1MDB scandal.

He has been under growing political pressure over the fiasco and has urged critics to await findings from four official investigations into 1MDB’s activities.

Najib has also been facing criticism over his management of the economy and a scandal arising from the high-profile killing of a Mongolian model nine years ago.

‘Gutter tactics’

The prime minister said on his Facebook page that the allegations made so far over the 1MDB scandal are based on leaked documents and unnamed investigators.

“Not once has the source of these documents ever been shown, neither have the documents themselves been provided for verification by lawful authorities.”

“Those who continue to mount these attacks should be prepared to face the consequences of their actions,” he said. “These gutter tactics – in some cases criminal tactics – to overthrow the government will fail. Where appropriate, they will be met with the full force of the law.”

Investigators believe part of the money traced to Najib’s accounts came from an entity known as SRC International Sdn. Bhd., an energy company that originally was controlled by 1MDB but was transferred to the Finance Ministry in 2012, The Wall Street Journal reported.

Najib is also Malaysia’s finance minister.

The paper reported that investigators had traced the money wired into Najib's bank accounts ahead of general elections two years ago.

This is the first time Najib, who chairs the fund's advisory board, has been directly linked to accusations of corruption surrounding the 1MDB.

The Wall Street Journal stuck to its report on Friday.

"We are very careful and we believe the investigation and the documents we have are solid and come from reliable investigation and not a political investigation,” Ken Brown, the paper’s Hong Kong bureau chief, told U.S. financial news television channel CNBC.

“It's a significant story and we take it very seriously. Anytime you see a leader of a country has been – at least, the evidence shows money has flowed into his personal account, tied to government deals – it's hugely dramatic,” he said.

1MDB is reeling from 42 billion ringgit (U.S. $11.1 billion) in debt and is being investigated by Malaysia’s central bank, auditor general, police and a parliamentary committee for alleged impropriety.

Najib looked relaxed at a Ramadan fast-breaking dinner with other leaders and local officials in Malaysia’s southern city of Johor Bahru on Friday evening, Reuters reported.