Brother of Malaysia’s PM Calls for Transparency in Light of 1MDB Lawsuits

The Malaysian prime minister’s brother has called for his government to be transparent in light of damaging allegations in U.S. lawsuits that seek to recover more than $1 billion allegedly stolen from state fund 1Malaysia Development Berhad (1MDB).

“Democracy is not just about elections, it’s also about integrity of institutions, the rule of law and freedom of the media,” Nazir Razak wrote in an Instagram post on Thursday night.

For the past year his brother, Prime Minister Najib Razak, has been embroiled in a corruption scandal linked to 1MDB. Now, the new U.S. lawsuits appear to connect Najib to dubious activities and dealings involving key players named in court documents. A person close to the American investigation identified Najib as “Malaysian Official 1,” who is often referred to in the court papers, the Wall Street Journal (WSJ) reported.

Nazir, the chairman of the CIMB group, one of the largest banks in Malaysia, did not specifically name his brother in social media posts. But he pointed to a headline from a year ago in the Malaysian financial newspaper The Edge, which led to his brother’s government suspending the publication for three months.

“Exactly 12 months ago, this headline got them suspended. Today, the U.S. Attorney General is saying pretty much the same thing,” Nazir said, alluding to a headline in The Edge that referred to Low Taek Jho, a close political ally of his brother who is named as a party in the suits brought this week by the U.S. Justice Department (DOJ).

Meanwhile, the WSJ, which broke the story about $681 million in money linked to 1MDB being deposited in Najib’s personal bank accounts in March 2013 – which led to calls for the prime minister’s resignation – said in an editorial that the losses would catch up to him and his supporters. Elsewhere, a White House spokesman told reports that President Barack Obama told Najib last year that the Malaysian government needed to be transparent.

‘Toxic’ atmosphere: Nazir

In January, Malaysia’s attorney general claimed that the $681 million was a donation from the Saudi royal family and was used to fund candidates in the 2013 general election. Najib, for his part, has consistently denied any wrongdoing regarding the donation and as well as reports about lavish spending linked to 1MDB money.

His brother Nazir himself was subjected to WSJ reporting about receiving $7 million to be distributed to politicians prior to those elections. He confirmed in a written statement that he had received the funds, which were disbursed to staff officials of Najib’s United Malays National Organization (UMNO) party, according to instructions from party leaders.

Nazir told the Journal that he believed the money was from donations that he helped raise from Malaysian corporations and individuals for the elections, and that he had no knowledge of any other source of funding.

Nazir has been speaking out on social media about his displeasure over 1MDB. In February, he said that the scandal terrified him, pointing to clues that $4 billion had gone astray, the Financial Times (FT) reported.

“I just can’t see how our institutions can recover, how our political atmosphere can become less toxic, how our international reputation can be repaired,” he wrote on Instagram, according to the FT.

US allegations

In court documents filed on Wednesday in California, the DOJ stated that it sought to seize assets allegedly purchased with laundered 1MDB money, including penthouses, mansions, artwork and a private jet. The suits also claim that money was used to pay off gambling debts; and by Najib’s stepson, Riza Aziz, to establish Red Granite Pictures, a company that produced the Hollywood movie “The Wolf of Wall Street.”

On Thursday, authorities in two other countries moved to seize more assets tied to 1MDB.

Singaporean authorities announced that that they had seized assets totaling $240 million (U.S. $177 million) – of which $120 million (U.S. $88.5 million) was from Najib’s ally Low Taek Jho, who was listed in the U.S. complaint documents, and his immediate family. Separately, Swiss authorities announced that they had seized a drawing by Van Gogh valued at $5.4 million, and two paintings by Monet valued at $92.5 million.

‘Can’t escape responsibility’

In its editorial, the Wall Street Journal took aim at the prime minister, who had started the state-backed fund with a mission of spurring development in his country.

“Mr. Najib can’t escape responsibility if it is proved that national wealth held by 1MDB disappeared on his watch. He launched 1MDB in 2009, served as chairman of the advisory board, and oversaw it as prime minister and, concurrently, finance minister.”

The paper also had a message for politicians serving under Najib.

“… UMNO politicians should be having second thoughts. Mr. Obama is a short-timer, and the U.S. lawsuit makes clear that Mr. Najib’s position as a moderate Muslim ally won’t shield him or Malaysia from legal actions. The 1MDB losses will eventually catch up with him and his allies,” the editorial posted Thursday night said.

“The longer UMNO waits to disavow Mr. Najib, the more likely the opposition is to regroup by the time the 1MDB fallout hits. Former Deputy Prime Minister Muhyiddin Yassin is publicly mulling the formation of a new, cleaner version of UMNO. That could be the chance for reform-minded members of the ruling party to step off Mr. Najib’s sinking ship,” the editorial went on to say.

At the White House on Thursday, spokesman Josh Earnest said Obama did not influence the DOJ’s lawsuits, but that the president had spoken to Najib about the need for good governance during a visit to Malaysia in November.

“… The president reiterated how important it is, particularly for a fast-growing country like Malaysia, to be transparent, to demonstrate a commitment to fair play and good government and a business climate that will allow that country's economy to continue to succeed.  And for business interests who are considering doing business in Malaysia, they’re going to be looking for signs that there’s a good business climate in Malaysia,” Earnest said during a White House press briefing.

“But ultimately it will be the responsibility of the Malaysian government to address the concerns that have been raised, and that’s something that the president has been saying, dating back to his visit to Malaysia last year.”