Malaysian Ex-PM Faces Bankruptcy over Allegations of $421M in Unpaid Taxes, Penalties

S. Adie Zul and Hadi Azmi
Kuala Lumpur
2021-04-07
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Malaysian Ex-PM Faces Bankruptcy over Allegations of $421M in Unpaid Taxes, Penalties Former Prime Minister Najib Razak arrives at the Palace of Justice in Putrajaya, Malaysia, for an appeal hearing on his 2020 conviction on money laundering and other charges tied to a subsidiary of state fund 1MDB, April 6, 2021.
S. Mahfuz/BenarNews

Disgraced former Malaysian Prime Minister Najib Razak faces bankruptcy for allegedly failing to pay U.S. $421 million in taxes and penalties, which could end his political career.

Najib said late Tuesday that the country’s tax board served him a bankruptcy notice allegedly for unpaid personal income taxes from 2011 to 2017, in retaliation for his political party deciding to break up with the ruling coalition in the next general election.

“What are the consequences of this bankruptcy notice? I will be losing status as the Pekan Member of Parliament and a by-election would be held,” Najib said in a Facebook post.

He was referring to a rule that strips a person of their parliamentary seat and bars him or her from contesting elections if declared bankrupt.

“I will no longer be eligible to run for party elections and general elections, I will lose all my savings accumulated through my years of service in the government, which I am depending on to support my life and to pay my lawyers.”

Malaysia’s Inland Revenue Board (IRB) served Najib the bankruptcy notice on Monday. The case is scheduled to be heard May 5.

Najib is a former president of the United Malays National Organization (UMNO), which holds the most parliamentary seats in the Perikatan Nasional (PN) coalition government led by Prime Minister Muhyiddin Yassin.

The former PM alleged that the notice was related to UMNO’s decision last month to not ally itself with Muhyiddin’s coalition in the next general election.

“UMNO[’s] decision not to cooperate with PPBM/PN during GE15,” he claimed was one of the reasons he received the notice. PPBM refers to Muhyiddin’s party Bersatu and GE15 stands for the 15th general election.

BenarNews contacted IRB and Muhyiddin’s office for comment, but no one from either office returned calls.

Najib got the bankruptcy notice on the day that he began appealing his July 2020 Kuala Lumpur High Court conviction on charges tied to the looting of billions of dollars from state fund 1MDB that led to his government’s ouster almost three years ago.

He was sentenced to 12 years in prison and fined 210 million ringgit ($51 million), in the case related to SRC International, a subsidiary of sovereign wealth fund 1Malaysia Development Berhad.

“Perhaps the move to issue the bankruptcy notice on the first day of my appeal case hearing is meant to rub salt on the injustice injury that still bleeds, or simply to humiliate me,” he said.

“I will use all of my capabilities to come up with the best appeal alongside my lawyers, to help the wise judges make a decision that is based on truth.”

Najib said the personal income tax the IRB was claiming was on 3 billion ringgit ($726.1 million) he had received in “donations” in his personal account.

Political analyst Azmi Hassan said Najib’s tax bill would be difficult to pay for any person.

“I don’t think Najib could ever afford to pay a 1.7 billion ringgit tax return,” Azmi, an academic at Universiti Teknologi Malaysia, told BenarNews

The bankruptcy notice is an option that the IRB has and they have used it, hoping to recoup some of the money, given that Najib has challenged the IRB in court over the tax bill, Azmi said.

If Najib is declared bankrupt it would be a huge blow to the former PM’s political career, Azmi

“Najib would be stripped of his seat in parliament and as someone found bankrupt, he would be ineligible to stand as a candidate in the general election,” Azmi said.

Conviction appeal

Separately, in the appeal of his SRC conviction, Najib’s defense team told the Court of Appeal on Monday that the High Court judge who oversaw the trial was inexperienced in criminal cases, leading to a situation where Najib did not receive a fair trial.

On Wednesday, Najib defense lawyer Harvinderjit Singh blamed fugitive financier Low Taek Jho, better known as Jho Low, for manipulating the distribution of funds from 1MDB subsidiary SRC International.

Singh argued that Low used an SRC senior official and bank official to move funds into Najib’s account.

The subject of an international manhunt, Low faces criminal charges in Malaysia for his role in allegedly embezzling billions of dollars from 1MDB as Najib’s financial adviser.

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