Malaysian Financial Scandal Fuels Political, Market Uncertainty

By BenarNews Staff
150706-MY-najib-620 Malaysian Prime Minister Najib Razak offers a prayer during an Iftar gathering at a mosque near Kuala Lumpur, July 5, 2015.

A report linking Malaysian Prime Minister Najib Razak to a financial scandal has created political and market uncertainty, as the authorities refuse to respond directly to charges that hundreds of millions of dollars were wired into his personal bank accounts, reports say.

The U.S.-based Wall Street Journal last week reported that investigations into the affairs of 1Malaysia Development Berhad (1MDB), an indebted state fund, had shown that nearly U.S. $700 million (2.66 billion ringgit) was deposited into Najib's accounts.

The prime minister moved swiftly to deny the claims, calling it "political sabotage.” But Bank Negara, Malaysia's central bank, and a domestic private bank where allegedly Najib has his accounts have yet to clear the air over the report.

Malaysia's main opposition parties, meanwhile, have demanded an emergency sitting of parliament to discuss the charges, and Najib's deputy has even called for a probe.

"We want the truth," Deputy Prime Minister Muhyiddin Yassin said, according to the Sunday Star newspaper.

"This is a very serious allegation that can jeopardize his credibility and integrity as prime minister and leader of the government," said Muhyiddin, the second-most-powerful member of the United

Malays National Organization (UMNO), the pillar of the ruling National Front coalition.

Amid the uncertainty Malaysia's currency, the ringgit, plunged to a 16-year low on Monday. One American dollar fetched 3.808 ringgit, compared with 3.777 before the weekend, the ringgit’s weakest level in more than 16 years.

Malaysian stocks were also down 1.3 percent amid a flurry of bearish reports on the financial scandal and the saga around Greek debt negotiations.

Ooi Chin Hock, a dealer with M&A Securities, told Agence France-Presse in Kuala Lumpur that the cloud over the prime minister and his failure to respond specifically to the allegations were driving uncertainty.

"Weak oil and commodities prices, along with an unexpected slowdown in exports of Southeast Asia's third largest economy, is also putting strain on the ringgit," he told AFP.

"Investors' confidence has been shattered. Unless we settle the political issue involving Najib and 1MDB, the ringgit could slide lower."

A crisis of huge magnitude: Opposition leader

The Wall Street Journal (WSJ) report alleged that Najib had received up to U.S. $700 million in various personal accounts held at AmBank – Malaysia's fifth-biggest bank by assets – between March 2013 and February 2015.

"There has been no clear statement from Bank Negara Malaysia or even AmBank ... and this brings about confusion among the public," UMNO lawmaker Reezal Merican said in a statement, according to the Straits Times in Singapore.

It said that Bank Negara, a well-regarded regulator in international banking circles, would normally be alerted to large transfers in domestic accounts, especially ones such as the alleged deposit via a Singapore-based Swiss bank of U.S. $620 million (2.36 billion ringgit) in March 2013.

At the weekend, Malaysian Attorney-General Abdul Gani Patail said he had received documents from a task force investigating 1MDB, which were "connected to allegations" that money was transferred into the prime minister's account, Reuters news agency reported.

He said the task force had raided offices of three companies linked to the state investor, but he gave no more details about the nature or contents of the documents and did not specify what further action he had advised the task force to take.

"With the attorney-general's confirmation, the WSJ allegation against Najib has assumed an even more serious character and import, sparking a political and government crisis of the first magnitude never seen in Malaysia's 58-year history," Lim Kit Siang, the opposition Democratic Action Party's (DAP) parliamentary leader, said in a statement.

‘I did not betray the people’

1MDB has said it had never provided any funds to Najib, who has persistently denied any wrong doing.

Both Najib and 1MDB have also said that previous leaked documents had "reportedly" been tampered with, and that the documents cited by the WSJ had not been verified.

On Monday, Najib advised Malaysians to remain calm.

"I did not betray the people. I will find ways to uphold the truth, be calm, and the truth will prevail," he was quoted saying after opening a school in Terengganu state.

Najib has denied taking any money for personal gains, saying that he would consult with his lawyers to decide his next course of action on the "malicious accusations" against him.


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