Malaysia’s prime minister has a problem: He cannot explain away a US$700 million bank account to a skeptical public.
His response? A crackdown on critics and the press that has kept him in power, but does not address a deep reservoir of dissatisfaction with his leadership.
Less than a month after leaked documents suggested that US$700 million from entities linked to debt-ridden state investment fund 1MDB was funneled into Malaysian Prime Minister Najib Razak’s accounts, he has expelled critics in his government, sacked the attorney-general probing him, suspended two newspapers, blocked a UK-based Web site and stalled investigations over the scandal.
It is the first time a Malaysian leader has faced criminal allegations, and news of possible graft at the top level has gripped the country. It is also the biggest political crisis for Najib since he took power in 2009. Concerns over 1MDB also contributed to the Malaysian currency plunging to a 17-year low beyond 4 ringgit to the US dollar on Wednesday.
“Malaysia’s leader is still facing a legitimacy crisis with declining domestic support,” said Bridget Welsh, senior research associate at the Center for East Asia Democratic Studies at the National Taiwan University.
The message being sent is that Najib’s leadership is moving further toward a hardline trajectory, she said.
“History shows that crackdowns, arrests and threats backfire, and are at best temporary measures that fail to address the underlying demands for a better Malaysia,” she said.
A nation of 30 million, Malaysia is predominantly Malay Muslim with significant Chinese and Indian minorities. It is one of the region’s lynchpin economies, with ambitions to rise from middle income status to developed nation level this decade. Najib’s increasing authoritarianism is a setback for the hopes of many Malaysians that their country was slowly embracing elements of liberal democracy.
In a new twist last week, the anti-graft agency said the money was donations from the Middle East, and unrelated to 1MDB.
Najib, who insists he has never used government funds for personal gain, then said he received the money on behalf of his ruling United Malays National Organization (UMNO), with much of it going toward “social responsibility” programs.
While the explanation has seemingly cleared Najib of corruption claims, it did not mollify critics nor improve his public image. On the contrary, it raised new questions over who in the Middle East would donate such a huge sum and whether it came with conditions. It also did not answer the mystery over why it landed in Najib’s accounts.
Electoral reform group Bersih is planning mass rallies at the end of this month, on the weekend of Malaysia’s Independence Day, to demand Najib’s resignation, but police have warned of a crackdown.
Najib has also indicated he may crack the whip further, saying recently that laws regulating Internet content need to be tightened to prevent “trial by the social media” against the government.
The scandal started with investigations into 1MDB, which was set up in 2009 by Najib to develop new industries. However, in just six years, it amassed 42 billion ringgit (US$10.32 billion) in debt after its energy ventures abroad faltered. Critics have long voiced concern over its massive debt and lack of transparency. Najib still chairs its advisory board.
Meanwhile, police have gone on a witchhunt to determine who leaked the documents showing transfers to Najib’s accounts. Police have questioned nine members of the anti-graft agency, seven central bank officials and have said they may also question central bank Governor Zeti Akhtar Aziz.
Despite the crisis, Najib has strengthened his footing in UMNO and taken full control of the government by placing loyalists in key positions.
“In Malay political culture, a strong leader is feared and admired, and that’s how Najib is selling himself, as a strongman,” said James Chin, who heads the Asia Institute in Australia’s University of Tasmania.
Najib’s own brother, Nazir Razak, who heads Malaysia’s second-largest banking group CIMB, has also echoed concerns over the country’s future.
In an Instagram post last month, Nazir said “in this darkest hour of political times, we must remember to place the country and the [people] first. Not personal interests, not personal loyalties, not even party politics.”
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