Malaysia PM under scrutiny over wealth, opposition crackdown

  • AFP, Kuala Lumpur
  • Updated: Feb 15, 2015 10:47 IST

Malaysia's premier is under mounting scrutiny for cracking down on opponents, troubles in a sovereign wealth fund and questions over his family assets, with even ruling-party conservatives questioning his leadership.

Prime Minister Najib Razak, 61, took the helm of the multi-ethnic country's long-ruling regime in 2009, promising to soothe racial tensions and bolster democracy.

But he is under fire from progressives for abandoning such pledges and from ruling-party hardliners over 1MDB -- a sovereign wealth fund he launched which is believed to be in a precarious state.

"People are beginning to doubt whether he is the sort of leader who can address Malaysia's problems," said Wan Saiful Wan Jan, head of Malaysian think-tank IDEAS.

Malaysia also drew international criticism after opposition leader Anwar Ibrahim was jailed for five years last week on a sodomy conviction widely considered politically motivated, the latest in a crackdown on Najib's opponents.

1MDB, meanwhile, has missed repeated deadlines to pay down billions of dollars in debts, with questions swirling around the whereabouts of huge sums.

1MDB said a $560 million loan payment was finally made last week, after a Malaysian billionaire was reportedly drafted in to stump up the cash.

Also last week, a New York Times investigative report detailed multi-million-dollar purchases of luxury US real estate by a close Najib family associate and 1MDB figure, financier Low Taek Jho.

It also said documents showed millions of dollars in earlier jewellery purchases for Rosmah Mansor, Najib's wife, who is widely ridiculed in Malaysia for her luxurious tastes.

In a statement to AFP, Najib's office said the report raised "false allegations".

"The prime minister does not have, nor has he ever had, a financial interest in, or any sort of agreement related to, the properties mentioned in the article," it said.

It added that "no purchases by the prime minister or his family involved funds from 1MDB".

'Something rotten' in Malaysia

But Malaysia's opposition and other government critics, who allege decades of widespread government graft, have called for Najib to detail the sources of his wealth and for an independent audit of 1MDB.

The government is yet to respond to such calls.

Fears that the fund could collapse and rattle Malaysia's financial system have exacerbated economic unease in the energy-exporting country.

Sagging oil prices have dragged the ringgit currency to six-year lows and are expected to crimp economic growth this year while the government struggles to contain a troubling deficit.

Most experts expect the economy to avoid serious harm.

Leading criticisms of 1MDB is Mahathir Mohamad, who was premier from 1981-2003 and still casts a long shadow at 89.

That is potentially worrisome for Najib -- Mahathir engineered the ouster of his own chosen successor, installing Najib.

Mahathir wrote on his widely read blog last week that "there is something rotten" in Malaysia, and on Thursday suggested Najib should resign.

"The country is currently facing a lot of problems but the government is not admitting it. They are in denial," he said.

Political observers say such pressure is part of a battle for influence and spoils in the ruling United Malays National Organisation (UMNO), pitting Najib against forces seeking to take the country even further to the right.

"The danger for Najib on 1MDB is that people in his own party realise the magnitude of money going around, and that the cake is not being shared equally," said Rafizi Ramli, the opposition's leading graft whistle-blower.

Analysts say Najib appears secure for now. No other UMNO figures are seen rivalling him, the son of a Malaysian founding father.

A history of scandal

A British-educated Anglophile known for his impeccable, high-priced suits, Najib has proven his ability to survive scandal, with the help of UMNO's firm grip after 58 years in power.

These include widely alleged multi-million-dollar kickbacks to Malaysian officials in the 2002 purchase of French-made submarines when Najib was defence minister.

The government has long resisted a full inquiry into the affair.

But UMNO is increasingly being rejected by voters, fed up with corruption and authoritarianism.

Najib's government has responded by hurling sedition and other charges at dozens of critics, mainly opposition politicians.

Meanwhile, Najib has tolerated divisive racial and religious rhetoric by Islamists, which analysts view as a bid by UMNO, a Muslim party, to sow sectarian fears and justify its crackdown.

Wan Saiful said Najib intended to bring in reforms but misjudged resistance in UMNO, and is now in full retreat from conservatives seeking a tougher hand on dissent and strengthening of policies favouring majority ethnic Malays that many experts say shackle the economy.

Wan Saiful warned that if ethnic divisions in particular were not checked, it could "generate a vicious cycle" of racial enmity, scaring off foreign investment and sending Malaysian money abroad.

Najib's office defended his record but added "he believes there is still more work to do, and his efforts are on-going," while blaming unspecified opponents for spinning "baseless smears and rumours for pure political gain."

Najib's government and national carrier Malaysia Airlines also remain under fire from relatives of flight MH370 passengers over the plane's still unexplained disappearance last year with 239 people aboard, with many alleging a cover-up.

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