Malaysia’s Arch-Kleptocrat is Found Guilty

Malaysia’s former prime minister Najib Razak was found guilty in the first of 5 trials he faces for his multibillion-dollar looting of Malaysia’s 1MBD development fund. This particular trial concerned US$14m of funds deposited in Najib’s personal accounts from a unit of 1MDB.

In all, it is alleged that US $4.5 bn was stolen from the fund by Najib and his associates, with more than $US1bn ending up in Najib’s personal accounts. This in a country where 40% live on less than US$2.50 a day.

The court sentenced Najib to serve up to 12 years in prison after finding him guilty of crimes that brought down his government in a surprise election defeat 2 years ago.

Najib’s sentence involved 1 count of abuse of power, 10 years each for 3 counts of criminal breach of trust, and 10 years each for 3 counts of money laundering, as well as a fine of US$48.4m. The judge ordered the sentences to run concurrently, so Najib will face up to 12 years in jail.

The ruling in this trial came 5 months after the ethnic Malay party previously led by Najib returned to power as the largest bloc in an alliance that replaced the Mahathir Mohammed government which had ousted Najib in 2018.

Mahathir had initiated an investigation into Najib’s 1MDB dealings and his subsequent prosecution.

In his final statement, Najib spoke of his achievements during his 9-year tenure as prime minister and swore in Arabic with Allah as his witness that he wasn’t aware of the money channeled into his bank accounts from a unit of 1MDB.

Najib said: “I did not demand the 42 million [in Malaysian ringgit], I did not plan for the 42 million, nor was the 42 million offered to me. There has been no evidence nor witness to this. And I also like to say that I have no knowledge of the 42 million”. He said he was misled by rogue bankers and the case against him was political.

The judge, Mohamad Nazlan Mohamad Ghazali, agreed with the prosecution that Najib had “overarching control” of 1MBD, that he did not refute the prosecution’s charges against him, and that the prosecution had established beyond reasonable doubt that Najib misappropriated funds for his own use.

Najib’s lawyers argued he was misled by Malaysian financier Jho Low (now a fugitive in China) and other 1MDB officials into believing that the funds banked into his accounts were donated by the Saudi royal family, rather than embezzled from 1MBD, as prosecutors alleged. The judge said in his decision it was “far-fetched” to believe Najib could have been misled by Low.

The judge said the sentence was “appropriate and proportionate” taking into consideration that Najib had committed his crimes from a “position of trust” as prime minister, as well as the need to deter others from committing similar crimes.

The prosecution said the case had risked showing Malaysia to be a kleptocracy and requested a sentence sufficient to remind those in high office that “no one is above the law”.

Najib’s lawyers had argued for a light sentence. In an obvious legal ploy aimed at a future appeal, they said their case was “crippled” by the judge’s refusal to delay their sentencing arguments.

Najib’s lawyers immediately sought a stay of execution of the sentence. Najib will remain free while he challenges the judge’s decision.

It should however be remembered that Najib’s political party remains in office, as part of an alliance led by the current prime minister Muhyiddin Yassin. Najib, though out of power, retains clout in his party through family networks going back to Malaysia’s independence from Britain in 1957, beginning with his father (who was Malaysia’s second prime minister).

Malaysia’s judiciary has been stacked by the ethnic Malay ruling party for decades (the 2-year rule of Mahathir Mohamad’s coalition possibly being the sole exception, though Mahathir himself stacked the judiciary in his previous term as Malaysia’s longest serving prime minister), and the decision of the independent-minded judge could be overturned upon appeal.

For now, Najib is disqualified from being a candidate in any election. To be eligible for any such candidacy he would need to win his appeal, a possibility that cannot be ruled out.

Commentators say the verdict is likely to lend weight to the prosecution’s case in Najib’s remaining trials and would show clearly that Malaysia’s legal system is sufficiently robust and independent to take on crimes of this magnitude.

However, the deeper repercussions of this verdict are a little uncertain.

Prime minister Muhyiddin’s credibility in international circles, and also locally, could be enhanced by properly conducted legal proceedings against Najib.

At the same time, Muhyiddin’s rickety coalition– made up of Malay-centric parties and rural Islamic hardliners, with Najib’s United Malays National Organisation (UMNO) as its biggest cog— could fall apart and trigger a snap election.

The coalition has a bare majority in parliament, and is struggling to deal with the Covid pandemic and record unemployment. It hardly has a mandate to act in any significant way, and some say fresh elections are needed to break this impasse.

Waiting in the wings should there be new elections will be the multiracial, secular party led by the former deputy prime minister Anwar Ibrahim, which is now the main parliamentary opposition to Muhyiddin’s ruling coalition.

Anwar has had a tumultuous political past.

When Mahathir was prime minister between 1981 and 2003, Anwar served as deputy prime minister, and was being groomed by Mahathir to be his successor. They fell-out over the handling of the 1997 Asian financial crisis, with Anwar supporting deflationary measures advocated by the IMF and World Bank, and Mahathir opposing the recommended austerity.

Mahathir had Anwar put behind bars on corruption and sodomy charges that many regarded as bogus.

Once out of jail in 2005 Anwar blew the whistle on the goings-on at 1MDB. This time it was Najib’s turn to throw him in jail in 2015 under yet another set of trumped-up charges.

Mahathir Mohamad left UMNO when the IMDB scandal broke, and formed his own party, which became a component in the Pakatan Harapan coalition. In his determination to oust Najib, Mahathir reconciled with Anwar, and formed an alliance with him.

Mahathir agreed that if he won the 2018 election with Anwar’s support, he would have him pardoned and released from jail, and then make way for him to become prime minister in 2 years.

The 93-year-old Mahathir led his coalition to a shock victory in 2018, giving Malaysia its first opposition government since independence. Anwar’s wife, Wan Azizah, became Mahathir’s deputy.

Anwar was pardoned and released from prison, but before there was a chance for Mahathir to honour his agreement with Anwar, Mahathir resigned as prime minister earlier this year. There had been a faction in Mahathir’s coalition wanting it broadened to include a post-Najib UMNO, but Mahathir resigned rather than work with the latter. Malaysia’s king then asked Muhyiddin Yassin to form the government that is now in power.

Should a snap election be called, it is likely that Anwar will at last become prime minister.

The court’s decision comes just days after Malaysia reached a $3.9 billion deal with Goldman Sachs over its role in helping 1MDB raise funds, proving yet again that Goldman Sachs functions as the equivalent of crime syndicate.

The financial reporter Matt Taibbi once referred to Goldman as “a great vampire squid wrapped around the face of humanity, relentlessly jamming its blood funnel into anything that smells like money”. Taibbi’s words are borne out by Goldman’s RAP sheet over the last 20 years or so– it includes at least 33 major legal actions involving violations of dozens if not hundreds of laws, costing Goldman almost $10 billion in fines and settlements.

The details regarding Goldman Sachs and its dealings with Malaysia are provided in this piece by CounterPuncher Binoy Kampmark.