October 25, 2015

Malaysian PM under Mounting Pressure over Corruption Scandal

Yohannan Chemarapally

A POLITICAL storm has been buffeting Malaysia's prime minister, Najib Razak, for the last couple of months. A corruption scandal, whose magnitude has dwarfed previous scams, has galvanised the people in many cities, including the capital, to stage massive anti-government protests. $US700 million from the State run investment fund called the 1MDB allegedly found its way into the personal bank account of the prime minister. The story first surfaced in July this year. The Malaysian prime minister had initially threatened to sue the paper and has been saying that the attempt to discredit him is part of a bigger conspiracy to destabilise the country's economy. Various 1MDB deals, according to both opposition as well as sections of UMNO, have benefited cronies of those in power, including close relatives and friends of the prime minister. The 1MDB was set up by Najib in 2009. From the beginning it was criticised for its lack of transparency. Within a span of few years the agency had run up billions of dollars in debt. In July, the country's attorney general, Abdul Ghani Patail, revealed that investigators had handed him papers, which included documents relating to allegations of fund transfer into the personal accounts of the prime minister. The leader of the opposition Democratic Action Party in parliament, Lim Kit Siang issued a statement saying that the attorney general's revelations have lent credence to the WSJ expose on the mysterious $700 million in the prime minister's personal bank account. He said that Malaysia has never witnessed a scandal of such dimensions since it gained independence in 1957. HIGH HANDED DEALING In late July, deputy prime minister, Muhyiddin Yassin, publicly called for an investigation. “We want the truth. This is a very serious allegation that can jeopardise (Najib's) credibility and integrity as prime minister and leader of the government”, he told the Sunday Star newspaper of Malaysia. The prime minister responded by sacking his critics inside the government and those investigating the case. The deputy prime minister along with the attorney general and four other ministers were shown the door on July 28. A top police officer investigating the case was “retired' and several members of the country's anti-corruption commission sidelined. The high level inquiry they were conducting into the affairs of the 1MDB is now in deep freeze. According to the WSJ story and other media reports, part of the money that found its way into the prime minister's personal account was used to finance the 2013 election campaign of the ruling United Malay National Organisation (UMNO). The party has been in power since Malaysia gained its independence. In the 2013 elections, UMNO won a majority in parliament despite getting only 47 percent of the votes. The opposition People Alliance (PR) despite getting 51 percent of the votes could only win 89 seats in the 222 member parliament. Selective gerrymandering of constituencies aided by a cooperative Election Commission had thwarted an opposition victory. It was the first time that the opposition got the majority of the popular vote. Non-government groups representing various sectors of civil society have had for some years now been functioning under an umbrella peoples movement known as Bersih, meaning “clean” in the Malay language. Bersih's sympathies are obviously with the opposition. Bersih had staged big protests after the results of the disputed 2013 elections were announced. Bersih's aim at the time was to persuade the government to introduce meaningful reforms so that the will of the people would be reflected in future elections. The authorities have been high handed while generally dealing with protests in the country. Two newspapers that have covered the corruption scandal extensively have been shut down. Top government officials have also talked about putting curbs on the social media. Since 2013, the government has been cracking down in selective ways against the opposition. Anwar Ibrahim, the leader of the opposition coalition, has been again sent to jail on charges of alleged sodomy. Many Malaysians, including human rights organisations believe that the charges against Anwar are trumped up ones. Archaic laws inherited from the colonial rulers, including those relating to sedition, are still on the books in Malaysia. The ruling party has been successful this year in weaning away some conservative Malay parties from the opposition. UMNO leaders have been supporting calls in some opposition ruled states for the imposition of Sharia laws. The opposition Peoples Alliance which almost toppled UMNO in 2013 has now split. One of its main components, the Islamist leaning PAS, announced in mid-June that it could no longer work with the ethnic Chinese dominated DAP. PAS, DAP and Keadilan led by Anwar Ibrahim were the three major constituents of the opposition alliance. The government on its part has given up its half hearted efforts to provide a level playing field for all Malaysians, regardless of their ethnicity. Under Malaysia's “Bumiputra” policy, Malays who constitute the majority of the population, are given preferential treatment in the education and business sectors. The Bumiputra policies were put in place in the 1970's. But the scandal of the 1MDB funds allegedly finding its way into the personal bank account of the prime minister, has once again energised civil society groups and the opposition. The 1MDB is at present finding it tough to finance debts totaling $11 billion and is under investigation in Switzerland for its allegedly underhand dealings. There are stories floating around in the media that Swiss banks were used as a conduit to siphon off money from the 1MDB. In the first week of September, Swiss authorities announced that they were “investigating” two senior executives of the 1MDB along with other persons “unknown” over a series of offenses, including money laundering, corruption of foreign officials and “suspected misconduct in office”. Ordinary Malays have joined their fellow citizens of Chinese and Indian origin, in the protests that have rocked the political establishment in late August. Prime Minister Najib has been vigorously denying that the money in his account is from government funds. He and his supporters in UMNO have now come forward with the not too convincing story that the money was donated by a well wisher in a Gulf monarchy and was a legal political donation. One senior UMNO official claimed that the rich well wisher from the Gulf monarchy made the contribution as he wanted the ruling party to prevent a pro-Israeli coalition from winning the 2013 elections. HUGE STREET PROTESTS In the last week of August, Kuala Lumpur and other Malaysian cities witnessed huge street protests. Hundreds of thousands of people wearing yellow T-shirts have massed on the streets despite dire government warnings that force could be used against them. In the end, the government allowed the rally to be held despite deeming it illegal. The organisers claim that more than 200,000 people attended the rallies in the capital on August 29 and 30. Most observers agree that it was the biggest show of strength by the opposition since the 2013 protests against the “rigged” election. The police authorities had even belatedly tried to ban the wearing of yellow shirts by demonstrators. The protestors’ spirits were buoyed when the 90 year old elder statesman of Malaysian politics and of the region, Mahathir Mohammed, joined the “yellow shirts” during the two huge protest rallies in the capital. Mahathir has been an outspoken critic of the prime minister for some time now. Najib was once his protege but the two have fallen out on key policy issues. Mahathir has been particularly upset with Najib's free market policies that have seen the value of its currency decline by 24 percent against the American dollar, the lowest since the Asian financial crisis of 1997-98. Foreign investment is down by 50 percent in the first half of 2015. The slowdown of the Chinese economy has had an adverse impact on Malaysia. The country is China's biggest trading partner in Southeast Asia. Mahathir, Malaysia's longest serving prime minister is also angry with Najib's support for the Obama administration's Trans Pacific Partnership (TPP) that would make the region subservient to American trade laws and regulations. The former prime minister, as outspoken as ever, said that the only way to remove the current incumbent was by exercising “peoples power”. He said that was the only option left for people to get back to remove “this kind of corrupt leader”. The former prime minister said that though he was in principle against street protests the people had no other alternative as the government had blocked legal methods to get the prime minister to resign. Mahathir, as prime minister, had sacked Anwar Ibrahim from the deputy prime minister's post at the height of the Asian financial crisis of the late nineties for taking positions favouring the IMF and the World Bank. That Mahathir had a strong authoritarian streak is well known but many also acknowledge that he stood up to western financial institutions and in the process staved off the imminent devaluation of the Malaysian currency, the ringgit and reviving the Malaysian economy. Mahathir, especially after he left office, has been an outspoken critic of western imperialism. At the same time, it should be remembered that he was one of the key architects of the “bumiputra” policy which has been detrimental to the interests of the sizable Chinese and Indian origin citizens of the country. Prime Minister Najib strongly criticised the protests. “Those who wear this yellow attire – they want to discredit our good name, scribble black coal on Malaysia's face to the outside world”, Najib said. The Malaysian police chief has said that Mahathir would be questioned over the remarks he had made at the rally. The opposition and civil society groups plan to continue with their protests. Besides seeking the prime minister's resignation, they want the introduction of institutional reforms that will make the government transparent and accountable to the people. Transparency International has said that Malaysia is going through a “corruption crisis”. Zaid Ibrahim, a former law minister and one of Malaysia's leading legal luminaries wrote in early August that the government is “doing everything in their power to cover up mismanagement, corruption and the abuse of power”. He said that Malaysia's public institutions are in disarray and that their independence was under assault.