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article imageA year after 1MDB: Malaysian premier takes hardline turn

By Dan Martin (AFP)     Jun 26, 2016 in Politics

Giant video screens lining Malaysia's ruling-party headquarters flash towering, 40-storey images of a smiling Prime Minister Najib Razak across a corner of the capital, a glaring reminder of who's in charge.

One year after a financial scandal that would have toppled many leaders, Najib is standing taller than ever after smothering investigations, outmanoeuvering opponents, and bolstering his control with a pair of recent election wins.

But the political survival steps he has taken -- which include assuming tough new powers and flirting with an Islamist party -- are stoking fears for multi-ethnic Malaysia's already fragile democracy and sectarian relations.

"He called himself a reformist, but has changed into an aspiring dictator," said Ambiga Sreenevasan, a prominent lawyer and reform advocate.

"What changed him, clearly, is 1MDB."

Last July 2, the Wall Street Journal reported that Najib received a mysterious $681 million payment, which capped months of allegations that billions were diverted from 1MDB (1Malaysia Development Berhad), an investment fund Najib founded.

Other revelations followed, including reports that Najib's film-producer stepson used 1MDB-related funds to bankroll the Hollywood greedfest "The Wolf of Wall Street", and for millions in luxury purchases.

Last July  the WSJ reported that Najib Razak received a mysterious $681 mn payment  which capped all...
Last July, the WSJ reported that Najib Razak received a mysterious $681 mn payment, which capped allegations that billions were diverted from 1MDB
Mohd Rasfan, AFP/File

Swiss authorities say more than $4 billion may have been stolen.

Najib and 1MDB deny wrongdoing. But Najib has purged ruling-party critics, curbed investigations, and cracked down on media reporting of the affair.

With former opposition leader Anwar Ibrahim jailed since February 2015 on politically-tinged sodomy charges, Najib now towers over the country.

"Najib's critics failed to comprehend his resolve at staying in power and the lengths he is prepare to go to," said Ibrahim Suffian, head of Merdeka Center, an independent polling firm.

- 'Lurch toward dictatorship' -

The government recently pushed through a new law allowing a Najib-led council to suspend basic liberties if security is deemed threatened, which the opposition called a "lurch toward dictatorship."

Other proposals would tighten Internet controls and limit other legal protections.

"Any remnants of checks and balances are being dismantled by the PM" due to 1MDB, said Eric Paulsen, head of the legal-advocacy group Lawyers for Liberty.

Yet Najib's electoral fortunes have never looked better as general elections loom by mid-2018, aided by disarray in the once-formidable opposition following Anwar's jailing.

Najib's United Malays National Organisation (UMNO) has governed since independence in 1957 on a platform of rapid economic growth and special rights for Muslim ethnic Malays, Malaysia's majority group.

Former opposition leader Anwar Ibrahim has been jailed since February 2015 on politically-tinged sod...
Former opposition leader Anwar Ibrahim has been jailed since February 2015 on politically-tinged sodomy charges
Manan Vatsyayana, AFP/File

Aided by its deep pockets and loyal Malay support, UMNO's Barisan Nasional (National Front) ruling coalition notched landslide wins in a May state election and two June parliamentary by-elections that exposed the limits of 1MDB outrage.

"Najib's standing among Malaysians has gradually improved over the past six months as voter anger over 1MDB and (an unpopular consumption tax) dissipate," said Suffian, adding that bread-and-butter economic issues matter more.

Najib denies abusing power and recently dismissed the graft allegations as "unprecedented politically-motivated slander" by 90-year-old former premier Mahathir Mohamad, who has led calls for Najib's removal.

Najib's office did not respond to a request for comment.

But Barisan Nasional's strategy director Abdul Rahman Dahlan dismissed the allegations of 1MDB-spurred repression as "absolute rubbish."

"The opposition's problem is they are unable to convince voters they are a viable alternative," he told AFP.

"When (voters) go to the polls, it is not just about 1MDB."

- Getting away with it -

In the scandal's wake, UMNO also has intensified a dalliance with the country's conservative Muslim party, refusing to denounce its proposal for harsh sharia law in a northern state.

The sharia bid has scant hope of succeeding, and analysts said UMNO is merely playing politics to solidify Muslim support and distract from 1MDB.

But the Islamist tilt has unsettled many who view Malaysia's treasured religious moderation as under threat.

"I'm very worried," said Bob Broadfoot, head of Hong Kong-based Political and Economic Risk Consultancy.

"(Najib) is changing UMNO in ways that I fear could make it more Islamic and weaken the government’s support among non-Malays. This is going to strain racial relations much more."

Fringe Muslim elements disgusted by 1MDB may also abandon political parties and turn to extremism, he said.

A half-dozen countries including the United States have launched 1MDB-related probes, but few believe big fish will be caught, citing the carefully constructed complexity of 1MDB fund flows.

Najib "will get away with it," said Broadfoot.

But he said the allegations of fraud and embezzlement involving state-linked entities may make foreign investors think twice, at a time when Malaysia needs investment to buffer global economic headwinds.

"That's going to cost Malaysia," Broadfoot said.

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