KUALA LUMPUR: It is the day many Malaysians have been waiting for - when Najib Razak, once the country’s most powerful man, will give his statement to authorities over his alleged role in a multi billion-dollar corruption scandal.
At 10am on Tuesday (May 22), the former prime minister is expected to arrive at the Malaysian Anti-Corruption Commission's (MACC) headquarters to give a statement, as the probe into debt-ridden state development fund 1Malaysia Development Berhad (1MDB) gathers pace.
It is one of the biggest financial scandals in Malaysian history. According to the audit report on 1MDB, declassified last week by the Auditor-General, an estimated RM42.26 billion (US$10.6 billion) is required to settle its loans and interest between November 2015 and May 2039.
The calculation was based on assumptions that 1MDB’s rationalisation plan would be implemented and no new loan was to be made after October 2015.
To repay the loans, the report said 1MDB needs at least US$382 million every year between November 2015 and May 2024.
THE SCANDAL BREAKS
The 1MDB scandal captured global attention three years ago.
In a major exposé, The Wall Street Journal (WSJ) reported on Jul 2, 2015 that Malaysian investigators had traced nearly US$700 million of deposits into what they suspected were personal bank accounts belonging to Najib.
The then prime minister, who was also serving as finance minister, founded 1MDB shortly after securing his premiership in 2009. For seven years, he chaired its advisory board and had control over all its investment decisions.
In its July report, WSJ cited documents from a government investigation that allegedly identified the money trail to Najib’s accounts - through governmental agencies, banks and companies linked to 1MDB.
“The original source of the money is unclear, and the government investigation doesn’t detail what happened to the money that went into Mr Najib’s personal accounts,” the newspaper said.
Following the report, Najib faced mounting pressure from the public to step down. Dissatisfaction also grew within his ruling party, the United Malays National Organisation (UMNO), which he presided.
In less than a month after the scandal broke, two of his cabinet ministers were removed in a reshuffle widely seen as a tactic to silence those who questioned him.
They were his Deputy Prime Minister Muhyiddin Yassin and Rural and Regional Development Minister Shafie Apdal. Both had criticised his government's handling of the 1MDB investigation.
Besides the two, Najib also sacked then Attorney-General Abdul Gani Patail, who was leading a special task force of the Central Bank, police and anti-corruption officials in the 1MBD probe. He was replaced by Mohamad Apandi Ali, an ex-federal court judge with strong ties to UMNO. His appointment soon brought an abrupt end to the task force.
Financial irregularities surrounding 1MDB are believed to have begun in the same year the fund was created.
In September 2009, the Malaysian state fund entered aUS$2.5 billion joint venture with a private Saudi oil company, PetroSaudi International (PSI).
1MDB’s board of directors and Malaysia’s Central Bank then approved the transfer of US$1 billion – borrowed public money – to the joint venture. Its partner PSI also injected assets valued at US$1.5 billion.
However, the US Department of Justice (DOJ), which is investigating the financial scandal, reported US$700 million of 1MDB’s US$1 billion transfer was diverted to a Swiss bank account named Good Star Limited by Jho Low – a close friend of Najib’s stepson Riza Aziz.
Between 2009 and 2011, the US investigation revealed that more than US$1 billion was misappropriated from 1MDB to Good Star Limited.
“The Good Star Account was beneficially owned not by PetroSaudi or the joint venture, but by Low Taek Jho, aka Jho Low, a Malaysian national who had no formal position with 1MDB but who was involved in its creation and exercised significant control over its dealings,” the department said.
In 2011, it added, about US$330 million in additional funds were wired to the Good Star account “purportedly in connection with a financing agreement” between 1MDB and the 1MDB-PetroSaudi joint venture.
MALAYSIAN OFFICIAL 1
Based on DOJ's probe, the misappropriation of 1MDB took place in multiple phases over the course of several years. It involves various people, including Najib, whom US investigators refer to as Malaysian Official 1.
Malaysian Official 1 is described as "a high-ranking official in the Malaysian government who also held a position of authority with 1MDB" and whose approval was required for any financial commitments by 1MDB.
Through an intermediary, the DOJ's reported, funds embezzled from 1MDB were wired to Malaysian Official 1.
Fast forward to January 2016, Malaysia's new attorney-general Apandi claimed his investigation into the troubled state fund had concluded that the nearly US$700 million in Najib's back accounts was a personal donation from the Saudi royal family.
The then prime minister welcomed the conclusion of what he described as "a thorough investigation".
"He has confirmed what I have maintained all along: that no crime was committed," Najib said in a statement on Jan 26, 2016.
"This issue has been an unnecessary distraction for the country. Now that the matter has been comprehensively put to rest, it is time for us to unite and move on."
Meanwhile, Jho Low is believed to have been living overseas over the past two years. His assets - ranging from art work to luxury yacht Equanimity, a private jet, film rights and a luxury real estate in the United States - were allegedly obtained with hundreds of millions of dollars from the troubled state fund, according to the DOJ.
1MDB PROBE REOPENED
Besides the huge amount of money involved, the 1MDB case has also captured public attention because it is being handled by a new government under Najib’s mentor-turned-rival, Prime Minister Mahathir Mohamad.
Since taking power, he has not only reopened and speeded up the graft probe, but also made it clear that he will not strike a deal with Najib in exchange for the return of monies that were allegedly misappropriated.
On Monday, the new administration formed a special task force to investigate 1MDB-related matters.
The body is expected to identify and seize assets allegedly acquired with misappropriated funds. According to the Prime Minister's Office, it will also seek cooperation from various enforcement agencies in the United States, Canada, Singapore, Switzerland and other countries involved.
The task force is helmed by high-profile officials previously pressured or removed from power by Najib’s government during the original 1MDB probe in 2015-2016.
They include: Former Attorney-General Abdul Gani Patail, former Special Branch deputy director Abdul Hamid Bador, former MACC chief commissioner Abu Kassim Mohamed and current MACC chief commissioner Mohd Shukri Abdull.
The reopened investigation has progressed swiftly since Najib’s coalition Barisan Nasional (BN) was crushed in a historic general election on May 9.
HANDBAGS, JEWELLERY, CASH
Acting on Mahathir's instructions, Malaysia's immigration department moved to blacklist key profiles related to 1MDB from leaving the country. They include Najib, his wife Rosmah Mansor, former 1MDB chief executive officers Ismee Ismail and Shahrol Halmi, and its current CEO Arul Kanda Kandasamy, among others.
As the probe continues, police have raided properties linked to Najib and seized truckloads of items that might have been obtained with 1MDB funds. Confiscated objects include 284 boxes of designer handbags – some worth up to hundreds of thousands of dollars each – 72 bags stuffed with cash, jewellery and luxury watches.
In his speech to Pekan supporters on Sunday, Najib criticised the government’s handling of the investigation. He claimed his children’s wedding gifts and baby shoes had been seized without reason and mentioned a campaign of “slander and hatred” against him.
“What is the relation between 1MDB and children's shoes? What is the relation between wedding gifts and 1MDB?” said the 64-year-old Pekan MP, who stepped down as BN chairman and United Malays National Organisation (UMNO) president shortly after the coalition's election defeat.
Tuesday is likely to be eventful. Besides recording Najib’s statement, the MACC is also due to hold a media briefing at 11am, where its newly appointed chief commissioner Mohd Shukri is expected to share “interesting stories”with journalists.
At 5pm, UMNO's supreme council also plans to hold a press conference at its headquarters in Kuala Lumpur.
Nobody besides members of the MACC and Prime Minister Mahathir’s government know for sure what will happen to Najib when he turns up in Putrajaya. But it will not be long before the world finds out.