- Personal contribution of $681 million came from royal family
- Questions remain over purpose of donation before 2013 election
Malaysian investigators closed the door on a graft investigation into Prime Minister Najib Razak, clearing him of wrongdoing over a “personal contribution” of $681 million from the Saudi Arabian royal family.
The money was transferred to Najib in early 2013 before the general election, Attorney General Mohamed Apandi Ali told reporters Tuesday, citing investigations by the anti-graft agency. Najib returned $620 million in August that year that was not utilized, Apandi said. He did not specify what the remainder of the funds was used for.
"Based on the facts and evidence as a whole, I as the public prosecutor, am satisfied that no criminal offense has been committed," Apandi said. "Today I am here to clear the prime minister."
The attorney-general’s report effectively brings to a close the various investigations into the funding imbroglio that has seen Najib face his biggest crisis in his nearly seven years in power. That’s even as questions remain about the funds and their purpose. Najib, 62, has said the money was to meet the needs of the party and the community and not a new practice, and denied taking money for personal gain.
He’s weathered a public campaign by former premier Mahathir Mohamad to get him out, with Mahathir warning their United Malays National Organisation and the broader ruling coalition risk losing the next election due by 2018 if Najib stays on. The alliance lost the popular vote for the first time in 2013 as non-Malay voters deserted it.
"Can the government move on? Yes," said Ibrahim Suffian, an analyst at the Merdeka Center for Opinion Research. “But will the allegation affect the sentiment of the voters? It depends on how the government performs over the next couple of years."
Najib is grappling with a slowing economy as government revenues are hit by falling oil prices. He’s expected to announce a revision to growth forecasts and cuts to operating expenditure on Thursday to keep the fiscal deficit for 2016 in check.
The key for Najib is how much the economic pullback impacts the lives of voters. Malaysians are faced with rising costs from transportation to food and electricity as the government removes subsidies and after the implementation of a goods and services tax last year.
"If things remain largely the same or if things continue to worsen as far as the economy is concerned, then the sentiments that will be carried over into the election will be negative," Ibrahim said.
Investors periodically dumped Malaysia’s stocks, bonds and currency last year. Foreign investors pulled 30.6 billion ringgit ($7.1 billion) from stocks and bonds in 2015 and helped send the currency to a 17-year low. The ringgit rose for a third day Tuesday, while the benchmark stock index closed little changed.
“Once a leader has these kinds of negative perception, it affects investor confidence as a whole on concern of how the country is being run,” said Danny Wong Teck Meng, chief executive officer of Kuala Lumpur-based Areca Capital Sdn., which manages about $224 million in assets. “It would be hard to change this negative perception. Fund managers in the U.S. and Europe will not put Malaysia as attractive as peers after considering political factors.”
Apandi on Tuesday also cleared Najib of wrongdoing in accepting unspecified funds from SRC International, a company that was linked to debt-ridden state investment company 1Malaysia Development Bhd. 1MDB has been the subject of overlapping investigations amid allegations of financial irregularities, although an initial Auditor General’s report didn’t reveal any suspicious activity.
Apandi’s office was part of a task force investigating 1MDB that included the police, the anti-corruption commission and the central bank. The government in July installed
former Federal Court judge Apandi after then-Attorney General Abdul Gani Patail was replaced.
There is no evidence that Najib knew that money from SRC was transferred into his personal accounts, Apandi said. He declined to say if others faced charges over the matter.
Najib chairs the advisory board of 1MDB, which amassed about 42 billion ringgit of borrowings in fewer than five years.
"The prime minister and attorney general need to know that citizens will be the judge at the next elections," according to a Twitter post from the account of jailed opposition leader Anwar Ibrahim. Anwar is in prison for sodomy, a charge he denies.