Malaysian Sultans Urge Transparency on Najib-Linked Fund Probe

  • Ringgit is Asia's worst-performing currency in past year
  • 1MDB is subject of multiple probes in Malaysia and overseas

Prime Minister Najib Razak’s administration needs to complete investigations into a debt-ridden government investment company soon to help resolve a crisis in confidence in the country, the rulers of Malaysia’s 13 states said in a statement.

Findings of the probe of 1Malaysia Development Bhd. must be “reported comprehensively and in a transparent manner" to convince Malaysians there is no concealing of the truth, state news agency Bernama reported, citing the statement. The group comprises the sultans of nine states and the governors or head of state of four others.

1MDB has been the subject of overlapping investigations by entities including the central bank and the police amid allegations of financial irregularities. The Wall Street Journal reported in July that about $700 million may have moved through government agencies and companies linked to 1MDB before ending up in accounts bearing Najib’s name ahead of elections in 2013. The Malaysian Anti-Corruption Commission said the money was from donors in the Middle East, not 1MDB. Najib has denied any wrongdoing.

"The people believe, whether basing on reality or perception, that this is among the causes for the plunge in the value of the Malaysian ringgit, impacting the country’s financial market and economic climate negatively and at the same time adversely affecting the world’s view of Malaysia,” the rulers said in the statement. "The failure to give convincing clarifications and answers is feared to have resulted in a crisis of confidence."

Ringgit Decline

Some of Malaysia’s royal families claim ancestry from 16th-century monarchs. The hereditary rulers take turns providing a constitutional monarch every five years. They are subsidized by taxpayers and ex-premier Mahathir Mohamad curbed their privileges during his tenure, moving in 1993 to limit their immunity from prosecution.

Policy makers have struggled to boost economic sentiment and government finances since oil prices started slumping late last year. The ringgit is Asia’s worst-performer in the past 12 months, and had depreciated to a 17-year low. The resolution of issues related to 1MDB is among the factors that could bolster the currency, central bank Governor Zeti Akhtar Aziz said last month.

Najib chairs the advisory board of 1MDB and has resisted calls from ex-premier Mahathir to step down over the fund’s performance as it amassed about 42 billion ringgit ($9.7 billion) of debt in less than five years.

A task force probing 1MDB from the central bank, police, the anti-corruption commission and attorney general’s office has been dismantled. The commission said in August it was told by the attorney general the task force was no longer needed and each investigating party can conduct its own probe. The central bank has completed its investigations and submitted the results to the attorney general.

“The findings of the investigation must be reported comprehensively and in a transparent manner so the people will be convinced of the sincerity of the government which shall not at all conceal facts and the truth," the rulers said. "Appropriate stern action” must be taken against those implicated, Bernama said, citing the statement.