Malaysia Sets Strict Limits to View State Fund Audit Report

  • Najib has faced pressure to step down over funding scandals
  • Switzerland, Singapore are among countries probing 1MDB

A long-awaited audit report on a troubled Malaysian state investment company has been classified secret, with lawmakers banned from taking copies outside parliament amid political tensions in the country over financial scandals.

The Auditor General’s report on 1Malaysia Development Bhd. has been categorized under the Official Secrets Act by the National Security Council, according to Tony Pua, a member of the parliamentary Public Accounts Committee investigating the company. 

At a PAC hearing Friday, those present were required to sign a form that acknowledged they were aware of the report’s secrecy, and weren’t allowed to bring it outside the parliament, said Pua of the opposition Democratic Action Party. The committee has 14 members of which 9 are government lawmakers.

Debt-ridden 1MDB has been the subject of investigations by local agencies including the central bank, as well as countries such as Switzerland and Singapore amid allegations of financial irregularities. An interim report from the Auditor General’s Office last year did not find any suspicious activity, while the attorney general dismissed the central bank’s request to start criminal proceedings against the company.

Delayed Report

The submission of the final audit report to the PAC had previously been delayed. Prime Minister Najib Razak chairs 1MDB’s advisory board. The auditor general classified the final report under the Secrets Act after some of the interim one became public, the Malaysian Insider reported, quoting PAC chairman Hasan Arifin.

Financial woes at the company, which included almost defaulting on a loan, led it last year to announce plans to wind down much of its business. It agreed to sell its power assets to China General Nuclear Power Corp. for 9.83 billion ringgit ($2.4 billion) and pared its stake in a Kuala Lumpur property project for 7.41 billion ringgit.

The Wall Street Journal reported in July that about $700 million may have moved through government agencies, banks and companies linked to 1MDB before apparently appearing in Najib’s accounts. Both the premier and 1MDB have consistently denied any wrongdoing, with Najib saying the funds were a donation from the Saudi Arabian royal family. The attorney general cleared him in late January of any graft in the case.

Anwar Statement

Najib has also faced 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.

Mahathir, who announced this week he would leave the ruling party, led opposition and civil society groups on Friday in calling for the removal of Najib from office through non-violent and permissible ways. In response, the government said Najib’s critics "have demonstrated the depth of their political opportunism and desperation."

"In 2013, the Malaysian people expressed their will and elected the current government, led by Prime Minister Najib," the government said in a statement. "If Tun Mahathir wants to change the government, he must follow democratic process and await the next election, in line with Malaysia’s laws and federal constitution."

Coming Together

Jailed opposition leader Anwar Ibrahim, a one-time deputy to Mahathir who was fired after a dispute over economic policies in 1998, is backing his former mentor.

Anwar was arrested soon after Mahathir fired him and spent six years in prison on convictions for abuse of power and sodomy. He was released in 2004 after Mahathir retired and a judge overturned the guilty verdict for having sex with a man. Anwar was sentenced to five years in prison in February 2015 on separate charges of sodomy. He has maintained his innocence.

He said in a statement Thursday he supported political parties and individuals including Mahathir “to build up strength and ​common ​understanding ​together.”

"The 1MDB scandal involving the Prime Minister is the most severe scandal in our history and has badly damaged our nation’s image," Anwar said.

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