Malaysia's PM denies fraud, says ex-PM Mahathir foments crisis

Reuters News
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Posted: Jul 02, 2015 10:34 PM

By Praveen Menon

KUALA LUMPUR (Reuters) - Malaysian Prime Minister Najib Razak on Friday denied taking money from state fund 1MDB or any other entity for personal gain, after a media report said investigators traced nearly $700 million to bank accounts that were allegedly in his name.

The Wall Street Journal's report, if true, would be the first time the beleaguered prime minister has been directly linked to accusations of corruption surrounding the fund.

Reuters could not independently verify the report.

Najib blamed former prime minister and Mahathir Mohamad, a past ally, of being behind the latest corruption allegations, which he described as a lie and said the allegations began when he refused to implement Mahathir's personal demands.

Mahathir was not immediately available for comment.

"Let me be very clear: I have never taken funds for personal gain as alleged by my political opponents – whether from 1MDB, SRC International or other entities, as these companies have confirmed," Najib wrote on his Facebook page and on Twitter.

He said he believed that Mahathir was working with "foreign nationals" to promulgate "this latest lie" and warned that those continuing to mount these attacks should be prepared to face the consequences of their actions.

Mahathir, who was once Najib's patron and remains highly influential, has become Najib's fiercest critic and has called for him to step down over the 1MDB furor.

Malaysia's longest-serving prime minister, Mahathir withdrew his support for Najib after the Barisan Nasional coalition fell short of a majority in 2013 elections but retained power.

In a blog released late in the day, Mahathir made no mention of the Wall Street Journal report and instead made allegations about people in power dodging taxes.

The PM's office said earlier in the day that the allegations were part of a "continuation of political sabotage".

PM ALREADY ON BACK FOOT

Najib, the son of a former primer minister, has been weakened by accusations of graft and mismanagement from the opposition and from within his own party.

Now in his second term, the premier has also been under pressure over his management of the economy and a scandal over the murder of a Mongolian model nine years ago.

He says he had nothing to do with the murder of Altantuya Shaariibuu, and two officers who were part of Najib's security detail at the time were found guilty of her murder.

However, Najib retains support within the long-ruling BN coalition and from within his party, the United Malays National Organization (UMNO).

"If they (the Wall Street Journal) were dead serious about the authenticity, the reports should have named the sources," Abdul Rahman Dahlan, the minister for Urban Wellbeing, Housing and Local Government, said in a Tweet.

1MDB has faced a storm of criticism over its debt of nearly $11.6 billion and financial mismanagement. Najib chairs the fund's advisory board.

The Wall Street Journal, citing documents from a government probe, said there were five deposits into Najib's account.

The two largest transactions, worth $620 million and $61 million, through a chain of companies linked to 1MDB were done in March 2013 during the election campaign, it said.

The fund is facing separate investigations by the country's central bank, auditor-general, police and the parliament's Public Accounts Committee.

1MDB described the allegations as "unsubstantiated" and said it had never provided any funds to the prime minister.

"To suggest otherwise, as some media outlets have done, is highly irresponsible and a deliberate attempt to undermine the company," the fund said in a statement.

Najib has previously denied any wrongdoing in connection with 1MDB and has accused opponents of spreading misinformation.

Two opposition groups, the Democratic Action Party and the People's Justice Party (PKR), said Najib should take leave to allow a proper investigation into the allegations.

"In order to protect whistleblowers and allow a free and independent investigation, he cannot hold the post of prime minister," PKR lawmaker Tian Chua said.

"He must set himself aside; it would show that he is confident of his innocence. If he refuses, there will be suspicion that someone is trying to cook the books."

(Additional reporting by Yantoultra Ngui and Al-Zaquan Amer Hamzah in KUALA LUMPUR, Rujun Shen in JOHOR BAHRU, Umesh Desai in BANGKOK and Jongwoo Cheon in SINGAPORE; Editing by Louise Ireland)