Since hearings in the main 1Malaysia Development Berhad (1MDB) state development fund trial commenced in August, prosecutors have presented jaw-dropping accounts of alleged top-level corruption and abuse of power.
Ex-premier Najib Razak stands accused of looting hundreds of millions of dollars from 1MDB for self-enrichment and actively interfering with an anti-corruption probe launched after the first hints of the scandal broke in July 2015.
Prosecutors have leveled 42 charges against Najib, who faces the possibility of life in prison for graft, money laundering, abuse of power and criminal breach of trust.
The latest trial, one of a scheduled five, brings 21 charges of money laundering and four of abuse of power for receiving illegal transfers of about 2.3 billion ringgit (US$550.8 million) between 2011 and 2014.
While observers wait for justice to be served in what some have referred to as the biggest heist in financial history, Malaysia is slowly but surely putting in place new mechanisms to prevent a repeat of the massive scam.
Dave Ananth, a senior tax counsel with Stace Hammond Lawyers in Auckland, New Zealand, believes Najib’s defense strategy has been flawed from the beginning and inconsistent.
“That he was cheated and had the wrong advisors, that to me cannot hold water as funds were disbursed into his account. He knew about it and spent it,” he told Asia Times.
To be sure, Najib did not act alone, according to prosecutors pursuing the case.
“If you place the accused before a mirror, you will see Jho Low. And if you place Jho Low before a mirror, you will see the accused,” prosecutor Gopal Sri Ram told the Kuala Lumpur High Court in his opening statement, referring to fugitive Malaysian financier Low Taek Jho, also known as Jho Low, who is widely viewed as the scandal’s chief architect.
Low, infamous for his playboy antics and extravagant spending, is accused of setting up a globe-spanning web of intermediaries and shell companies through which an estimated $4.5 billion was embezzled with tacit approval from Najib, whose family members were allegedly among the corrupt scheme’s top beneficiaries.
In his testimony to the court, 1MDB’s former chief executive Shahrol Azral Ibrahim Halmi last week described 37-year-old Low as the former premier’s “consigliere”, an Italian term popularized by The Godfather films that commonly refers to an adviser or consultant to the leader of a mafia family.
“He gets things done for the prime minister,” claimed Shahrol.
Former special officer Amhari Effendi Nazaruddin testified in September that Low accompanied him on a “secret mission” to China in June 2016 after Najib approved a plan to bail out 1MDB and its former unit, SRC International, by offering Chinese firms large stakes in several infrastructure mega-projects that have since been renegotiated or cancelled by the current government.
Amhari told the court that Low prepared the talking points for his meeting with Chinese officials and acted as a translator. Malaysian investigators are currently probing whether a $2.3 billion loan from the state-run Export-Import Bank of China to fund two pipeline projects was in fact used to repay 1MDB debts.
Low has been charged in the United States and faces 15 counts of money laundering in Malaysia, though he has consistently denied any wrongdoing.
His whereabouts are currently unconfirmed, though he is widely rumored to be in China. Malaysian police say they know where the fugitive businessman is and hope to have him apprehended and extradited to Malaysia before year’s end.
Najib’s defense counsel say they welcome testimony from Low, who defense lawyer Muhammad Shafee Abdullah claims “misled” the former leader and the company’s board of advisers.
But the ex-premier, according to Shahrol’s testimony, was still the ultimate decision-maker at the state fund as prime minister, finance minister and 1MDB’s advisory board chairman.
Najib, whose extravagant wife, film producer son-in-law and past political confidantes have also been ensnared in the government’s anti-corruption dragnet, maintains his innocence and insists he is the victim of a political conspiracy led by incumbent Prime Minister Mahathir Mohamad.
The witch hunt narrative has resonated with Najib’s political base and unexpectedly buoyed his popularity following his historic electoral ouster in May 2018. Reinventing himself as a moped-riding disruptor, Najib recently embraced the moniker “Bossku” (my boss) to win grassroots support.
Now, however, observers believe that damaging court testimony publicized far and wide in press reports has chipped away at that popular appeal.
“I think his friends and ex-colleagues finally have a grasp of what this whole 1MDB fiasco is all about,” said Ananth. “The damaging evidence about his relationship with Jho Low was jaw-dropping [and] it’s clear that opinions have changed, although his hardcore supporters still refuse to accept the evidence adduced so far.”
James Chin, director of the University of Tasmania’s Asia Institute, expects Najib’s public profile to take a hard hit once a verdict is announced.
“As widely expected, details of the scam and the free-money shopping by [his] wife and family have caused damage to his reputation. The scale of the corruption was just too big, even by Malaysian standards,” he told Asia Times.
State prosecutors are clearly not pulling their punches in their pursuit of justice.
“Nothing concentrates the mind more of any individual than a real threat of prosecution, followed by imprisonment,” said Attorney-General Tommy Thomas in a speech on October 15 at a conference in Kuala Lumpur organized by the Institute of Corporate Directors Malaysia.
“If the enforcement message of the new government remains loud and clear, wrong-doing ought to reduce,” he said, in reference to the ruling Pakatan Harapan coalition’s efforts to stomp out corruption in political governance, public sector administration, and public procurement since being elected last year.
Measures to prevent a repeat of 1MDB-scale graft include revisions to guidelines against money laundering and terrorism financing undertaken by Bank Negara Malaysia (BNM), the central bank, to increase its supervisory and enforcement of anti-money laundering compliance and take more deterrent actions.
Last week, parliament passed the National Anti-Financial Crime Centre Bill (NFACC), legislation that aims to better coordinate the country’s enforcement bodies, including the Malaysia Anti-Corruption Commission (MACC) and National Audit Department, through a new agency that will pursue and centralize data relevant to financial crimes.
The establishment of an anti-financial crime center is long overdue, according to barrister Ananth.
“With 12 existing enforcement agencies coordinating to help investigate financial crimes, it’s a way forward in tackling money laundering and corruption,” he opined. “What’s crucial is that who is in charge runs it professionally, without any influence from the government.”
One sticking point on the NFACC bill raised by parliamentarians is that candidates for the new agency’s director general and chairman positions will be appointed by the prime minister, rather than a Parliamentary Select Committee.
A representative of the premier’s office said proposals to change the appointment process will be considered.
“Parliamentary Select Committees are important for crucial appointments [and] to get feedback from stakeholders in closing loopholes. More importantly, absolute power cannot rest on a single individual, like in all the previous Barisan Nasional (BN) regimes and even the current [Harapan] one,” said Ananth.
Mahathir’s unilateral appointment in June of Latheefa Koya, a lawyer and human rights activist from the ruling Harapan coalition’s component party Parti Keadilan Rakyat (PKR), as the MACC’s chief commissioner was seen by many as controversial.
Critics said the appointment violated the ruling coalition’s election promise that politicians would not hold positions in independent agencies, such as MACC.
Though widely seen as a competent, outspoken and progressive-minded legal professional, Latheefa’s appointment bypassed Cabinet and blindsided Harapan’s own senior ministers.
Mak Yuen Teen, an associate professor at the National Union of Singapore’s Business School, told Asia Times that laws and institutions are only as good as those who are in power.
“The current government is certainly doing a lot to strengthen laws and institutions, and putting in place checks and balances,” Mak said.
“[But] if the wrong leaders are in place, they could use legislation selectively to weed out opponents,” he said. “Whether we will see something similar to 1MDB happening in Malaysia again ultimately depends on the people of Malaysia – whether they will pick the right government and leaders.”