It all started in 2015, when reports emerged alleging that about 700 million dollars from Malaysian sovereign wealth fund 1 Malaysia Development Berhad had ended up in the private bank account of then-President Najib Razak.
What followed was a years-long investigation spanning several countries and the seizure of assets worth over a billion dollars thought to have been purchased with money from the fund including art, extravagant jewellery and a private jet.
Malaysia launched its own investigations into the affair only to clear Najib of. However, a shock win for the opposition in the May 9 general election has brought the long-buried issues bubbling to the surface – and Malaysia finally seems to be getting some answers.
As one of its election pledges, Pakatan Harapan promised voters to reopen the case, and it has wasted no time in investigating – starting with the country’s former prime minister.
On May 18, police raided luxury apartments linked to Najib, seizing 284 designer bags, 37 bags packed with watches and jewellery and a further 35 bags of cash later found to be worth about RM114 million, The Straits Times reported.
A number of the handbags were part of the Hermes Berkin range, which can sell for thousands of dollars each.
Other locations raided include Najib’s private residence in Taman Duta, which was found to contain more luxury handbags, watches and about half a million ringgit.
Najib has maintained his innocence, claiming the items were gifts from friends and the cash donations for his campaign, according to The Straits Times.
He also released a statement via his lawyer slamming the police for carrying out the raids in a “cavalier and irresponsible manner.” The police had allegedly extended their raid to include Najib’s refrigerator, helping themselves to food and chocolates.
The pricey items stashed away in Najib’s residences is just one part of a complex situation.
Malaysia’s Ministry of Finance confirmed that funds transferred to it from the nation’s central bank and main state fund Khazanah Nasional were used to bail out the ailing 1MDB, which was unable to pay its debts, according to The Star.
Finance Minister Lim Guan Eng revealed during a press conference that two former directors of the fund had informed him that 1MDB is insolvent and that its RM9.8bil investment units overseas were “scams,” The Star reported.
The revelation was a direct contradiction of the company CEO and sole employee Arul Kanda’s assurances that the fund would be able to clear its debts.
Arul Kanda also informed Lim Guan Eng that he does not know if 1MDB’s investments are genuine or not.
“He claimed that all financial matters were handled strictly by the company CFO and that he was uncertain of the value of these investments and whether they existed,” Lim said, according to The Star.
“It is unbelievable that a highly paid and experienced investment banker can be so irresponsibly clueless as to not know whether RM9.8bil worth of investments are real.”
The Star reported that Kepong MP Lim Lip Eng has since filed a police report against Arul Kanda for allegedly giving false information on the company.
“He had repeatedly said that the company was not bankrupt and would be able to pay off its debts through a rationalisation plan,” Lim is quoted as saying in The Star.
Najib has asserted that the finance minister’s claim that 1MDB had to be bailed out is “misleading.”
One of the biggest shocks so far came when Mahathir announced that the country’s debt had reached 1 trillion ringgit – much higher than figure put forward by the previous government.
The surprise revelation caused Malaysian stocks plunge, and Najib criticised the Finance Minister and Prime Minister for making “alarming and confusing” statements in a May 23 Facebook post.
“Coming out to say that our country’s government debt to GDP is now 65%, which is a big jump from the official 50.9% figure and saying that our debt is now RM1 trillion without giving any details of what you mean will just unsettle the financial markets, alarm the credit rating agencies and investors confidence in our institutions such as our Bank Negara Malaysia,” he said.
After Lim Guan Eng clarified that the 1.1 million figure included government guarantees and lease payments for public-private partnerships (PPP) as well as the official Federal Government debt, Najib claimed in a May 25 Facebook post that his government “had always complied with international public debt reporting guidelines” and that the “figure of 50.8% is a universally accepted measurement.”
“Contingent obligations, such as guarantees, have never been included in the official measurement of government debt, not even during Tun Mahathir’s previous reign,” he said.