Malaysia

In a tailspin

Print edition : October 02, 2015

Prime Minister Najib Razak (right) with Muhyiddin Yassin, who was sacked as Deputy Prime Minister. Photo: BAZUKI MUHAMMAD/REUTERS

Protesters at Dataran Merdeka, or IIndependence Square, in Kuala Lumpur for a rally on August 30. Photo: Sanjit Das/Bloomberg

Massive protests demanding Prime Minister Najib Razak’s resignation over the alleged transfer of $700 million from a state-run investment fund into his personal bank account rock Malaysia.

A POLITICAL STORM HAS BEEN BUFFETING Prime Minister Najib Razak for the past couple of months. A corruption scandal, whose magnitude has dwarfed previous scams, has galvanised the people in many cities, including Kuala Lumpur, to stage massive anti-government protests. A sum of $700 million from the state-run investment fund called the 1MDB (1 Malaysia Development Berhad) allegedly found its way into the personal bank account of the Prime Minister. The story was first broken by The Wall Street Journal in July. Razak initially threatened to sue the paper and has been saying that the attempt to discredit him is part of a bigger conspiracy to destabilise the country’s economy.

Various 1MDB deals, according to both the opposition and sections of the ruling United Malay National Organisation (UMNO), have benefited cronies of those in power, including close relatives and friends of the Prime Minister. The 1MDB, which was set up by Najib in 2009, was criticised for its lack of transparency right from its inception. Within a span of a few years, the agency had run up billions of dollars in debt.

In July, the country’s Attorney General, Abdul Ghani Patail, revealed that investigators had handed him papers, which included documents relating to allegations of fund transfer into the personal accounts of the Prime Minister. Lim Kit Siang, the leader of the opposition Democratic Action Party (DAP) in Parliament, issued a statement saying that the Attorney General’s revelations had lent credence to The Wall Street Journal expose on the mysterious $700 million in the Prime Minister’s personal bank account. He said that Malaysia had never witnessed a scandal of such dimensions since it gained independence in 1957.

In late July, Deputy Prime Minister Muhyiddin Yassin called for an investigation. “We want the truth. This is a very serious allegation that can jeopardise [Najib’s] credibility and integrity as Prime Minister and leader of the government,” he told the newspaper Sunday Star. Najib responded by sacking his critics inside the government and those investigating the case. The Deputy Prime Minister, the Attorney General and four other Ministers were shown the door on July 28. A top police officer investigating the case was “retired” and several members of the country’s anti-corruption commission were sidelined. The high-level inquiry they were conducting into the affairs of the 1MDB is now in deep freeze.

According to The Wall Street Journal story and other media reports, part of the money that found its way into the Prime Minister’s personal account was used to finance the 2013 election campaign of the UMNO. The party has been in power since Malaysia gained independence. In the 2013 elections, the UMNO won a majority in Parliament despite getting only 47 per cent of the votes. The opposition People’s Alliance (Pakatan Rakyat, or P.R.), despite getting 51 per cent of the votes, secured only 89 seats in the 222-member Parliament. Selective gerrymandering of constituencies aided by a cooperative Election Commission thwarted an opposition victory. It was the first time that the opposition got the majority of the popular vote.

Non-governmental groups representing various sectors of civil society have for some years now been functioning under an umbrella people’s movement known as Bersih, meaning “clean” in the Malay language. Bersih’s sympathies are obviously with the opposition. Bersih had staged big protests after the results of the disputed 2013 elections were announced. Its aim at the time was to persuade the government to introduce meaningful reforms so that the will of the people would be reflected in future elections. The authorities have been generally high-handed while dealing with protests in the country. Two newspapers that have covered the corruption scandal extensively have been shut down. Top government officials have also talked about putting curbs on social media.

Since 2013, the government has been cracking down in selective ways on the opposition. Anwar Ibrahim, the leader of the opposition coalition, has been sent to jail again on charges of sodomy. Many Malaysians, including human rights organisations, believe that the charges against Anwar are trumped-up ones. Archaic laws, inherited from the colonial rulers, including those relating to sedition, are still on the books in Malaysia.

The ruling party has been successful in luring some conservative Malay parties from the opposition. UMNO leaders have been supporting calls in some opposition-ruled States for the imposition of Sharia laws. The P.R., which almost toppled UMNO in 2013, has now split. One of its main components, the Islamist-leaning Pan-Malaysian Islamic Party (PAS), announced in mid-June that it could no longer work with the ethnic Chinese-dominated DAP. The PAS, the DAP and Keadilan led by Anwar Ibrahim were the three major constituents of the opposition alliance. The government, on its part, has given up its half-hearted efforts to provide a level playing field for all Malaysians regardless of their ethnicity. Under Malaysia’s Bumiputra policy, Malays, who constitute the majority of the population, are given preferential treatment in education and business sectors. Bumiputra was put in place in the 1970s.

But the 1MDB funds scandal has once again energised civil society groups and the opposition. The 1MDB is finding it tough to finance debts totalling $11 billion and is under investigation in Switzerland for its allegedly underhand dealings. The media are full of stories that Swiss banks were used as a conduit to siphon off money from the 1MDB. In the first week of September, the Swiss authorities announced that they were “investigating” two senior executives of the 1MDB along with other “unknown” persons over a series of offences, including money laundering, corruption of foreign officials and “suspected misconduct in office”. In late August, ordinary Malays joined their fellow citizens of Chinese and Indian origin in huge street protests that rocked the political establishment. Najib has been vigorously denying that the money in his account is from government funds. He and his supporters in the UMNO have now come forward with the not-too-convincing story that the money was donated by a well-wisher in a Gulf monarchy and was a legal political donation. One senior UMNO official claimed that the rich well-wisher made the contribution as he wanted the ruling party to prevent a pro-Israeli coalition from winning the 2013 election.

Hundreds of thousands of people wearing yellow T-shirts massed on the streets of Kuala Lumpur and other Malaysian cities despite the government’s warnings that force could be used against them. In the end, the government allowed the rally to be held despite deeming it illegal. The organisers claim that more than 200,000 people attended the rallies in Kuala Lumpur on August 29 and 30. Most observers agree that it was the biggest show of strength by the opposition since the 2013 protests against the “rigged” election. The police authorities belatedly tried to ban the wearing of yellow shirts by the demonstrators.

The protesters’ spirits were buoyed when Mahathir Mohammed, the nonagenarian elder statesman of Malaysian politics and of the region, joined the “yellow shirts” during the rallies. Mahathir has been an outspoken critic of Najib for some time now. Najib was once his protege but the two have fallen out on key policy issues. Mahathir has been particularly upset with Najib’s free-market policies that have seen the value of the ringgit decline by 24 per cent against the American dollar, the lowest since the Asian financial crisis of 1997-98. Foreign investment was down by 50 per cent in the first half of 2015. The slowdown of the Chinese economy has had an adverse impact on Malaysia. The country is China’s biggest trading partner in South-east Asia.

Mahathir, Malaysia’s longest-serving Prime Minister, is also angry with Najib’s support for the Barack Obama administration’s Trans Pacific Partnership (TPP) which would make the region subservient to the United States’ trade laws and regulations. He said the only way to remove the incumbent Prime Minister was by exercising “people’s power”. Mahathir said although in principle he was against street protests, the people had no other alternative as the government had blocked all legal methods to get the Prime Minister to resign.

Mahathir had sacked Anwar Ibrahim from the post of Deputy Prime Minister at the height of the 1997-98 Asian financial crisis for taking positions favouring the International Monetary Fund (IMF) and the World Bank. That Mahathir had a strong authoritarian streak is well known but many admit that he stood up to Western financial institutions and in the process averted imminent devaluation of the ringgit, thereby reviving the Malaysian economy. Mahathir has been an outspoken critic of Western imperialism, especially since he left office. It should be remembered that he was one of the key architects of the Bumiputra policy, which has been detrimental to the interests of the sizable Chinese- and Indian-origin citizens.

Najib strongly criticised the protests. “Those who wear this yellow attire—they want to discredit our good name, scribble black coal on Malaysia’s face to the outside world,” he said. The Malaysian police chief said Mahathir would be questioned over the remarks he made at the rally.

The opposition and civil society groups plan to continue with the protests. Besides seeking the Prime Minister’s resignation, they want the introduction of institutional reforms that will make the government transparent and accountable to the people. Transparency International has said that Malaysia is going through a “corruption crisis”. Zaid Ibrahim, a former Law Minister and one of Malaysia’s leading legal luminaries, wrote in early August that the government was “doing everything in their power to cover up mismanagement, corruption and the abuse of power”. He said Malaysia’s public institutions were in disarray and that their independence was under assault.

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