BANGKOK -- Malaysia's Prime Minister Najib Razak and troubled state fund 1Malaysia Development Berhad have denied claims published in the Wall Street Journal that $700 million was funneled by 1MDB into Najib's personal bank accounts. However, key opposition parties urged Najib to take a leave of absence while the allegations are investigated.
The latest reports, also carried by the Sarawak Report, an anti-corruption campaign site run by the sister of former U.K. Prime Minister Gordon Brown, are based on what they claimed were leaked documents from ongoing investigations into 1MDB, which has incurred nearly $12 billion in debt. Najib chairs the fund's advisory board.
Following speculation about the fund's financial health, Malaysia's auditor-general, central bank, police and the public accounts committee (PAC), launched a probe into alleged mismanagement of public money. The auditor-general is scheduled to present an interim report on its investigation during a briefing with the public accounts committee on July 9. Najib has previously denied any wrongdoing in connection with 1MDB and has accused opponents of spreading misinformation.
According to the WSJ report, the documents suggest that nearly $700 million was moved among government agencies, banks and entities linked to 1MDB, before finally landing in the prime minister's personal accounts in five separate deposits.
The prime minister's office in a statement posted on its Facebook page described the reports as "a continuation of sabotage" in a campaign by "certain individuals to undermine confidence in our economy, tarnish the government, and remove a democratically elected prime minister." It said the documents cited in the report should not be accepted as genuine unless verified by appropriate authorities.
1MDB in a statement claimed the leaked documents were found to be "tampered with," 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," it added.
Minister in for Urban Wellbeing, Housing and Local Government Abdul Rahman Dahlan was quick to defend the prime minister, accusing the Wall Street Journal of "gutter journalism" over its reliance on "unnamed investigators," and echoed 1MDB's suggestion that the documents the reports relied on might have been tampered with.
Before the latest claims about 1MDB were published, Malaysia's youth and sports minister Khairy Jamaluddin praised the prime minister's handling of the 1MDB affair in an interview with NAR earlier in the week.
"He has been transparent in asking for the auditor-general to go through all past transactions and for the findings to be presented to a bipartisan committee in parliament. This will mean opposition legislators will be able to scrutinize everything," Khairy said.
On Friday, he told media: "we could not accept the latest allegations without concrete proof, and seeing the actual documents."
But the allegations are likely to fuel an increasingly vociferous campaign by former Prime Minister Mahathir Mohamed for Najib to resign over the losses at 1MDB, which will likely in turn prompt Najib to repeat earlier pleas to the Malaysian public not to listen to Mahathir.
Mahathir, who was Malaysia's prime minister for two decades and remains an influential public figure despite being almost 90 years old, has accused 1MDB of "shady business," writing on his blog that "a large amount of money disappeared."
In an email to the NAR, a 1MDB spokesperson sought to refute Mahathir's claims, saying that: "Despite repeated clarifications from 1MDB, despite both KPMG and Deloitte standing behind their audits at recent PAC hearings, and despite the ongoing enquiries into this matter by the lawful authorities, Tun (a Malaysian honorific) Mahathir has continued to repeat the same questions and falsely claims that 1MDB funds are 'lost' or 'unaccounted for,' without providing any shred of evidence."
The latest allegations have drawn sharper reactions from the government and 1MDB than did previous allegations about the fund.
"In handling the 1MDB saga, the Najib administration progressed from initial stonewalling through elegant silence to sporadic explanation," said Oh Ei Sun, a senior fellow at the S. Rajaratnam School of International Studies at Singapore's Nanyang Technological University.
Despite the government's rebuttals, the fresh allegations could galvanize Malaysia's fractious opposition parties, who last month formally dissolved their three-party alliance, to join up again to oppose Najib more forcefully.
Speaking at a press conference on July 3, Lim Guan Eng, leader of the Democratic Action party (DAP), the second biggest party in Malaysia's parliament after Najib's United National Malays Organisation (UMNO), said that Najib should step down if he cannot disprove the latest allegations.
"I hope the prime minister can respond to these serious allegations from the Wall Street Journal," said Lim, adding "if he [Najib] cannot respond I will have to call him to resign."
In a June interview, Lim also told the NAR that "if Najib refuses to give a full accounting, then he should step down, no question."
Adding her voice to the reaction, Nurul Izzah Anwar, an opposition MP and daughter of jailed opposition leader Anwar Ibrahim, told the NAR that "in any democratic nation, any working democratic nation," Najib would have had to resign already.
Anwar's wife, Wan Azizah, who leads the Keadilan party founded by Anwar, said that Najib should make a public disclosure of his assets and that there should be a public inquiry into the latest allegations.
It is unlikely, however, that opposition parties would ally themselves with former Prime Minister Mahathir over the 1MBD issue. Mahathir previously ousted Anwar Ibrahim from the UMNO and drove a campaign that saw him jailed for six years in 1999 on sodomy and corruption charges.
Nurul Izzah Anwar believes that Mahathir, rather than wanting to hold Malaysia's government to account, "wants to protect his legacy" by replacing Najib with a more popular UMNO leader. Her view implied that a scandalized public could vote the opposition into power in a future election.
In 2013 elections, due to the vagaries of Malaysia's election system, Najib just held on to office although the opposition won 52% of the popular vote.
Najib's near loss in 2013 prompted Mahathir to then suggest that the UMNO could "change horses," or oust Najib. However the prime minister survived and, under pressure from UMNO hardliners, pulled back on some of the liberalising political reforms he had introduced prior to the election.
More than 150 people, including opposition MPs and local journalists covering 1MDB, have been charged with sedition, as the UMNO-led government seeks to silence critics.
But the latest allegations are likely to heap pressure on Najib. On Monday this week, Najib's high flying banker brother Nazir Razak posted on his Instagram account a photo of a sign carrying the slogan: "Truth. Next exit."
Nazir, who some believe harbors political ambitions of his own, went on to write, "I hope so. Our institutions must get us there quickly. Malaysians feeling truth-deprived, depressing and divisive. After truth we can find reconciliation."