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Malaysia in transition

Malaysia drops Najib-era graft cases spearheaded by Mahathir

Dismissed charges raise concerns country is turning soft on corruption

Former Malaysian Prime Minister Najib Razak, center, arrives in court on June 1. Najib faces verdicts on 1MDB-related charges next month.   © Reuters

SINGAPORE -- As Malaysia awaits a verdict in the corruption trial of former Prime Minister Najib Razak, the judiciary has dropped graft cases against prominent figures tied to his party.

A power struggle is playing out between former Prime Minister Mahathir Mohamad and the incumbent, Muhyiddin Yassin, who is seen as close to the Najib faction. With the cases spearheaded by Mahathir having been withdrawn, some have raised concerns that the country may be heading back to an era tainted by corruption.

Prosecutors on June 9 announced the withdrawal of all charges against Musa Aman, former chief minister of the eastern state of Sabah, citing a lack of evidence. Musa had faced nearly four dozen charges including corruption and money laundering related to timber concessions in the state.

Last month, a court dismissed the case against Riza Aziz, stepson of former leader Najib and a central figure in the scandal surrounding the sovereign wealth fund 1Malaysia Development Berhad, or 1MDB. Riza was accused of laundering $248 million from the fund, but the charges were dropped under an agreement requiring him to return more assets.

These moves, as well as upcoming verdicts on charges against Najib himself, will influence how the international community views Malaysia's willingness to prosecute corruption at a time when the government seeks to boost inflows of foreign direct investment.

Riza and Musa were among the targets of investigations pursued under Mahathir after he returned to power in 2018 with Najib's election defeat over the 1MDB affair. The anti-corruption campaign gave Mahathir an avenue to take down Najib, a major political foe.

But Muhyiddin replaced Mahathir in March after the latter suddenly resigned amid turmoil in the ruling coalition at the time. The new prime minister, whose government depends on having Najib's United Malays National Organization in coalition, appointed a new attorney general. The Mahathir-led graft investigations have stalled, raising fears that the government will backslide into the corruption of the Najib era.

Muhyiddin's government is fragile, with only a narrow majority in the parliament's lower house. He is wary of a no-confidence motion from Mahathir, now in the opposition, after a close call last month. The dismissals offer an opportunity to shore up political support.

A regional party aligned with Mahathir's coalition holds a plurality of seats in Sabah's legislative assembly. Some observers say Muhyiddin is helping Musa make a return to power as a way to break off support from the pro-Mahathir camp there.

The Riza case draws an accusation that the dismissal is intended to cement Muhyiddin's leadership in the coalition by doing a favor for United Malays National Organization, a central member.

"Musa Aman's acquittal was a strategy by Muhyiddin to penetrate the Sabah state government," said Liew Wui Chern, a lecturer at Universiti Tunku Abdul Rahman. "In terms of Riza's acquittal, it was apparent that Muhyiddin would like to gain continuous support from UMNO."

A Malaysian High Court dropped a breach of trust charge last week against Isa Samad, former chairman of the Federal Development Land Authority, who has deep ties with UMNO.

Najib himself faces verdicts July 28 on seven of more than 40 charges related to the 1MDB scandal. The affair, which involved the siphoning of $4.5 billion out of the country and entangled U.S. financial institutions, was an massive scandal even by global standards.

Meanwhile, Malaysia's government is scrambling to shore up an economy battered by the coronavirus pandemic. Since attracting foreign investment will be essential to maintain growth and jobs, "the change of power to Prime Minister Muhyiddin shouldn't lead to more unreasonable demands to businesses," an executive of a Japanese company said.

But any weakening of transparency or trust in the judicial system would risk disrupting business activity and hurting Malaysia's international competitiveness.

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