KUALA LUMPUR -- Former Malaysian Prime Minister Najib Razak was arrested on Tuesday for allegedly misappropriating funds from SRC International, a unit of state fund 1Malaysia Development Berhad, according to a special government task force investigating the case.
The arrest was made at Najib's private residence in an upscale neighborhood of the capital. He is expected to be charged tomorrow at a Kuala Lumpur court.
The arrest is the first in the country involving a former prime minister on alleged criminal cases.
The Malaysian Anti-Corruption Commission in May had summoned Najib, 64, to its headquarters near Kuala Lumpur for questioning over a suspicious money transfer into his accounts from SRC International, a former subsidiary of the 1MDB state fund.
Current Prime Minister Mahathir Mohamad made the probe into 1MDB his priority upon election.
Najib had denied allegations of misappropriating funds since the scandal came to light in 2015.
Over $4.5 billion was alleged to be have been creamed off from the fund and the case remains under investigation in several countries including the U.S., Singapore and Switzerland. As prime minister, Najib sacked the attorney general and anti-graft commission chief who tried to investigate the case.
The 1MDB scandal helped spur Mahathir to come out of retirement and lead Malaysia's opposition coalition to an unprecedented election victory May 9. His Pakatan Harapan, or Alliance of Hope, campaigned on the promise of reopening investigations into the state fund.
Mahathir said a clean-up of the mess around 1MDB was a top priority for Malaysia's reputation.
"We must restore the country to ensure that it will be looked highly upon and respected once again," Mahathir said on May 21 as he began his second stint in office.
Mahathir's new government has established a special 1MDB investigation team made up of the anti-corruption commission, the police and the central bank, the administration said Monday. Mahathir is also engaging experts who had been ousted by Najib to lead the team.
The police said on June 27 at least 900 million ringgit ($225 million) worth of cash and luxury items were seized in raids conducted last month in six residential properties linked to Najib. The haul, which police deemed the biggest in the country’s history, includes 72 luggage containing jewelry and foreign currencies, as well as 284 boxes of designer handbags.
The raids were part of the 1MDB-related investigations under the country’s Anti-Money Laundering, Anti-Terrorism Financing and Proceeds of Unlawful Activities Act 2001, said the police.
Najib established the state fund in 2009 to back projects that would boost economic growth. Big projects funded by 1MDB include the Tun Razak Exchange, a 280,000-sq.-meter financial district launched in 2012 that remains under construction in the capital.
On May 24, Minister of Finance Lim Guan Eng said reserves from Bank Negara, the central bank, and Khazanah Nasional, a key Malaysian sovereign fund, were used to service debt obligations of 1MDB. In the case of Bank Negara, it paid 2.066 billion ringgit ($521 million) to the Ministry of Finance in 2017 for a plot of government land valued at market price, a rare transaction between government bodies.
Then-governor of the central bank Muhammad Ibrahim has submitted his resignation on June 6.