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Malaysia in transition

Najib Razak unrepentant over 1MDB scandal

Malaysia's ex-prime minister defends his rule despite slew of criminal charges

Najib Razak, the ex-prime minister of Malaysia swept from power by a wave of popular outrage at the excesses of his administration, cuts a diminished figure as he talks about the scandal that could send him to jail for life.

But in an interview with the Financial Times, he was unrepentant about his rule and denied all charges of money laundering, abuse of power and criminal breach of trust made against him since he lost the premiership.

Mr Najib was ejected from power in May amid voter fury over 1MDB, the state investment fund he founded in 2009 and from which $4.5bn is alleged to have gone missing.

Asked about 1MDB and the hoards of cash and luxury goods seized from home and offices by police, he conceded that nearly $700m had been deposited in his personal bank account - but not from 1MDB and not for his own use.

The US Department of Justice alleges that $681m sent to Mr Najib was derived from 1MDB proceeds misappropriated from a bond issue arranged by Goldman Sachs in 2013. Mr Najib, however, insisted that the money was for politics and came from a Saudi government eager to bolster a moderate Muslim country at a time of Islamic extremism.

Najib Razak, the ex-prime minister of Malaysia swept from power by a wave of popular outrage at the excesses of his administration, cuts a diminished figure as he talks about the scandal that could send him to jail for life.

But in an interview with the Financial Times, he was unrepentant about his rule and denied all charges of money laundering, abuse of power and criminal breach of trust made against him since he lost the premiership.

Mr Najib was ejected from power in May amid voter fury over 1MDB, the state investment fund he founded in 2009 and from which $4.5bn is alleged to have gone missing.

Asked about 1MDB and the hoards of cash and luxury goods seized from home and offices by police, he conceded that nearly $700m had been deposited in his personal bank account - but not from 1MDB and not for his own use.

The US Department of Justice alleges that $681m sent to Mr Najib was derived from 1MDB proceeds misappropriated from a bond issue arranged by Goldman Sachs in 2013. Mr Najib, however, insisted that the money was for politics and came from a Saudi government eager to bolster a moderate Muslim country at a time of Islamic extremism.

Former Malaysian leader talks about his fall from power

"I wouldn't describe it as a slush fund, but I would describe it as a donation to ensure the government of that day continues to be in office," Mr Najib said in a Kuala Lumpur hotel, where he was accompanied by a coterie of advisers and one of his children.

Referring to the previous election in 2013 that returned him to power, he added: "I received a certain amount of $681m but . . . four months after the election, before the 1MDB issue which came so much to the public attention . . . I returned $620m back to the source and we have documents, wire transfers to prove this." He said he had needed a "contingency fund" to stop government MPs defecting to the opposition.

"The money was basically from the Saudis and it was used for election purposes," he continued. "What happened outside, in terms of the other monies, will be subject to further investigation. I am on record to say that I don't condone any wrongdoings . . . I had no intention of spending it in a lavish way."

According to the DoJ, some of the $620m was then used to purchase a $27.3m pink diamond necklace for Mr Najib's wife after passing through various bank accounts. But Mr Najib says the necklace was a birthday gift from Sheikh Mansour bin Zayed al-Nahyan, the brother of Abu Dhabi's ruler. He could not be reached for comment.

In this year's dramatic May election, Mr Najib's Umno party, which had run the country since independence in 1957 with its partners, lost office despite years of official Malaysian attempts to suppress opposition parties, curbs on the media and gerrymandering of electoral boundaries. The upset victory of the Pakatan Harapan (Alliance of Hope) delighted Asia's dwindling band of democrats in their struggles against authoritarian rulers.

The politicians who joined forces to topple Mr Najib at the ballot box reinstalled Mahathir Mohamad, now 93, as prime minister.

It did not take long for the reckoning to begin. The new government promptly cancelled or suspended $23bn of infrastructure projects agreed with China that it portrayed as excessively costly. Malaysian police also seized $275m worth of designer handbags, jewellery and watches from five Najib residences and an office, as well as $30m in cash in different currencies.

Mr Najib's wife Rosmah Mansor, who became notorious among Malaysians for her lavishly ostentatious lifestyle, was arrested last week by Malaysia's anti-corruption commission and charged with 17 counts of money laundering and tax evasion. The couple, who have each pleaded not guilty, are forbidden to leave the country.

Mr Najib, meanwhile, maintains his innocence on 32 charges and blames everyone but himself for his downfall in the May election.

He accused his political rivals in the once-dominant Umno party of an earlier "conspiracy" to depose him. He attacked his victorious opponents for a "propaganda" campaign of false promises to the electorate. And he criticised voters for failing to appreciate the economic growth he says he fostered in this south-east Asian country of 32m. "We had a sterling achievement," he said. "The only thing that would pin us down was 1MDB."

Mr Najib, who was finance minister as well as prime minister, asked the FT to photograph him in front of the Tun Razak Exchange (TRX), a Kuala Lumpur property development including an almost-completed 106-storey tower that was launched by a 1MDB subsidiary. The project was named after Mr Najib's late father, a former prime minister whose reputation for austerity has been contrasted with the luxury lifestyle of Mr Najib and his wife.

Mr Najib held out TRX as an example of 1MDB's achievements, although only three months ago Lim Guan Eng, the new finance minister who replaced him following the election, said 1MDB had used the project to misappropriate more than $750m - equivalent to over three-quarters of the money transferred from the government for the development - in order to repay unrelated loans.

The main regret expressed by Mr Najib is that he failed to appreciate the extent of disaffection among Malaysians. "I was shocked . . . We didn't expect such a catastrophic result," he said.

Asked about the cash seized after the election, Mr Najib said he had kept it stored in strongrooms for Umno and simply continued the electoral practices of previous Umno prime ministers such as Mr Mahathir, his former mentor.

"What I did was nothing different from what my predecessors did because, as I said, election funding is not regulated," said Mr Najib.

Mr Najib agreed that the seized jewellery and the 567 handbags - some made by Hermes, Prada and Chanel - would not be much good for electioneering. He said that the treasures were largely gifts from rulers in the Middle East and Brunei or from his Kazakh in-laws, following his daughter's marriage to Daniyar Nazarbayev, nephew of Kazakh dictator Nursultan Nazarbayev.

Mr Najib said he was looking forward to clearing his name in a trial expected early next year and would welcome international observers. "I have to face trial," he said. "In a way, I welcome it because it will give me an opportunity to clear my name . . . Nobody wants to go to jail, obviously.

(Financial Times)

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