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Malaysia in transition

Najib pleads not guilty as 1MDB trial begins

Legal drama in Malaysia gives possible boost to Mahathir

Malaysia's former Prime Minister Najib Razak arrives at Kuala Lumpur High Court in Kuala Lumpur on April 3.    © Reuters

KUALA LUMPUR/SINGAPORE -- The trial of Malaysia's former Prime Minister Najib Razak on charges related to 1Malaysia Development Berhad began on Wednesday, a legal drama that could provide a boost for Prime Minister Mahathir Mohamad by reminding the country of the scandal that led to the historic regime change last May.

Najib, who pleaded not guilty, is Malaysia's first former prime minister to be tried in court for allegedly committing crimes.

Najib, 65, became Malaysia's sixth prime minister on the same day in 2009 and served until 2018. He faces a total of 42 charges, including money laundering and breach of trust. The first trial on Wednesday covers about seven of them, all relating to SRC International, a former subsidiary of state-investment fund 1MDB, from which 42 million ringgit ($10 million) was allegedly misappropriated.

Speaking at a Kuala Lumpur court, Attorney General Tommy Thomas said Najib, having been prime minister and finance minister at same time, combined "maximum political power and control of the nation's purse" to his benefit. His speech was followed by a statement by a witness called by the prosecutor.

The court set the next trial date for April 15. Najib left the court without giving comments.

Najib's lawyer told reporters after the trial that the attorney general's speech was "nothing more than the charges." He also said: "We are confident on winning this case."

Over $4.5 billion was alleged to be have been siphoned from 1MDB. Prosecutors will attempt to show the scope of the far-reaching scandal.

1MDB was founded by Najib to fund the country's strategic projects. Since the scandal was revealed in 2015, the former prime minister has denied allegations of misappropriating funds. At the time, however, he sacked the attorney general and anti-graft commissioner who were investigating the case.

The scandal spurred Mahathir to come out of retirement and lead Malaysia's opposition coalition to a historic election victory last May. His Pakatan Harapan coalition campaigned on the promise of reopening investigations into 1MDB.

Since his return to office Mahathir has made good on his promise, forming a special investigative team that led to Najib's first indictment in July. The trial was originally set for February, but was postponed at the request of Najib's defense team.

The start of the trial could strengthen Mahathir, as the initial surge of support for him is ebbing as the public scrutinizes his other policy promises.

The government on Wednesday announced that it has agreed to sell a luxury yacht allegedly bought with money stolen from 1MDB to casino resort operator Genting Malaysia for $126 million. Attorney General Tommy Thomas said in a statement that this will be "the highest recovery to date for the government from the 1MDB scandals."

The yacht was among the assets allegedly bought by Malaysian financier Low Taek Jho, the mastermind of the alleged scheme, also known as Jho Low, who has also been charged but remains at large. The government seized the yacht last year and put it up for auction.

"The 1MDB trial would remind voters why Pakatan Harapan came to power in 2018, which many Malaysians seem to have forgotten ... due to unfulfilled promises made by Pakatan Harapan so far," Norshahril Saat, fellow at Singapore's ISEAS-Yusof Ishak Institute, told the Nikkei Asian Review.

The Mahathir administration faces numerous challenges. It scrapped the 6% goods and services tax in June but later introduced a new one, leading to public discontent.

The economy also slowed, growing 4.7% in 2018 compared with 5.9% in 2017. Moreover, some ethnic Malays are opposed to Mahathir's multiracial policies.

Meanwhile, the opposition coalition formerly led by Najib is regaining popularity. Last month, the Barisan Nasional coalition beat Pakatan Harapan in a state parliament by-election in the state of Selangor. The United Malays National Organization -- a key party in Barisan Nasional -- and the Malaysian Islamic Party last month announced that they had formed bloc in parliament and will cooperate in future elections.

Najib, still a member of parliament, uses Facebook and Twitter to criticize the government while posting photos of himself surrounded by supporters.

According to Norshahril of ISEAS-Yosof Ishak Institute: "Still, the opposition may play up race and religious issues, which was the strategy in the last two by-elections, and secure Barisan Nasional's victory. If this happens again, then the impact of the 1MDB trial would be limited."

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