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Malaysia in transition

Najib's prosecution hangs on testimony of fugitive financier

Lengthy trial expected as former prime minister faces new 1MDB charges

Protesters in Kuala Lumpur carry signs illustrating Low Taek Jho as a pirate. The financier is considered to be a key player in the 1MDB scandal.   © Getty Images

KUALA LUMPUR -- The absence of a key witness benefits former Malaysian Prime Minister Najib Razak as he fights additional charges in the corruption scandal surrounding sovereign wealth fund 1Malaysia Development Berhad.

Prosecutors indicted Najib on three counts of money laundering Wednesday, according to a court statement. Najib is accused of transferring a total of 42 million ringgit ($10.3 million) from 1MDB to his personal accounts in three separate transactions between December 2014 and February 2015.

If convicted, Najib could receive a prison sentence of up to 15 years, with fines of at least five times any illegal proceeds. The former prime minister was also charged with three counts of criminal breach of trust and one for abuse of power last month. The Kuala Lumpur high court will set the trial date on Friday.

The prosecution is focusing on Najib's connections to Low Taek Jho, a Malaysian financier currently on the run. Low is suspected of buying a $250 million yacht using money misappropriated from 1MDB. In February, the yacht was seized in Indonesia during a separate U.S. Justice Department probe into the scandal.

Malaysian law enforcement negotiated with U.S. and Indonesian authorities to transfer the vessel, which arrived at a port near Kuala Lumpur on Tuesday. That same day, current Malaysian Prime Minister Mahathir Mohamad called Indonesian President Joko Widodo to thank him personally for cooperation in securing the yacht.

U.S. federal prosecutors are looking into Goldman Sachs' role in the 1MDB scandal, The New York Times reported Tuesday. Malaysia investigators are also working with Singaporean and Swiss officials to untangle the complex web of transactions surrounding the fund. But without the detention and testimony from Low, a central figure in the scandal, prosecutors face an uphill battle.

The trial appears likely to begin in earnest as soon as next year. Najib categorically denies all seven charges, and he is expected to contest every accusation. His legal team could call a large number of witnesses to draw out the court battle. Mahathir's government likely will let the trial continue until the next general election in five years to stir up anti-Najib sentiment, said political commentator Koh Kok Wee.

The new prime minister has developed a reputation over the years as a hard-nosed politician. During his previous stint in the post, Mahathir had his deputy prime minister, Anwar Ibrahim, arrested in 1998 on accusations of inciting riots. Mahathir won his current tenure in May by invoking separation of powers and the rule of law. The prosecution against Najib will test the reliability of Malaysia's justice system.

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