Mahathir resumes attack on PM over graft investigation

KUALA LUMPUR - Former Malaysian leader Mahathir Mohamad on Monday resumed an attack on Prime Minister Najib Razak, saying that by halting an investigation into a debt-laden state fund Najib had avoided legal action but had substantiated allegations against him.

Najib has faced criticism from the public and within his party after a Wall Street Journal report in July said investigators looking into allegations of graft and financial mismanagement at debt-laden state fund 1Malaysia Development Berhad (1MDB) found that nearly US$671 million (S$945 million) was deposited into Najib's private bank account.

Reuters has not verified the report.

Najib has denied taking any money for personal gain, saying the allegations were part of a malicious campaign to force him from office. 1MDB has denied transferring funds to Najib and an interim government report found nothing suspicious.

The Malaysian Anti-Corruption Commission (MACC) has said the money in Najib's account was a donation, and not connected to 1MDB.

Mahathir, Malaysia's longest-serving prime minister who remains highly influential, has become Najib's fiercest critic and has called for the prime minister to step down over the 1MDB affair.

Najib has suspended a parliamentary committee looking into 1MDB's accounts, replaced the attorney-general and several MACC and central bank officials who were suspected of leaking investigation information were questioned by police.

Referring to that, Mahathir said Najib was shielded from legal action.

"Now no legal action can be taken against Najib as the allegations cannot be proven," Mahathir said in a post on his blog. "But his very actions prove that there is substance in the allegations made against him".

Last month, Najib sacked his deputy in a cabinet reshuffle, removing ministers critical of his involvement with the state fund which ran up debts of more than US$11 billion.

Najib is the chair of 1MDB's advisory board.

The central bank said last week it has completed its investigation into the fund and submitted its findings to the attorney general. It gave no details.

Mahathir said that "the rule of law has been turned upside down".

Amidst the political uncertainty, Malaysia is struggling with lower commodity prices and slowing domestic consumption. The ringgit has fallen almost 15 per cent this year.

On Monday, Najib issued a statement aimed at allaying concerns about the economy, saying: "The government will continue to take a proactive role in managing the economy".

Mahathir, however, raised the prospect that Malaysia's"economy will collapse" as market conditions worsened amid poor confidence in Najib's leadership. "Public opinion therefore remains strong in wanting Najib to resign as PM," Mahathir wrote.