Malaysian PM dismisses funds report as 'political sabotage'

Malaysian PM dismisses funds report as 'political sabotage'
PHOTO: AFP

KUALA LUMPUR - Malaysian Prime Minister Najib Razak on Friday dismissed as "political sabotage" a report that a probe into a state-owned investment fund had found hundreds of millions of dollars were transferred to his personal bank accounts.

The investment vehicle, 1Malaysia Development Bhd (1MDB), denied any wrongdoing after the Wall Street Journal said that nearly US$700 million (S$944 million) moved through government agencies, banks and companies linked to the fund before ending up in Najib's accounts.

The newspaper cited documents it said it had obtained, including bank transfer forms and flow charts prepared by government investigators as the basis for its report.

Malaysia's ringgit currency tumbled to 3.7845 against the dollar, its lowest level since July 2005, on Friday after the report's publication.

The newspaper said the original source of the money was unclear, and noted that the government investigation did not detail what happened to the funds that allegedly went into Najib's accounts.

Najib's office said in a statement that the claims were an effort to "undermine confidence in our economy, tarnish the government, and remove a democratically elected prime minister".

"These latest claims, attributed to unnamed investigators as a basis to attack the prime minister, are a continuation of this political sabotage," it added.

On the allegations themselves, the statement said only that "it must be noted that 1MDB has already stated that the company never provided funds to the prime minister".

1MDB said in a separate statement that it had not transferred any funds to Najib.

"To suggest otherwise, as some media outlets have done, is highly irresponsible and a deliberate attempt to undermine the company," it said.

Calls for investigation

Both Najib and 1MDB said that previous leaked documents had "reportedly" been tampered with, and that the documents cited by the WSJ had not been verified.

1MDB was launched in 2009 by Najib, who still chairs its advisory board. Critics say it has been opaque in explaining its dealings.

It is reeling under an estimated $11 billion debt, which has weighed on the ringgit amid allegations of mismanagement and murky overseas transactions.

Critics including powerful former premier Mahathir Mohamad have called for criminal investigations, but both Najib and 1MDB have denied wrongdoing in the past, saying the company is on a solid footing.

Under pressure, Najib earlier this year ordered his auditor-general to examine 1MDB's books. Its report has not yet been released.

Opposition lawmakers and critics seized on the WSJ report to call for the prime minister to step down or to go on leave until the allegations are resolved.

Opposition leader Wan Azizah Wan Ismail demanded Najib declare his assets publicly and provide a "credible" response.

"He must immediately issue an immediate, specific and credible response to these very serious allegations," said Wan Azizah, who is the wife of jailed former opposition leader Anwar Ibrahim.

Chong Ja Ian, a political analyst from the National University of Singapore, said that Najib could no longer skirt demands for a fuller explanation.

"This will undoubtedly increase pressure on Najib to be more forthcoming with information about 1MDB. Staying silent will likely fuel Malaysians' distrust of him and his administration," he told AFP.

The embattled premier, who was weakened by 2013 polls in which his long-ruling coalition nearly lost power, got some good news on Wednesday when credit ratings agency Fitch upgraded Malaysia's sovereign outlook to "stable" from "negative".

But IG Markets strategist Bernard Aw said that clearing the air over 1MDB was "critical to maintain investor confidence in the economy." "If there are more negative developments uncovered from the investigations, the relevant authorities need to move quickly to address the oversight," he said.

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