KUALA LUMPUR - Malaysian police said on Monday a special task force set up to probe reported transfers involving a state investment fund to Prime Minister Najib Razak is now itself under investigation to see if its members leaked classified information.
The Wall Street Journal reported on July 3 that investigators had discovered nearly US$700 million (S$945 million) had moved through government agencies, banks and companies linked to 1Malaysia Development Bhd (1MDB) before ending up in Najib's personal accounts.
The report created a storm of controversy in Malaysia with the prime minister dismissing the WSJ report as "political sabotage" and threatening possible legal action, while 1MDB denied any wrongdoing, saying it had not transferred any funds to the premier.
Police chief Khalid Abu Bakar in a statement released Monday said that after the publication of the report, on July 8, the Attorney-General instructed the police to launch an investigation into "the criminal act of leaking classified documents to foreign nationals."
"These criminal acts are very serious and raise national security implications," said the police chief in the statement.
"We are therefore duty bound to conduct a fully independent investigation. This will include investigating all members of the special task force...
"The Royal Malaysia Police have not eliminated the possibility of a conspiracy to subvert Malaysia's democratic process and topple the prime minister," he added.
The statement went on to say that the "leakage of information... could constitute economic sabotage against Malaysia." The task force is made up of the police, the Malaysian Anti-Corruption Commission, the Attorney-General and Malaysia's central bank.
Call for PM's resignation
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 Malaysian currency, the ringgit, amid allegations of mismanagement and murky overseas transactions.
1MDB is facing multiple investigations. Under pressure, Najib earlier this year ordered the auditor-general to examine 1MDB's books. Its full report has not yet been released.
A bi-partisan Public Accounts Committee last week said an interim report by the auditor-general did not reveal anything incriminating but said that the debt-laden fund had failed to submit a few documents.
Both Najib and 1MDB have said that previously leaked documents had "reportedly" been tampered with, and that the documents cited by the WSJ had not been verified.
Six bank accounts were frozen by the task force recently but it said none of the accounts belonged to Najib.
In its report, the WSJ cited bank transfer forms and flow charts prepared by government investigators as evidence of the accusations. It released online redacted documents of the alleged money trail last week.
The US 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 ended up in Najib's accounts.
Influential ex-Prime Minister Mahathir Mohamad, who turned 90 last Friday, has urged Najib to step down over the fund's activities and poor handling of Southeast Asia's third largest economy on the back of weak oil and commodities prices.