Malaysia's PM Najib says party united despite talk of rift

KUALA LUMPUR - Malaysian Prime Minister Najib Razak said on Wednesday his party was united and looking to victory in the next elections, dismissing talk of a rift over a financial scandal that has brought unprecedented dissent within the long-ruling party.

Najib chaired the first leadership meeting of the United Malays National Organisation (UMNO) since a cabinet reshuffle in July when he sacked then deputy prime minister Muhyiddin Yassin and other senior ministers.

The dismissals came after critical comments by the ministers about the scandal, which involved alleged mismanagement and corruption at indebted state investment fund 1MDB. Najib is chairman of the fund's advisory board.

Wednesday's party meeting had been due in July but was delayed. Many people were expecting Najib to dismiss Muhyiddin from his post of UMNO deputy president, along with other senior leaders who have criticised Najib's leadership.

But Najib said the party's leaders had to build solidarity and resolve differences to ensure UMNO stays in power.

"I welcome the involvement of Muhyiddin as the deputy president of the party and he has voiced his loyalty to UMNO and his willingness to continue to fight to uphold UMNO's strength and victory in the next election," Najib told a news conference after the meeting. The next general election is due by 2018.

Najib is facing the biggest crisis of his political career following media reports of a mysterious transfer of more than US$600 million (S$854 million) into an account under his name.

He has denied any wrongdoing and said on Wednesday he had addressed party concerns related to 1MDB, which amassed debts of more than US$11 billion, and is under investigation.

Earlier, veteran former premier Mahathir Mohamad said on his return from an overseas trip he would comply with any police investigation into comments he made against Najib at an anti-government rally last month.

Mahathir, who still has much influence in the ruling party, has led calls for Najib's resignation over the 1MDB affair.

The strong stand by Mahathir, and Najib's actions to stifle dissent in UMNO, have raised fears of a split in the party that has led every government since Malaysia's independence in 1957.

The uncertainty has nagged at investor confidence in an economy whose currency has fallen 19 per cent against the dollar this year.

Mahathir, 90, surprised many in UMNO, as well as the opposition, when he joined tens of thousands of anti-government protesters in a two-day rally last month in an unprecedented act of defiance by a ruling party stalwart.