MS Risk Blog

Malaysian PM Reshuffles Cabinet Amidst Corruption Scandal

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Malaysian Prime Minister Najib Razak has reshuffled his cabinet amid an ongoing corruption scandal that continues to threaten the stability of his administration. On Tuesday this week Najib dismissed his Attorney General, Abdul Gani Patil, who had been investigating the Malaysian leader over embezzlement allegations, along with deputy PM Muhyiddin Yassin, who had called on the premier to answer the charges laid against him. Four other Malaysian lawmakers have also been sacked in what Najib’s critics have described as a purge designed to prevent the premier’s alleged involvement in the scandal from being thoroughly investigated.

On 13 July, Malaysian police said that an investigation had been launched into the release of confidential documents to the Sarawak Report and the Wall Street Journal, which are reported to contain proof of how millions of dollars were siphoned into the PM’s private accounts from a variety of banks, government agencies and other companies connected to 1 Malaysia Development Berhad (1MDB) – a state investment fund chaired by Najib. These reports claim that five deposits were made in Najib’s accounts, the two largest of which – worth $681 million collectively – occurred during Malaysia’s 2013 election campaign. A special task force has been convened to investigate the case; so far, six of Najib’s bank accounts have been frozen and seventeen more are under investigation.

While Najib does not deny ownership of the accounts or that money was deposited in them, he utterly rejects the allegations of graft and corruption made by his critics and the Wall Street Journal, against whom he is considering taking legal action. In a televised address that took place after the reshuffle, Najib said: “I can accept differences in opinion and criticisms as part of the decision-making process, but these differences in opinion should not be made in an open forum that can affect the public perception of the government and the country.” Representatives for 1MDB have also rejected claims there was anything untoward in their financial dealings with the PM.

While professing his innocence of any wrongdoing, Najib has accused former Malaysian PM Mahathir Mohamad of masterminding an act of “political sabotage” which he claims is an attempt to bring down the government and remove him from power. Certainly, Mahathir has been instrumental in undercutting public confidence in Najib, whose approval ratings have dropped sharply over the past year, but there has otherwise been no conclusive evidence of any such conspiracy.

As the investigation progresses, questions continue to be asked about the future of Malaysia’s leadership. If a smoking gun were found which directly implicated Najib in an embezzlement scam, it seems likely that the United Malay’s National Organization (UMNO) party would drop him as a means of preserving their 58-year long rule. If not, he may be able to weather the storm, provided that the reshuffle hasn’t exhausted his supply of political goodwill within the party.

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