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Corruption at its Finest: The Case of Former Malaysian PM Najib Razak

Tahlia Beckitt

Source: New York Times

The 1MDB Scandal


In 2015, Malaysia was rocked by a corruption scheme unrivalled in size and depth. With estimated losses of $4.5 billion, the Malaysian state fund known as the 1Malaysia Development Berhad (1MDB) was thrust into the international spotlight. 

 

Set up in 2009, the 1MDB was designed to support Malaysian development through the promotion of foreign investment and partnerships. Chaired by then Prime Minister Najib Razak, the fund was a cesspool of corruption, bribery and money laundering from day one. Significant sums were siphoned into overseas bank accounts, personal finances, real estate, art and, in Najib’s case, used to bribe fellow politicians, finance his wife’s shopping habits and pay off the resulting credit card bills. Ironically, the stolen funds were also used to fund much of the production of the film The Wolf of Wall Street.

 

After 6 years, it all came crashing down when a British journalist handed over 200,000 leaked documents detailing the fraud and widespread embezzlement. However, the crimes weren’t limited to Malaysia. 

 

As a fund initially designed to attract foreign investment, individuals and institutions around the world were implicated in the damaging evidence. With criminal investigations now open in 7 countries, including Australia and the US, the scheme earned the title of the “largest kleptocracy case to date.” After a series of lengthy criminal proceedings, now-former Prime Minister Najib joined many of his co-conspirators in jail in 2022, as the first ever Southeast Asian Prime Minister to be convicted and imprisoned by a court of law.

 

This naturally brings us to 2024, where Najib and the 1MDB case are once again in the news.


Abdicating with a Bang


On February 2, 2024, Malaysia’s Pardon Board, on behalf of outgoing king Sultan Abdullan Sultan Ahman, slashed Najib’s sentence from 12 years to six. With the looming release date now in 2028 (or potentially even 2026 through good behaviour), the decision caused widespread unrest and anger, with fears that Najib’s release will hinder any chance of recovering lost funds. This, combined with harsh sentences imposed on citizens during the pandemic that continue to this day, has sparked further conversations on the issue of class and privilege in Malaysia, with Najib’s former title setting him both above the law and apart from the general public.

 

The Board also reduced Najib’s fee to AUD $16 million, despite originally ordering him to pay AUD $68 million. Given that even the original sum essentially amounted to pocket change for a man who held $731 million of the nation’s money in his personal bank accounts, the ruling has been called a "slap in the face for justice." No explanation has been provided for this decision, contributing to further frustration throughout Malaysia.


Further Developments


Since the announcement, Najib has begun legal proceedings in the hopes of serving the remainder of his shortened sentence under home arrest. On April 17, a high court judge approved a request for the case to be heard behind closed doors, further segregating the people from the ruling (or former ruling) class. Indeed, the wider Malaysian public continues to wait after Malaysia’s High Court deferred its decision to July 3. The High Court also allowed Najib's application to include two additional affidavits, a controversial move that could further undermine his original sentence and expose double standards within Malaysia’s criminal system. 

 

Should this attempt be successful, Najib will escape justice once again, serving a lighter, shorter and easier sentence for crimes against the very people and country he was elected to serve. Once again, this is a sad time for Malaysian anti-corruption efforts.


Ramifications


Backsliding on corruption charges is not a good look. Southeast Asian nations have historically struggled and continue to battle with widespread corruption in government, business and the public service. The 1MDB case, once considered a global victory of anti-corruption measures, can no longer hold this title. For Southeast Asia, the consequences are all the more concerning.

 

In 2021 and 2022, during Najib’s multiple trials, Malaysia was perceived as the 2nd least corrupt country in Southeast Asia, beaten only by Singapore. However, even if Malaysia manages to retain its ranking given the reopening of wounds around the 1MDB scandal, the corruption will continue to damage the broader reputation of Southeast Asia. 

 

Additionally, the leniency afforded to Najib will create a dangerous precedent of impunity for other leaders in Southeast Asia. The lack of significant accountability for Najib may encourage other leaders to act irresponsibly, given the perception of unearned and undeserved forgiveness afforded to the guilty former prime minister. Likewise, legal precedents will be severely weakened in future cases involving high level political figures or individuals, damaging anti-corruption efforts. In the same light, potential whistle-blowers may be discouraged from action given the lack of a return for their efforts.

 

Across Southeast Asia, the new precedent and enhanced privileges for the ruling elite, regardless of guilt, will surely undermine future anti-corruption efforts and perceived successes in this field. As public trust in Malaysian institutions continues to decline following the verdict, the decision is a victory for corruption, rather than the anti-corruption success it formerly represented. As the 1MDB scandal damaged the region’s ability to maintain its economic growth and tarnished the reputation of ASEAN nations as a whole, the original convictions were a regional victory. With that now torn away, leaders and nations will be looking for answers. In a region where the actions of one are often taken to represent the actions of many, the ramifications of the King’s call will be felt across Southeast Asia, lowering confidence and promoting the very thing the conviction was originally intended to stop.

 

On a domestic note, however, Najib’s influence may not be over. His party, the United Malays National Organisation (UMNO) remains as one of the largest political parties in Malaysia and currently forms part of the ruling coalition. Najib remains a popular member among his party and could potentially return to feature in Malaysia’s political landscape. With his crimes disparaged by the King of Malaysia, Najib’s situation is not the same as it was two years ago. If he plays his cards right, an effective marketing strategy could potentially brand him as a victim rather than the perpetrator. 


Summary


The leniency afforded to Najib despite his crimes has no silver lining for the global community. Not only is the 1MDB case once again in the news, potentially reopening old wounds in more than just Malaysia, but regional anti-corruption efforts, both domestic and international, have been dealt a significant blow. With Najib potentially back out on the streets in as little as two years, the victory over corruption is now an enduring loss, highlighting issues of privilege, impunity and accountability in Malaysia.


 

Tahlia Beckett is currently studying International Relations at Curtin University and was the Future of Work delegate at the 2023 G20 Youth Summit in India. A former intern at Castle Asia in Jakarta, Tahlia is highly interested in Australia’s relations with Southeast Asia and the potential for effective and respectful diplomacy and cooperation between Australia and the broader Indo-Pacific. Tahlia has also engaged as a speaker at the 2023 World Food Forum Flagship Event and volunteers for the ASEAN-Australia Strategic Youth Partnership.

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