Spotlight Falls on Najib’s Verdict After Goldman’s 1MDB Deal
(Bloomberg) -- After Malaysia reached a deal to drop the 1MDB case against Goldman Sachs Group Inc., the spotlight now falls on the upcoming first verdict in former leader Najib Razak’s series of trials involving the troubled state fund.
The High Court will announce on Tuesday whether Najib is guilty of corruption and money laundering charges. He has repeatedly denied any wrongdoing. That comes days after Malaysia resolved settlement talks with Goldman Sachs over the bank’s role in raising funds for 1MDB during Najib’s time as prime minister. Goldman agreed on a $3.9 billion settlement, including $2.5 billion in cash, in return for all its charges being dropped.
The deal with the U.S. bank doesn’t hinder Malaysia from pursuing claims against individuals such as Najib. The former leader has sought to defend himself by pleading ignorance as to how 42 million ringgit ($10 million) was deposited in his accounts, allegedly from a former unit of 1MDB. He faces a total of seven charges in the case, each carrying punishments ranging from a maximum of five to 20 years imprisonment as well as fines.
“So whether he is found guilty or not guilty, the trial itself is historic,” said James Chin, head of the Asia Institute at the University of Tasmania. “Currently most people in Kuala Lumpur think that he will not be found guilty so he will probably get away. But as I mentioned, even if he is found guilty, it will probably be reversed during the appeal process.”
Prime Minister Muhyiddin Yassin’s government came into power on the backing of a party once led by Najib. It followed the fall of the earlier administration that ousted Najib in 2018 then presented him with the 1MDB-related charges. Muhyiddin faced public backlash when prosecutors reached a deal to drop 1MDB-related charges against Najib’s stepson Riza Aziz, even as Muhyiddin repeatedly pledged to ensure justice in the proceedings.
The government is aware that the longer the 1MDB issue drags on, the worse it would look for them, said Chin.
Even the Goldman settlement, which Muhyiddin welcomed, was met with criticism from the opposition that had demanded a heftier $7.5 billion compensation when they were in power. Muhyiddin controls a razor-thin majority in parliament and talk of a snap election has heated up in the past weeks from both sides of the aisle.
Najib’s verdict is a culmination of a yearlong hearing in which his lawyers sought to argue that he had been misled by others, such as fugitive financier Low Taek Jho who faces his own set of charges. Najib testified that he acted in the best interests of the country and sought to show that he consulted the cabinet, 1MDB executives and his advisers at every step of the relevant transactions.
Prosecutors have questioned dozens of witnesses, including a central bank official and a former cabinet minister, to argue Najib engaged in a “planned, premeditated criminal breach of trust case” that ran over many years.
The trial is only the first of at least three involving Najib. He faces a total of 42 corruption and money-laundering charges, including those linked to billion-dollar acquisitions and bond sales by the scandal-ridden fund.
©2020 Bloomberg L.P.