Malaysia Charges Ex-PM Najib Over Misuse of $1.6 Billion

(Bloomberg) -- Malaysia charged ex-premier Najib Razak and one of his former finance chiefs with six counts of criminal breach of trust, accusing them of misusing 6.6 billion ringgit ($1.6 billion) of public funds.

The former leader and Mohd Irwan Serigar Abdullah, the Finance Ministry’s top bureaucrat until Najib’s government lost power in May, were jointly charged in a Kuala Lumpur court on Thursday. Both Najib and Irwan pleaded not guilty on all charges.

Funds were reallocated to avoid Malaysia defaulting on payments, and the decision was made together with various committees in a practice common for the government, Najib’s lawyer Muhammad Shafee Abdullah told reporters in Kuala Lumpur. Najib said he had only acted in the country’s best interests, and that the accusations against him were "too general and unreasonable."

"For instance, paying back debts that had not been repaid. If they weren’t repaid, they would have hurt the economy and the people," Najib told reporters. "Nowhere in the charge sheets does it say I gained personal benefit from my actions."

Alleged Wrongdoing

Prime Minister Mahathir Mohamad has vowed to investigate alleged wrongdoing that took place during Najib’s administration after spending years accusing the government of covering up alleged embezzlement at state fund 1MDB and misusing public funds to garner voter support. Members of his Cabinet have said that some election promises can’t be fulfilled because Malaysia’s finances are worse than they had expected when pledges were made.

The charge sheets on Thursday didn’t give details of wrongdoing by Najib and Irwan. The allegations are linked to payments made by 1MDB to an Abu Dhabi sovereign wealth fund, as well as monies linked to rail and pipeline projects -- some of which involved Chinese companies, according to Azam Baki, deputy chief commissioner at the Malaysian Anti-Corruption Commission.

Since his surprise election victory in May, Mahathir has canceled or suspended several major projects backed by Chinese interests, including the East Coast Rail Link and three pipeline projects.

The charges presented against Najib and Irwan on Thursday are breaches of trust on:

  • 1.86 billion ringgit of government funds on Dec. 21, 2016
  • 220 million ringgit related to the Federal Consolidated Fund on Aug. 3, 2017
  • 1.3 billion ringgit related to the Federal Consolidated Fund on Aug. 10, 2017
  • 1.95 trillion Chinese yuan, equivalent to 1.26 billion ringgit, of government funds on Aug. 23, 2017
  • 2 billion ringgit of government funds on Dec. 18, 2017

Bail has been set at 1 million ringgit each for Najib and Irwan. The former head of the Malaysian External Intelligence Organisation, Hasanah Abdul Hamid, was also charged on Thursday with criminal breach of trust involving $12.1 million.

In recent months, Najib had been presented with charges of receiving, using and transferring illicit funds, as well as accusations of corruption and abuse of power. He has pleaded not guilty to all charges, which total 38 with Thursday’s additions.

1MDB is at the center of a global scandal involving claims of embezzlement and money laundering, which have also triggered investigations in the U.S., Singapore, Switzerland and other countries. Malaysian investigators are increasingly moving their sights overseas to advance probes, and the government has sought cooperation from other countries to repatriate monies and assets that it said were purchased with 1MDB money.

©2018 Bloomberg L.P.