The 1Malaysia Development Berhad (1MDB) scandal has forced the resignation of Malaysia’s central bank governor as the new coalition government steps up its investigation into the alleged plundering of the state fund.
Allegations that billions were stolen from 1MDB were a major factor in the election defeat last month for former prime minister Najib Razak’s coalition, which had ruled since independence from Britain in 1957.
Najib, his family and associates were accused of using the sovereign wealth fund to buy yachts, jewellery for models, art and real estate around the world.
The former prime minister replaced opponents in government with figures that critics said were more willing to do his bidding.
Muhammad Ibrahim, governor of the Bank Negara Malaysia, was appointed in 2016 following the departure of his long-serving predecessor, Zeti Akhtar Aziz, who left her post after increasingly finding herself at odds with Najib over 1MDB.
The former governor said yesterday (Wednesday) that the central bank would remain steadfast in performing its duties, despite Muhammad’s resignation.
“The central bank is a solid institution that was established to serve the people,” she told the media.
Zeti refused to comment further, saying she would reserve her remarks for the authorities.
Former deputy bank governor Nor Shamsiah Mohd Yunus, who left at the end of her term in November 2016, is purportedly among the candidates to replace Muhammad.
The central bank has admitted buying land from Najib’s administration in Kuala Lumpur late last year for about US$500 million, with the finance ministry alleging the proceeds were used to service 1MDB’s debts.
The bank insisted the land was bought at a fair price and that it had submitted details about the matter to anti-corruption inspectors for review.
“I am prepared to relinquish my post if I no longer have the strong trust and support of the public,” Muhammad told his staff in a leaked message.
“I cannot in good conscience continue if it affects the bank’s image and reputation.”
Jayant Menon at the Asian Development Bank said uncertainty might produce some negative market reaction in the short term, but the change at the bank should be positive in the long run.
“This type of outcome bodes well for market confidence if a more accountable and transparent governance system emerges in the longer term,” Menon told the media.
Prime Minister Mahathir Mohamad this week also replaced Malaysia’s legal chief, the attorney-general, and the head of the anti-corruption agency.
Malaysia is also apparently looking for a new national stock exchange boss while chief executives at state-linked firms are reported to be either stepping down or being asked to leave.
Picture credit: Wikimedia