Saudi Arabia has plenty of money to invest at home and abroad. Source: Flickr
Malaysian Prime Minister Najib Razak has been handed a welcome end to the distraction of corruption allegations that dominated his administration last year, allowing him to return to the agenda that depicts the federation as a bastion of prosperity and moderation.
Malaysia’s attorney general has ruled that US$681 million transferred into Prime Minister Najib Razak’s personal bank account was a gift from the Saudi royal family, with no criminal offences or corruption involved.
Saudi regal involvement provides an unexpected twist in the saga of the mysterious funds transfer and the troubles of indebted state fund 1Malaysia Development Berhad (1MDB). Najib chairs its advisory board.
The Malaysian anti-corruption commission had previously announced that the funds were a political donation from an unidentified Middle-Eastern benefactor.
Saudi Arabia has a long history of investment in Southeast Asia, seeing its governments as a bulwark against Islamic extremism.
Now the recent attacks on Jakarta and increasing links with Islamic State in the Philippines, Malaysia, Indonesia and Thailand have pushed the Saudi authorities to step up involvement in the region.
An estimated 100 Malaysian combatants are thought to be fighting with ISIS in Iraq and Syria and a Malaysian video emerged at the weekend with jihadists pledging to bring the violence home.
While looking for Asean allies, Riyadh has clearly settled on Najib as its kind of man to uphold the face of “moderate Islam” in Southeast Asia.
Najib, who has denied any wrongdoing, has repeatedly said he did not take any money for personal gain.
“I am satisfied with the findings that the funds were not a form of graft or bribery,” Attorney General Mohamed Apandi Ali told the media. He announced that Najib had returned US$620 million to the Saudi royal family because it had not been used. He did not say what had happened to the remaining US$61 million.
“There was no reason given as to why the donation was made to PM Najib – that is between him and the Saudi family,” Apandi said.
He said Najib was guilty of no criminal offence in relation to three investigations submitted by Malaysia’s anti-graft agency and no further action would be taken against the embattled prime minister.
The attorney general’s office said there was “no evidence” that Najib “had any knowledge” that the money had been transferred into his accounts.
Najib “was of the belief” that any of the money he spent had come from the Saudi royal family, the office said.
A statement from the prime minister said the ruling “confirmed what I have maintained all along: that no crime was committed”.
“This issue has been an unnecessary distraction for the country. Now that the matter has been comprehensively put to rest, it is time for us to unite and move on,” he added.
While not disclosing what the money was used for, the premier alluded to political funding.
“I appreciate that political funding is a topic of concern to many people. That is why I first initiated political funding reform proposals in 2010. Unfortunately, these were blocked by the opposition at the time. However, I have instructed for them to be put forward again for discussion,” Najib said.
The prime minister, who came to power in April 2009, called for closure. “I will now redouble my focus on the key issues that matter to Malaysia, especially combating the threat of terrorism, and strengthening the economy in the face of global headwinds,” Najib said.
The call for unity fits in with the broad sweep of United Malays National Organisation policy. The coalition has dominated Malaysian politics since independence in 1959. It is always keen to remind the diverse population that straddles two landmasses and several islands that more of them live freer and in greater prosperity than most other Asian citizens.
Malaysia’s delicate demographic balance between its Malay, Chinese and Indian communities is a potential powder keg of hatred along the Lebanese model but for all its faults, UMNO has managed to preserve relative harmony while allowing the economy to maintain a healthy level of growth over its decades in power.
Don’t rock a relatively happy, prosperous boat, appears to have been UMNOs prevailing message and Najib’s keenness to draw a line under the recent allegations fits neatly within this tradition.
The opposition Pan-Malaysian Islamic Party’s moves to impose Sharia law in the states it controls has bolstered Najib’s reputation as the face of moderate Islam.
But not everyone was quite so willing to accept Apandi’s findings this week.
Malaysian opposition MP Tony Pua from the Democratic Action Party said the “basis to absolve the prime minister of any wrongdoing is utterly without merit because the ‘personal affair’ does not preclude corrupt motives or transactions”.
He added: “The attorney general has provided no new or convincing information or arguments on whether the massive funds were bona fide, which leads to the question whether the newly appointed attorney general is merely covering up for the prime minister.”
Najib sacked Malaysia’s previous attorney general in July for “health reasons” in a cabinet reshuffle that also saw the removal of several figures who had criticised the administration.
His main challenge now is to re-establish confidence in Malaysia’s economy, which although performing well last year, has proved vulnerable to the fall in energy prices and the Chinese downturn.
Malaysia is Asean’s third-biggest economy and could set its sights on overtaking Thailand as the kingdom reels under military rule and charges of human rights abuses and the country’s elite prepares for the death of 88-year-old King Bhumibol Adulyadej.
And Najib still enjoys the backing of most of his United Malays National Organisation powerful division chiefs.
Even his fiercest internal critics, such as influential former prime minister Mahathir Mohamad, accept that he cannot be unseated.
Despite the opposition’s condemnation, Najib appears stronger domestically in 2016 than at any point last year.