Malaysia: What’s Next with conviction of Najib Razak

Aug 2, 2020

After years of investigative exposés and legal wrangling, former Prime Minister Najib Razak was found guilty last Tuesday 28 July of serious crimes related to the 1MDB financial scandal.

There is no simple way of explaining how things came to this situation. The details defy the understanding even of most forensic accountants and the grasp of diehard “Malaysian politics tragics”.

The only way to make sense of things for non-specialists is to start from last Tuesday’s Kuala Lumpur High Court verdict and to explore its implications. Where do things go from here? What will happen next?

Najib was found guilty, and resoundingly so, in a non-jury trial on seven charges. These covered abuse of power, criminal breach of trust and money-laundering related to the receipt of RM$42 million (= AUD $14million) from the 1MDB subsidiary SRC International. This trial was just one, the first, of a number of such proceedings against Najib and his close political associates, including his wife and nearest political confidant Rosmah Mansor, that have been foreshadowed and initiated.

This initiating of all these proceedings has been a quite recent development. They came after the long ruling UMNO party-led government headed by Najib as Prime Minister (who had succeeded, among his five predecessors in that office, both his father and his uncle) was ousted at the nation’s fourteenth general elections (GE14) in May 2018. This defeat was in many ways a personal rejection of Najib, of his evidently direct and controlling involvement in 1MDB (made ever more widely known by leading investigative reporters, notably those from the London-based Sarawak Report website), and of his resistance, both political and legal, to making himself accountable for the runaway state financial scandal. Najib was both Prime Minister and Minister of Finance, and in charge of all the private 1MDB investment vehicles that nested within the finance ministry.

That resistance had been tenacious and unrelenting. He had, for example, staged a quiet “putsch” or coup in mid-2015 when, having agreed that a top-level Group of Four — the Attorney-General, the Head of the Anti-Corruption Commission, the Head of the National Police and the Governor of Bank Negara, the nation’s reserve bank — should investigate and report on the matter, he summarily fired or reassigned all four, and then blocked both the Auditor-General and Parliament’s Public Accounts Committee from looking into the matter: in the latter instance by moving its key government members to junior ministerial positions without replacing them, and so depriving it of a quorum. Later, he found further protection from being held accountable when the courts happily contrived to find that, for the purposes of the relevant act, he as Prime Minister was somehow not a “public official” and so was beyond the ambit and reach of the law.

Public revulsion against Najib and the 1MDB morass, and the desperately contradictory obfuscation concerning it, led to the popular repudiation at GE14 of Malaysia’s UMNO-led “permanent government” for the first time since independence in 1957. Building upon the welling up of a diffuse “social movement activism”, an inchoate and incoherent opposition coalition known as the Pakatan Harapan (“Coalition of Hope”) came into office in its place. But, while sufficiently well supported to win enough local “first-past-the-post” elections against adversary political forces split between rival parties and candidates, PH was never strong enough, sufficiently widely supported, or clear about and in charge of its own political agenda to govern effectively. And from the outset it came under unrelenting assault from powerful Malay ethnopolitical and Islamist forces determined to impugn PH’s legitimacy and undermine its ability to govern. By March 2020, PH would be brought down by these forces, playing upon its internal divisions and political incoherence.

But not before, in one of its few effective actions, the new PH government appointed a determined new Attorney-General, the noted constitutional lawyer Tommy Thomas, who planned, set in motion and oversaw a range of prosecutions into the various parts of the widely ramifying 1MDB “heist” of state finances perpetrated by Najib and those around him for both political purposes and vast personal indulgences. After he became PM in 2009, Najib had begun covertly seeking funds from powerful Middle Eastern sources that had enabled him to consolidate his grip on the UMNO and its unruly local “warlords” and then to win GE13 in 2013 with a sudden flood of money that clearly had not come from local party fund-raising efforts. Najib continued on the same tack towards GE14 in 2018. The roots of the 1MDB scandal were in Najib’s need for political financing which he found by placing himself and Malaysia “in hock” politically to the conservative Islamist rulers of the Middle East (the “oil-igarchs”) and to their local Islamist allies in the Islamic party PAS. But those redoubled efforts, as some of the details leaked out, became increasingly notorious and resented.

The result was his defeat and the installation of a government and Attorney-General determined at last to hold Najib to account for 1MDB. When the PH government fell in March 2020, Tommy Thomas resigned as Attorney-General. Soon after, worst fears were confirmed. Prosecutions that had not begun appeared stalled, while out-of-court settlements were reached in related civil suits such as, most recently, the huge multi-billion dollar Malaysian action against 1MDB’s facilitator Goldman Sachs (a USD$7.5 billion claim was suddenly settled for USD$3.9 billion but effectively only $2.7 billion, a fine outcome for Goldman Sachs, some financial commentators suggested). In May Najib’s step-son Riza Aziz, who was behind the Wolf of Wall Street movie, said he was terribly sorry for his transgressions and was allowed to hand back USD$107 million, less than one-half of his gains, and to keep the remainder of his USD$248 benefit in exchange for a DNAA (dismissal not amounting to acquittal) on money-laundering charges.

Under the new UMNO-driven government the anti-1MDB actions were being shut down. While actions not yet initiated might be deferred, those already in train could not be easily set aside. Other proceedings against Najib and his wife Rosmah were also in train; whether they will duly proceed to conclusion is now unclear. But one case, that in which judgment was handed down last Tuesday, was already, despite much artful delay and stalling by Najib’s lawyers, close to conclusion. And that was its main immediate significance.

The PH government had collapsed when two of its component parties — the improvised and gerry-built Bersatu party which Dr. Mahathir had created as his personal vehicle to join with and then lead the GE14 anti-Najib coalition, and the PKR or People’s Justice party of Anwar Ibrahim — both split; taking their followers with them, notable party leaders threw their lot in with the UMNO-led anti-PH forces: the so-called Perikatan Nasional, which rested upon the new Muafakat or entente (a consortium of common understanding) between the once bitterly opposed rivals, UMNO and the Islamist party PAS. When Dr. Mahathir misplayed his hand in dealing with the internal problems of PH (and resisting demands that he hand over its leadership, as had been agreed, to Anwar Ibrahim), PH collapsed. A government led by Muhyiddin Yassin came into office through royal initiative. It seems now to have a shaky 2 seat parliamentary majority, but it has resisted calls to prove its numbers on the floor of the house. Muhyiddin had been Deputy Prime Minister to Najib in UMNO, until he broke from it over 1MDB to join Dr. Mahathir on the other side; now he broke with Mahathir to come in, with royal favour, as Prime Minister leading a basically UMNO-PAS government — while still remaining a member of a split Bersatu, his own faction, not Dr. Mahathir’s.

In this situation, Malaysia in mid-2020 resembled Australia in 1975, when Whitlam and Kerr found themselves in “a race to the palace” to see who could sack the other first. But in Malaysia today it is a different race. Who could get the main blow in first? The new Perikatan Nasional government needs to bring on a general election to consolidate and prove its position, and so destroy most of the former PH forces opposing it. But it cannot go to an election until it has cleared the decks of all the “1MDB legal complications”. It can stall or halt those that have not begun, but what is to become, and be the continuing effect, of those cases already under way, well advanced and even nearing completion?

That, the still potent political force of the 1MDB legal legacy, is now a central question. So the main significance of last Tuesday’s judgment is that the “race to get in first” has now been won: the first of the 1MDB cases has been heard, completed, and a verdict together with sentence pronounced. Najib will appeal the result (there are two levels above the High Court, namely the Court of Appeal and the Federal Court), and his appeals may go on for years. While he is appealing, he can continue to sit in Parliament (though he will set new records for shamelessness if he tries to play a full role in parliamentary life). Yet, even if convicted and while appealing, Najib will continue to be a major player in UMNO party affairs. But he cannot lead the party to an election, as its leader and public face, and the other leading UMNO barons, some with their own legal problems, are too divided amongst themselves to lead the party and its allies to the hustings and in government.

Only one person can really do that: Muhyiddin Yassin. UMNO needs him, especially since he has now built up some further personal standing with his handling of the Covid-19 crisis; and he, on his part, can say that he only left UMNO because he could no longer endure Najib’s compromised leadership, and Najib is no longer officially in charge. So he may now honourably return to UMNO: to work with it and be the public face of an UMNO-based government. But how is this to be arranged? The divided UMNO and its PN group are lost and hopeless without Muhyiddin. And Muhyiddin is homeless and lost without the UMNO/PAS [Muafakat/PN] power base. What is likely to happen is not hard to figure out. But how is that outcome to be contrived? Will Muhyiddin rejoin UMNO? Will he be allowed to do so? If not, how will he place himself and bring his Bersatu forces into the government: within the tight UMNO/PAS Muafakat consortium, or via the looser Perikatan Nasional umbrella or front framework that the new UMNO/PAS duopoly uses? Either way, back within UMNO or tied into it via the PN or Muafakat arrangements, Muhyiddin’s position will be weak. A head, but how much more than figurehead? And Muhyiddin’s problems are not just organisational; he is also said to be terminally ill. Whatever game he may be playing, if it is a long game, will be about more than his own personal power and political fate. Whatever the case, the context for any rapprochement with UMNO is one facing the prospect of an election in which he will lead it and its allied forces, including PAS, to the polls. Ideally, that will be when the adverse political “noise” and disturbance of Najib’s 1MDB scandal abates.

The immediate significance of last Tuesday’s judgment is that Najib has been found guilty and is put largely out of public political play by that verdict and his sentence, even if he appeals. The judicial process has struck the first blow, before the desperate politicians could get their house in order. That judgment also strengthens the prosecution’s position in several other cases already running — and involving far greater sums of money — against Najib and others, including Rosmah Mansor. Far exceeding the RM$42 million quantum in the case just decided against him, two other cases against Najib are under foot: one for RM$2.28 billion (= AUD$0.75 billion) and some related audit-tampering charges. All that means that the 1MDB issue remains publicly alive and prominent, cruelling the hopes of the UMNO-PAS consortium and their defecting allies from Bersatu and PKR to put themselves on an election footing and go to the people for the endorsement of their still insecure leadership of the nation.

In time, the enduring significance of the Najib era may prove to be not the 1MBD scandals but what went with them. Ever since its religious scholars (ulama) wing left UMNO in 1951 to form the Islamist party PAS, Malay and then Malayan and Malaysian politics have turned largely on the bitter rivalry, even enmity, between UMNO and PAS: between the ethno-nationalist and the Islamist understandings of Malay identity with their attendant agendas in Malay political and national life. For half a century since independence, Malay and Malayan politics was shaped and driven by this defining contest. UMNO could dominate its governing inter-ethnic coalitions, Parliament and national life so long as it could convincingly command a decisive majority of the Malay popular vote nationwide (and when it could do so, its political dominance was unchallengeable); but PAS was often able electorally to deny and deprive UMNO of significant Malay support, and thereby weaken UMNO’s governing political authority.

UMNO’s way of coping with this situation was always to “play catch-up” in an effort to match PAS’s ever increasing Islamist demands. But every time it matched what PAS called for in this unending and ever escalating Islamist “policy auction”, PAS would simply “up the ante” in its demands. In the context of the 1MBD way of financing UMNO, Najib initiated a bold strategic démarche. He devised a way to work with, not against, PAS. Even, with the encouragement of his Saudi and other Arab allies, towards the incremental implementation and enforcement of Arab-style shari’ah law, as PAS had long demanded. Najib made himself indebted, internationally, for his political survival upon Islamic finance from the Middle East, and domestically upon his Arab benefactors’ local political allies and sympathisers, the Islamists in PAS. Najib made himself and his UMNO dependent upon them, their doctrinal and political hostage.

Ever since GE13, Najib’s closest adviser in Islamic policy matters had posed and pushed the twin questions: who will promote and uphold an ever jeopardised Islam in Malaysia if not the Malays? And how will the always imperilled Malays be sustained and protected in their land, if not by Islam? Only UMNO could do it. But, working together, UMNO and PAS could do it far better. So Najib’s advisers now suggested, temptingly to PAS. Nobody can rule Malaysia other than UMNO, or without UMNO; PAS should recognise that fact and make common cause with UMNO to promote and entrench an Islamically sacralised Malay ascendancy: Malay primacy (“ketuanan Melayu”) in the name and for the sake of Islam.

UMNO could strengthen itself in that way, Najib reasoned, and remain ostensibly in control, the senior partner; but, over the long term, this way of staying in power was one that committed UMNO increasingly to the implementation of PAS-congenial policies, to the incremental or irresistible stealth Islamisation of Malaysian law and society: to governing at PAS’s pleasure and as its unprotesting, complicit hostage. That opening of the doors of government to PAS influence, and the longer-term implications of that politically fateful démarche, will prove the enduring legacy of the Najib years and his entangling 1MDB machinations.

Clive Kessler is Emeritus Professor of Sociology and Anthropology at the University of New South Wales. He has been studying Malay culture, society, religion and politics for over 50 years.

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