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Abu Dhabi, UAETuesday 17 July 2018

Malaysian officials reveal how much 1MDB probe was obstructed

Obstruction occurred on multiple levels and key witnesses disappeared, says senior anti-corruption officer

A supporter of former Malaysian prime minister Najib Razak holds up a sign, ahead of his arrival to court in Kuala Lumpur, Malaysia. REUTERS/Lai Seng Sin
A supporter of former Malaysian prime minister Najib Razak holds up a sign, ahead of his arrival to court in Kuala Lumpur, Malaysia. REUTERS/Lai Seng Sin

The government of former Malaysian prime minister Najib Razak spent years systematically obstructing investigations into the alleged looting of state fund 1MDB, while also ruthlessly muzzling critics, according to current and former government officials.

They said the meddling in the investigation by the Malaysian Anti-Corruption Commission (Macc) effectively shut down local inquiries into the scandal at 1Malaysia Development Berhad (1MDB) even as five other countries, including the United States, Switzerland and Singapore, carried out their own investigations.

Any suppression of the inquiries in Malaysia ended abruptly in May when Mr Najib lost power in an election. On Tuesday, he was arrested by the Malaysian authorities in relation to a probe into SRC International, a former 1MDB unit, according to an investigating task force. Sources close to the matter said he may face several charges.

Mr Najib, who lost power in an election last month, has consistently denied any wrongdoing in relation to 1MDB and SRC. An aide declined to respond to allegations there was meddling and a cover-up.

Interviews by Reuters with a dozen current and former government officials show that the obstruction of investigators occurred on multiple levels.

One senior Macc investigator said he was convinced there was tampering with key witnesses. The official, who declined to be identified because he is still involved in the 1MDB investigation, said he felt that by the time Macc got to talk to the witnesses they had been coached on what to say or were too frightened to talk because they had been threatened.

Other witnesses could not be found. “There were some witnesses who disappeared, ran abroad,” and some were clearly told by officials from other government agencies to do so, said the Macc official. He did not name these witnesses because some are still being sought.

Mr Najib’s office also sought to tightly control any public comment on 1MDB.

Macc is supposed to be an independent government agency that works without government interference, but three former Macc communications officers told Reuters that many of the press releases on the 1MDB probe issued by Macc were written by the prime minister’s office.

And it wasn’t just at the anti-corruption agency that the heat was intense.

New finance minister, Lim Guan Eng, told Reuters there was an “extensive cover-up” at the ministry of finance.

Malaysia’s new prime minister Mahathir Mohamad told Reuters the week before last that he holds Mr Najib fully responsible for the 1MDB scandal and that Malaysian authorities have “an almost perfect case” against him.

As a result of an anti-kleptocracy investigation, the US Department of Justice has alleged more than $4.5 billion was misappropriated from 1MDB and that about $700 million of the fund’s money ended up in Mr Najib’s personal bank accounts.

Mr Najib told Reuters last month he shouldn’t be blamed for any of the problems at the fund and declared he knew nothing about why hundreds of millions of dollars from 1MDB allegedly appeared in his bank account. Some of the ways in which those looking into the 1MDB scandal had been sidelined have been known for some time.

For example, in July 2015, Mr Najib removed then attorney general Abdul Gani Patail for “health reasons” at a time when the official was preparing to charge him. He also removed deputy PM Muhyiddin Yassin the same month after he had criticised Mr Najib over his handling of the scandal.

But the intensity of the pressure that Macc faced from other arms of government is only now becoming clear. In May, about two weeks after Mr Najib’s removal, the newly appointed head of Macc, Mohn Shukri Abdull, recalled how his investigation into 1MDB had been blocked in 2015.

Mr Shukri, who had been deputy commissioner at Macc until he retired two years ago, recalled how he had faced threats to his job and worse – a bullet was sent to his home in 2015. He sought and received US police protection during a visit to Washington and New York because he felt he was being followed by Malaysian government agents.

“We didn’t know who were the main people who were putting the pressure on Macc, but there were many of them,” another Macc official said. It “was coming from all sides.”

The senior Macc official also said police interfered in Macc’s investigations as they closed in on an investigation into how about $10.6 million from SRC went into Mr Najib’s bank account.

He said some witnesses in that probe could not be found because they were being held at police headquarters. Malaysian police did not respond to an emailed request for comment.

Khalid Abu Bakar, who was Malaysia’s police chief from 2012-17, has been barred from leaving Malaysia since the election. Mr Mahathir has said he would be investigated for his role in the 1MDB probe.

When asked about the sacking and transfer of officials, the Najib aide said the actions were to suppress a “political coup”. He denied there had been intimidation.

A senior government source said civil servants at the MOF, which was also run by Mr Najib, were instructed to cover up the 1MDB affair.

“Decisions were made at PMO [prime minister’s office]. And MOF had to find a way to hide it and figure out a way to pay for it,” this person said.

Checks and balances were ignored. For example, a member of the auditor general’s team who looked at 1MDB’s finances in 2015 said the fund was highly secretive and did not release all its documents and hard disks to the auditors.

Mr Najib acknowledged in the Reuters interview that “there were certain short-term payments that needed to be done” in relation to 1MDB after the fund had become so politicised that it could not act on its own.