Ex-premier Najib Razak finally took the stand today in the first of 42 criminal charges he faces in the multi-billion dollar globe-spanning 1MDB swindle
By Nile Bowie and Matt Mulberry, Singapore
The long-awaited first hearing of former Malaysian prime minister Najib Razak’s trial began at the Kuala Lumpur High Court today. It marks the first time a former Malaysian leader has stood in the accused dock for a criminal hearing.
The date coincidentally marks exactly a decade since Najib was sworn in as Malaysia’s sixth prime minister. He has been arrested multiple times since his unexpected ouster in a May 2018 general election and now faces 42 criminal charges linked to a globe-spanning financial scandal involving the 1Malaysia Development Berhad (1MDB) state development fund.
Investigators believe an estimated US$4.5 billion was embezzled from the state fund between 2009 and 2014, some of which was traced to the ex-premier’s bank accounts. After a wait that has had Malaysians on tenterhooks, the opening of today’s trial represents just the first of several criminal proceedings Najib is due to face in the months ahead.
The former premier, who has deftly utilized social media to reinvent himself as an opposition politician in recent months, maintains his innocence and denies all wrongdoing. Though Najib, 65, previously said that an impartial trial would be the “best chance” to clear his name, his legal team has been accused of using delaying tactics to hold up proceedings.
Najib’s lawyers obtained a court order from the Court of Appeal just a day before the original mid-February trial date to temporarily put the trial on hold until one of the appeals was resolved. Pre-trial appeal hearings were further delayed last month after lead counsel Muhammad Shafee Abdullah said he injured his wrist playing with his pet dog.
There was even speculation that the trial could be postponed at the very last minute after the defense today attempted to challenge the validity of the charges brought against the ex-premier by filing a certificate of urgency requesting a further stay of the hearing. High Court judge Justice Mohd Nazlan Mohd Ghazali in the end ordered for the trial to start.
Today’s hearings pertain to dealings at SRC International, a former subsidiary of 1MDB which pursued overseas investments in energy resources. An anti-graft probe last year uncovered 42 million ringgit ($10.3 million) in suspicious transactions involving the firm.
Those funds were found to be sent to Najib’s personal bank accounts and involve only a fraction of the total purportedly siphoned from 1MDB. The ex-premier faces a total of seven charges related to the transfer, including three counts of criminal breach of trust, three counts of money-laundering and one count of abuse of power.
If convicted on at least one of the seven charges, he faces both fines and jail time of up to 20 years. For the ruling Pakatan Harapan coalition led by Prime Minister Mahathir Mohamad, Najib’s trial represents the fulfillment of a key election promise to bring elite corruption to heel and resolve a scandal that has tarnished the country’s global standing.
While eager to deliver on promises made to the Malaysian people, the government and Attorney General Tommy Thomas have called for patience and respect for the judicial process in the face of procedural delays brought by the defense counsel, time which Najib has used to drum up support for himself and lambast the government on Facebook.
Amidst the politicking and regular legal skirmishes that have taken place, the facts of the case have fallen into the background, leaving a somewhat murky account of Najib’s alleged actions as they relate to SRC. Between December 2014 and February 2015, the premier received payments of 27 million, 5 million and 10 million ringgit from the 1MDB unit.
SRC International secured a 4.3 billion ringgit ($1.05 billion) loan from Retirement Fund (Incorporated) (KWAP), Malaysia’s largest public services pension fund responsible for administering the pensions of members of the country’s civil service, in 2011. The ostensible purpose of the loan was to fund strategic overseas energy investments.
Prior to that, in early November 2011, an SRC subsidiary, SRC International Limited (SRCI), launched a joint venture with Aabar Investments PJS (Aabar), called Aabar-SRC Strategic Resources Limited (ASRC), with each party putting up $60 million in starting capital. After receiving funding, SRC’s directors swiftly approved a series of investments.
The amount of $45.50 million was channeled into a Mongolian coal operation called Gobi Coal & Energy Limited (GCE) and $120 million went toward an Indonesian energy services company called PT ABM Investama TBK.
By February 2012, gains on the investment worth roughly $4 million were reported according to a declassified auditor-general’s report.
Ownership of SRC International was then transferred from 1MDB to the Ministry of Finance a day after those gains were recorded. In addition to holding the post of prime minister, Najib was also finance minister at the time and as Advisor Emeritus to SRC International, he was effectively in control of the company’s finances.
It was later revealed in the same report by the country’s National Audit Department that first investment was made without any form of feasibility study or business plan, and the second was done through the public acquisition of shares. The acquisitions and transfer of SRC shares to the finance ministry worked to reduce 1MDB’s operational losses.
The ownership transfer also put the Najib-helmed finance ministry in control of funds SRC had received as a subsidiary of 1MDB, including loans provided by KWAP and a government development grant, which would later trickle out of the company in the form of suspicious transactions, finding their way to the ex-premier’s personal bank accounts at AmBank.
According to the Wall Street Journal, from December 2014 and February 2015, SRC International transferred 50 million ringgit into one of its subsidiaries, Gandingan Mentari Sdn Bhd, which then transferred the funds into a private company called Ihsan Perdana Sdn Bhd, established to advance corporate social responsibility programs for 1MDB.
From Ihsan Perdana, 42 million ringgit was transferred into Najib’s private AmBank account in the three deposits of 27 million, 5 million and 10 million. The first tranche initially flowed through a construction company, Putrajaya Perdana Bhd, linked to fugitive Malaysian financier Low Taek Jho and onto its subsidiary, Permai Binaraya Sdn Bhd.
The funds, transferred to an account ending in ‘880’ known to belong to the ex-premier, were used to pay Visa and MasterCard bills totaling 3.2 million ringgit ($784,300). SRC International separately transferred 105 million ringgit and 30 million ringgit on July 14, 2014 and August 8, 2014 the same year to construction firm Putra Perdana.
Mohamed Apandi Ali, a former Najib-appointed attorney general, initially claimed in 2015 that these funds were gifted to the ex-premier by an unnamed Saudi royal, igniting intense public interest in the activities of 1MDB and spurring the US Department of Justice (DoJ) and investigators from multiple countries to launch their own investigations.
These events ultimately contributed to Najib’s unexpected political downfall, bringing his nine-year scandal-plagued rule to an end. The prosecution is reported to have over 60 witnesses, including government officers and bankers, slated to testify on dealings at SRC International over the course of the trial.
Thomas opened the trial with a statement to the court describing the former leader as wielding “near absolute power” during his premiership by “combining maximum political power and control of the nation’s purse” through his stewardship over the Finance Ministry.
The ex-premier appeared stoic as he entered the court today, not acknowledging the cries of supporters cheering him on. He was seen folding his hands in prayer as he entered the court ahead of what many have dubbed the “trial of the century.”