Overseas graft probes pose new challenge for Malaysian PM

KUALA LUMPUR: Mounting investigations by US and other foreign authorities are undermining the Malaysian premier´s attempts to quash corruption allegations, and analysts said they could further hasten his descent into an international pariah, even if criminal charges are dodged.
Prime Minister Najib Razak has used the blunt force of his government, in power for 58 years, to stymie Malaysian probes into hundreds of millions of dollars in mysterious overseas fund movements.
But the Wall Street Journal and New York Times have separately reported that the FBI and the US Justice Department were now scrutinising the flows, adding to investigations by Swiss, British, Singaporean and Hong Kong authorities.
"These investigations are now happening in places where some of this money was parked. If Najib hasn´t started losing sleep yet, he should," said Cynthia Gabriel, head of Malaysia´s Centre to Combat Corruption and Cronyism.
Malaysians have become inured to ruling-party corruption, but the scale of the latest scandal has provoked disbelief.
It began last year with allegations that perhaps more than a billion dollars went missing from overseas transactions by a Najib-linked state company, and was capped in July by the startling revelation that nearly $700 million was transferred into the premier´s own bank accounts.
The New York Times on Monday said the Justice Department was also investigating multi-million-dollar US property purchases by companies linked to Najib´s stepson and by a close family friend, citing people with knowledge of the probe.
The prospect of foreign charges against Najib remains remote for now -- that would require unlikely cooperation from Malaysia´s government in the highly complex investigations, experts said.
But the scrutiny further tars the image of Najib, an Anglophile who has curried Western favour by portraying himself as a moderate Muslim.
"He has been welcomed overseas with open arms. Now he is going to be shunned. That´ll be hard to swallow," said John Malott, a former US ambassador to Malaysia.Both Najib and the government-owned company, 1Malaysia Development Berhad (1MDB), whose advisory board he chairs, deny that the firm´s funds were diverted to his accounts.
He alleges a conspiracy to unseat him, increasingly blaming Mahathir Mohamad, Malaysia´s no-nonsense leader from 1981-2003 who has bitterly split with Najib over recent ruling-party election setbacks.
The government calls deposits to Najib´s accounts "political donations" from unspecified Middle Eastern sources. Mahathir has called that "absurd".
Neither Najib nor 1MDB responded to requests for comment.
The scandal has provided fresh ammunition to critics who accuse the ruling United Malays National Organisation (UMNO) of corruption, abuse of power, and a culture of impunity, which the opposition says has worsened under Najib.
Najib took office in 2009 already tainted by an earlier scandal over alleged kickbacks from French submarine purchases when he was defence minister.
The case, never fully investigated, also involved the mysterious murder by his bodyguards of a Mongolian woman linked to the deals. Najib denies any wrongdoing.
Malott said one 1MDB casualty could be the warming relationship between Najib and US President Barack Obama, who has touted Malaysia as a key partner in regional issues, including South China Sea security.
The pair famously bonded over a round of golf last December in Hawaii, but a more aloof Obama will attend a coming regional summit in November hosted by Najib, Malott said.
"For sure, there won´t be any golf games in November," he said.
Najib and his government may also find it harder to conduct overseas financial business, said Jason Sharman, an expert on money laundering with Australia´s Griffith University."You can be sure banks around the world are adjusting their exposure to Najib and those associated with him," he said, adding they would not want to be liable for any claims of money laundering down the line. Sharman added that Najib´s acceptance of questionable money into his personal accounts was "not the most clever thing to do."
Najib, who earlier sacked his deputy premier and attorney-general, continues to move against his critics. On Friday, police arrested a former UMNO official, Khairuddin Abu Hassan, who has met regulators in various countries to push for investigations. He has been charged with seeking to undermine the government. But the damage is already done, said Tony Pua, an opposition parliamentarian who has crusaded to expose the scandal.