KUALA LUMPUR - CIMB Group's Chairman Nazir Razak announced on Monday (April 18) that he has taken leave of absence pending a review of the bank's processes and policies, following his recent admission of his role in the distribution of US$7 million (S$9.5 million) in political funds in the run up to the 2013 election at the request of his older brother, Prime Minister Najib Razak.
"My brother asked for some help and I agreed after assessing that it does not involve anything illegal or misusing of my position at CIMB or any inappropriate use of CIMB resources," Datuk Seri Nazir said at a press conference.
"I feel that unless I'm completely absent from the company during this period, this institution would not be practising the highest standards of corporate governance," he added.
The Straits Times learnt that Mr Nazir had wanted to resign from his position at CIMB, Malaysia's second largest bank by assets, but the board of directors disagreed with his decision. However, a CIMB spokesman denied any talk of Mr Nazir resigning.
While institutional investors were unhappy with Mr Nazir's role in the political distribution of funds, shareholders voted in favour of having him remain as chairman on Monday.
The Wall Street Journal reported in March that Datuk Seri Najib had transferred money from his bank accounts to various parties, including US$7 million to Mr Nazir that was transferred to Umno politicians.
Mr Nazir later admitted to the newspaper that he had helped his brother distribute the funds.
Speaking to reporters on Monday, he said a special board meeting was held on April 5 to review the article and the board decided to engage Ernst & Young as an independent external auditor to assist in reviewing the bank's processes.
"I acted based on what I knew at that time. And of course given all the controversies around 1MDB and sources of political funding, I regretted it," said Mr Nazir, referring to debt-riden state investor 1Malaysia Development Berhad.
He also denied having been asked more than once by his brother for such a favour.
"There was no other time when my brother asked for this kind of assistance," he stressed.
Mr Najib has only led one election - in 2013 - thus far, which saw the ruling Barisan Nasional (BN) coalition lost the popular vote for the first time in its 58 years of power, and its seats in Parliament dropped to its lowest.
CIMB's Chief Executive Tengku Zafrul Tengku Abdul Aziz said on Monday that the review involves looking at the processes in the distribution of funds and the approach that was taken in the case.
Mr Nazir’s involvement in the disbursement of political funds has drawn surprise in Malaysia. Since becoming CIMB chairman in 2014, he has been vocal about national issues. He has been critical of 1MDB and called for its board and management to resign last year, while bemoaning the state of the country that his brother has governed since 2009.
He has been critical of his brother's handling of the scandals surrounding 1MDB, often posting his views on Instagram.
Malaysia's next election is due by mid-2018 while the Sarawak state is having its election on May 7.