KUALA LUMPUR (BLOOMBERG) - Investigators have cleared Malaysian Prime Minister Najib Razak of corruption over hundreds of millions of dollars donated to his personal bank accounts, bringing him closer to ending his biggest crisis in nearly seven years in power.
The US$681 million (S$973 million) transferred to Datuk Seri Najib in early 2013 was from the Saudi Arabia royal family, Attorney-General Mohamed Apandi Ali told reporters on Tuesday (Jan 26), citing investigations by the anti-graft agency.
Mr Najib returned US$620 million that was not utilised, in August that year, he added.
“Based on the facts and evidence as a whole, I as the public prosecutor am satisfied that no criminal offence has been committed,” he said.
The Attorney-General will instruct the Malaysian Anti-Corruption Commission to close the investigation papers related to the case.
The funding scandal has roiled Malaysia for seven months, sparking political tensions within Mr Najib’s own Umno party.
The 62-year-old leader has said the funds that appeared before the 2013 General Election was to meet the needs of the party and the community and not a new practice, and denied taking money for personal gain.
He has faced a public campaign by former premier Mahathir Mohamad to get him out, with Dr Mahathir warning that their Umno party and the broader ruling Barisan Nasional coalition risk losing the next election due by 2018 if Mr Najib stays on.
The alliance lost the popular vote for the first time in 2013 as non-Malay voters deserted it.
- VOTER SENTIMENT -
“Can the government move on? Yes,” said Dr Ibrahim Suffian, an analyst at the Merdeka Centre for Opinion Research. “But will the allegation affect the sentiment of the voters? It depends on how the government performs over the next couple of years.”
Mr Najib is grappling with a slowing economy as government revenues are hit by falling oil prices. He is expected to announce a revision to growth forecasts and cuts to operating expenditure on Thursday to keep the fiscal deficit for 2016 in check.
The key for him is how much the economic pullback impacts the lives of voters. Malaysians are faced with rising costs from transportation to food and electricity as the government removes subsidies and after the implementation of a goods and services tax last year.
- STOCKS, BONDS -
“If things remain largely the same or if things continue to worsen as far as the economy is concerned, then the sentiments that will be carried over into the election will be negative,” Dr Ibrahim said.
Investors periodically dumped Malaysia’s stocks, bonds and currency last year. Foreign investors pulled RM30.6 billion (S$10.23 billion) from stocks and bonds in 2015 and helped send the currency to a 17-year low.
“Once a leader has these kinds of negative perception, it affects investor confidence as a whole on concern of how the country is being run,” said Mr Danny Wong Teck Meng, chief executive officer of Areca Capital, which manages about US$224 million in assets.
“It would be hard to change this negative perception. Fund managers in the US and Europe will not put Malaysia as attractive as peers after considering political factors."