SINGAPORE: The 1MDB trial is just the start of Malaysia's war on graft. On Wednesday, former Prime Minister Datuk Seri Najib Tun Razak was charged in connection with the $6 billion scandal.
The swift action is commendable. Deeper change is needed to reassure investors, though.
That means measures like forcing politicians to declare assets, and regulating party funding.
The case follows Najib's dramatic election defeat in May to former mentor, Tun Dr Mahathir Mohamad.
Wednesday’s charges, focused on a small former 1MDB unit, mark a step in a long process. Najib pleaded not guilty.
Footage of Najib jostling his way into court sends a message in a country where the lines between business, politics and personal wealth have long been blurred.
If anything, Malaysia’s 62nd place ranking in last year’s Corruption Perceptions Index understates the problem.
Investigators have gone straight for the top, which is encouraging for investors hoping Malaysia can clean up.
The net will be cast wide. Najib's wife and stepson have been questioned. Last month Reuters reported authorities had issued an arrest warrant for Low Taek Jho, a financier also known as Jho Low.
1MDB officials and outside advisers like Goldman Sachs, who helped arrange bond sales, will no doubt be quizzed. Najib, facing 20 years in jail, has an incentive to help unpick the mess.
There is a deeper issue for Malaysia: ensuring this is more than a personal vendetta by Mahathir.
On the campaign trail, he railed against kleptocracy and cronyism. Cleaning up after 1MDB is only the first part of that. Just as important will be to set in place provisions to ensure there are no further 1MDBs.
Two provisions are key. Firstly, Malaysia needs laws forcing politicians and senior civil servants to declare their wealth, making it harder to amass inexplicable fortunes.
The current scandal should push through past objections.
Secondly, it would benefit from clearer rules and limits on funding for political parties, since the current system makes it too easy for lawmakers to demand dodgy donations.
That would help make Kuala Lumpur a more attractive investment destination.
CONTEXT NEWS
- On July 4, Malaysian authorities charged Najib with three counts of criminal breach of trust and one count of using his position for gratification, as part of an investigation into state fund 1Malaysia Development Berhad (1MDB).
- The charges relate to the transfer of 42 million ringgit ($10.4 million) from SRC International, then a 1MDB unit, into Najib’s personal account. The Straits Times newspaper said the offences carry sentences of between two and 20 years with possible fines.
- Najib, who lost a May general election, was arrested on July 3. He had been barred from leaving the country and has had millions of dollars of items seized from family properties.
- A spokesman for Najib said the charges were politically motivated, adding Najib would contest them and clear his name in court. - Reuters
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