By Jennifer Pak, Kuala Lumpur From BBC News

Malaysians are no strangers to money politics but the high-profile players and the amount of funds allegedly involved in the so-called “1MDB scandal” have gripped the nation.

What is the controversy about?

It stems from Prime Minister Najib Razak’s strategic state fund called 1Malaysia Development Bhd (1MDB) set up in 2009 when he came into office. The fund is meant to turn Kuala Lumpur into a financial hub.

It started to attract national attention when it missed payments for the $11bn (£7.1bn; €9.9bn) it owes to banks and bondholders.

Former Prime Minister Mahathir Mohamad has said the fund has taken on too much debt and lacks transparency. He has also criticised Mr Najib’s family’s “lavish” lifestyle, which has been regularly discussed in the local press.

Then the Wall Street Journal (WSJ) reported it had seen a paper trail that allegedly traces close to $700m from the troubled fund to Mr Najib’s personal bank accounts.

Mr Najib is now facing calls to prove his assets are legal.

What do those involved say?

1MDB said in a statement that it has never given money to the prime minister and called the claims “unsubstantiated.” It repeatedly states that the company has assets worth more than its debts.

Mr Najib also denied taking money from 1MDB or any public funds, and his lawyers have demanded an explanation from the WSJ on its report.

According to the New Straits Times, he told local reporters that it was “illogical” for him to embezzle money and then stash it in his personal account.

Then in a post on his Facebook page, he accused his fiercest critic, Mr Mahathir, of “political sabotage”.

Mr Najib said he believed Mr Mahathir worked “hand in glove” with foreigners as part of a campaign “to topple a democratically elected prime minister.” He said these attacks began when he refused to implement Mr Mahathir’s “personal demands”.
Mahathir Mohamed told the BBC’s Jennifer Pak: ”Let’s see the accounts (of the prime minister)”

The BBC put Mr Najib’s allegations to Mr Mahathir, who dismissed the claims. Instead, he called on the prime minister to show proof that he didn’t pocket state funds.

Mr Najib has said the money is a donation and Malaysia’s anti-corruption commission says it has verified that claim, adding that the donors who deposited the money are from the Middle East. It did not disclose their identities.

The accounts have since been closed and it is not known where the money is now.

Meanwhile, there are a few official investigations into the 1MDB fund, including a special task force headed by the attorney general. The team raided the office of 1MDB and took away some documents.

But Mr Najib subsequently removed the attorney general on health grounds and the investigation has been suspended.

Swiss authorities have opened criminal proceedings related to 1MDB on “suspected corruption of public foreign officials, dishonest management of public interests and money laundering”.

Could this spell the end for Najib?

Not necessarily. The opposition Pakatan Rakyat alliance has effectively collapsed from infighting so there is less outside pressure on Prime Minister Najib.

His greatest threat comes from his own governing party and in particular Mr Mahathir, who is still regarded as the father of modern Malaysia and highly respected.

This is Mr Mahathir’s third campaign against the men he groomed to be the country’s next leaders. He successfully ousted his deputy, Anwar Ibrahim, in the late 1990s and also forced his successor, Abdullah Badawi, to step down. Now Mr Mahathir has called on Mr Najib to resign.

Pro-democracy group Bersih has also demanded his resignation.
What do Malaysians think about it?
The 1MDB controversy had been featured prominently in the local press for months but few Malaysians understood what it could mean until the WSJ report.

It now resonates with many Malaysians who are struggling with the rising cost of living. The alleged mismanagement of a state fund makes many poor Malaysians resent paying the new broad-based consumption tax.

But it hasn’t made Malaysians lose their sense of humour.

One social media trend recently was to think of major film titles with a 1MDB twist.

Some of the more popular ones included: “Frozen (bank accounts)”, “42 billion shades of debt”, “How to train your ministers” and “The debt knight rises.”

One Twitter user summed up the feeling of confusion in the country: “Malaysia is now in the darkest of political times.”

Malaysian authorities have, in recent weeks, blocked online access to a website and newspapers that covered the 1MDB scandal extensively.

Images:
Image copyright Reuters
Malaysians and Singaporeans have been mocking the scandal with parody movie titles
The hashtag #1MDBmovies has become popular on Twitter Image copyright Twitter
Image copyright AP
Image caption Authorities seized computers when they raided 1MDB offices
Image copyright AFP / getty images
Image caption The PM denies any corruption allegations

For more on this story and video go to: http://www.bbc.com/news/world-asia-33447456

See related iNews Cayman story wirh link to others published September 3 2015 “1MDB scandal: Swiss authorities freeze millions in assets amid investigations of Malaysian fund” at: http://www.ieyenews.com/wordpress/1mdb-scandal-swiss-authorities-freeze-millions-in-assets-amid-investigations-of-malaysian-fund/

See also:
Malaysia’s 1MDB Fund Scandal Spreads to U.A.E.
At issue is a $1.4 billion payment from 1MDB that officials at an Abu Dhabi investment fund said is missing
By BRADLEY HOPE and TOM WRIGHT From Wall Street Journal
The corruption scandal around an economic-development fund in Malaysia is spilling beyond the country’s borders, as officials at a United Arab Emirates state investment vehicle raise questions about more than a billion dollars in money that they said is missing.
For more on this story go to: http://www.wsj.com/articles/malaysia-fund-scandal-spreads-to-u-a-e-1441755072

WSJ’s use of confidential documents shocks 1MDB

From The Star

PETALING JAYA: 1Malaysia Development Bhd has criticised the Wall Street Journal for using confidential information from a parliamentary committee probe, which is yet to be presented to Parliament.

“We are shocked that a reputable publisher such as the Wall Street Journal would make use of clearly confidential information in its reporting.

“We refer specifically to the WSJ confirming it has reviewed a ‘transcript of the proceedings’, from a parliamentary committee probing 1MDB, of which the only possible source is the Public Accounts Committee
(PAC) hearings on 1MDB.

“The Standing Orders of the Malaysian Parliament very clearly states that ‘the evidence taken before any Select Committee and any documents presented to such Committee shall not be published by any member of such Committee, or by any other person, before the Committee has presented its Report to the House,’ 1MDB said in a statement on Wednesday.

It said the actions by WSJ were a potential breach of Malaysian law by a supposedly respectable foreign publication.

“We are further concerned as to who involved in the PAC hearings may have leaked this transcript, which is clearly an attempt to prejudice the PAC investigations and deny 1MDB its right to due process as provided for by the laws of Malaysia.

“1MDB strongly urges the relevant authorities to investigate this matter thoroughly and take all requisite action to preserve the process integrity and Standing Orders,” it said on Wednesday.

1MDB further stated that WSJ, in the article relating to US$1.4bil of payments made by 1MDB, made no mention of its source or provide any proof of the unproven allegations it is making, thereby seriously discrediting its sensationalist story.

“1MDB cannot speak on behalf of Aabar or IPIC nor can we comment on the accounting arrangements of third parties.

“What we can confirm is that the 1MDB audited financial statements clearly describe the amount and purpose of the payments, which for the avoidance of doubt, is structured as a deposit (i.e. a financial asset belonging to 1MDB and not an expense to 1MDB).

“Secondly, based on those payments, we can confirm that IPIC did provide and continues to provide, guarantees for the principal and interest of 2 x US$1.75bil bonds issued by 1MDB, with a total principal and interest amount of approximately US$5.5bil.

“Thirdly, we can confirm that 1MDB auditors, Deloitte, made specific and detailed enquiries on these payments prior to signing off on the 1MDB audited accounts.

“Fourthly, Deloitte has strongly defended its methodology and audit process of 1MDB at the PAC hearings, a bipartisan select committee of the Malaysian Parliament. Accordingly, the Wall Street Journal is wrong to state “it isn’t clear what happened to the funds”, at least not from a 1MDB perspective,” it said.

WSJ reported that the US$1.4bil (RM6.03bil) that 1MDB claimed to have paid to a United Arab Emirates state investment vehicle had allegedly gone missing.

It was reported that sources said UAE are asking questions on the US$1.4bil which is said to have never reached their investment fund, the IPIC.

For more on this story go to: http://www.thestar.com.my/News/Nation/2015/09/09/1MDB-Shocked-WSJ/