Malaysia’s central bank chief latest to fall as 1MDB probes accelerate

KUALA LUMPUR, Malaysia (UPDATED) – Malaysia’s 1MDB scandal claimed another scalp Wednesday, June 6, with the resignation of the central bank governor after a controversy linked to the stricken investment fund, as the new government steps up probes into the alleged plundering of state coffers.

Allegations that billions of dollars were pillaged from the sovereign wealth fund were a major factor in the shock election loss last month of Najib Razak’s coalition, which had ruled Malaysia since independence from Britain in 1957.

Najib, his family and cronies were accused of looting 1 Malaysia Development Berhad (1MDB) and using stolen funds to buy everything from artworks to real estate, in a sophisticated campaign of fraud and embezzlement that stretched around the world.

As the scandal escalated, Najib lurched sharply to the right and purged opponents in government, who were replaced with figures that critics said were more willing to do the scandal-mired leader’s bidding.

Muhammad Ibrahim, governor of the Bank Negara Malaysia, the central bank, was appointed in 2016 following the departure of his long-serving predecessor, who left her post after increasingly finding herself at odds with Najib over the graft claims.

Prime Minister Mahathir Mohamad announced Wednesday that Muhammad, a Harvard-educated banker who had been at the central bank over 3 decades, had submitted his resignation.

It came after the bank admitted to buying land from Najib’s regime in Kuala Lumpur in late 2017 for about two billion ringgit ($500 million), with the finance ministry saying the cash was used to service 1MDB’s debts.

The bank has insisted the land was bought at a fair price and said it had given details about the matter to anti-corruption authorities for them to conduct a review.

Heads roll

Muhammad was the latest leading public figure to either quit or be forced from his post after the return to power of Mahathir, 92, who had a first stint as premier from 1981-2003 and came out of retirement to defeat Najib.

New Attorney-General Tommy Thomas – whose predecessor had cleared Najib of wrongdoing over 1MDB, and was pushed out of the job after the old regime lost power – started work Wednesday with a vow to pursue those allegedly involved in the scandal.

“The government’s first and immediate priority is all matters pertaining to 1MDB,” said Thomas in a statement.

He said “alleged wrongdoers” would be taken to court and insisted: “No one will be spared. There will be no cover-up”.

The finance ministry meanwhile sounded the alarm about a “highly suspicious” 9.4-billion ringgit ($2.4 billion) China-backed deal to build pipelines signed under Najib’s government, saying it was likely linked to 1MDB.

The deal was one of a series of big-ticket, Beijing-backed projects signed during Najib’s leadership, fueling suspicions China was helping the scandal-mired leader pay off debts racked up by the stricken fund.

The ministry said that 8.25 billion ringgit had already been drawn down by the Chinese company building the pipelines – but only 13% of the work completed.

The deal was largely funded by a Chinese state-owned bank. Najib insisted all laws had been complied with in the signing of the project. – Rappler.com