1MDB scandal / Why the region’s corrupt politicians should watch the 1MDB trial closely

By: Paul Millar - Posted on: April 3, 2019 | Current Affairs

Ten years to the day after being sworn in as prime minister of Malaysia, Najib Razak is standing trial for a slew of corruption and money laundering crimes. Asia Institute Tasmania director James Chin breaks down what the nation’s most high-profile trial means for the region’s once-untouchable political elite

Former Malaysia's prime minister Najib Razak leaving the courthouse in Kuala Lumpur in December Photo: Mohd Rasfan / AFP
Former Malaysia’s prime minister Najib Razak leaving the courthouse in Kuala Lumpur in December Photo: Mohd Rasfan / AFP

This week it’s been revealed that Malaysia’s Inland Revenue Board has slapped Najib with a RM1.5billion tax bill for undeclared income. Najib is disputing the fact that he would have to pay tax on the RM2.6billion income that he received from unverified sources, claiming that it came from donations. To the best of your knowledge, does the question of whether or not these were donations from foreign governments – or even taken from the 1MDB fund – matter in terms of having to pay tax on that income?
The first thing is that he’s absolutely wrong. In Malaysia, the way that the tax system is set up, you pay tax on all incomes unless you derive money from a country with which you have a tax treaty – otherwise you have to pay tax. Secondly, most people don’t really care where the money came from. Most people in Malaysia believe that these were the corrupt proceeds from 1MDB.

With this trial coming ten years to the day after Najib Razak was sworn in as prime minister, could you talk about the significance for many Malaysians in seeing a former prime minister on trial for a slew of corruption charges?
I think the trial is highly significant not only for Malaysia but for the region as well. It was always understood in the region that if you hold the number one political office, there was this unwritten guarantee that when you left office your successor would leave you alone. In other words, although there were allegations of corruption around an administration, by and large no former prime ministers have been charged in court, other than the Philippines – but that was a separate case.

By and large for Malaysia, Singapore, Thailand, Indonesia, if you look around the region most of the previous holder of the number one political post got away with it. So this has shown a shift in political culture in the region.

For Malaysians I think it’s highly significant, because last year when they got rid of Najib it was the first regime change, and they really wanted to see Najib and his wife go to jail over corruption. So I think that the new government has no choice but to make sure that this happens. Because if this does not happen, the voters will be very angry and will punish the current government at the next election.

On that note – that there is strong political motivation for Mahathir’s government to fulfil these election promises to hold Najib to account for all these allegations of corruption – to what extent is there a sense that there’s too much momentum behind this for Najib to get a fair trial?
I would suggest that this trial is not a political trial because if you look at the charges, the entire charge list is based off financial transactions – in other words, all of the charges are related to the money trail rather than political decisions. If it was a political trial, there would be charges for certain decisions that he had made. In this case, they’re just following the money trial from this company called SRC International, which went through two intermediaries before it ended up in Najib’s account. So I doubt seriously that this will be a politically motivated trial.

For years there’s been talk about systemic corruption in Malaysia. Obviously, this is the most high-profile alleged example of that, but do you think that the new government has the will and the motivation to be rooting out more entrenched forms of corruption within Malaysia’s political institutions?
I think what a lot of people are concerned about is that the will might not be there when the next guy takes over. In the case of Mahathir, obviously he’s leaving sometime next year. He wants his legacy preserved, so I think he’s quite serious about the anti-corruption thing. But I think over the long run, it’s all to do with the systems – they need to put a system in place, which would allow the system to deal with corruption. At the present moment that system does not exist.

Anything else to add?
The only thing I would add is that Najib is still trying to delay his trial because he’s worried that this trial will affect all of the other trials – especially his wife’s trial. People should not take today’s opening too seriously, because his defence team may try some other legal maneuver over the next few days to delay the trial further.