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Malaysia's Mahathir says 1MDB funds vanished, demands PM resign
[KUALA LUMPUR] Malaysian former strongman Mahathir Mohamad on Thursday launched the fiercest yet in a series of attacks on the country's prime minister, demanding he account for the disappearance of billions of dollars borrowed by state fund 1MDB, or resign.
"It is this disappearance of a huge amount of borrowed money by 1MDB and the inability to answer questions regarding what happened to the funds that disqualifies Najib from being prime minister of Malaysia," the 89-year-old wrote in his blog.
Najib Razak chairs the advisory board of 1Malaysia Development Berhad (1MDB), a power plant and property fund whose RM42 billion (S$15.66 billion) debt has weighed on Malaysia's sovereign rating and the ringgit in recent months.
The prime minister has ordered an audit of 1MDB's accounts by the country's Auditor General.
Mr Mahathir, who was prime minister for more than two decades before stepping down in 2003, is still widely respected and remains an influential voice in the main party of the ruling coalition. Mr Najib has been weakened by the attacks of his predecessor, but retains significant support within the party.
Mr Mahathir said that of nearly RM42 billion raised to finance purchases by 1MDB, about 27 billion was unaccounted for.
"Where is the rest of the money?" he wrote, arguing that governments can lose money through bad investments, but being unable to account for large sums was altogether different.
"... when huge sums of money disappear, then those entrusted with its management must answer for the disappearance," he said.
1MDB declined to comment on Mr Mahathir's statements.
The prime minister's office was not immediately available for comment.
1MDB reportedly bought two major land assets, Tun Razak Exchange (TRX) and Bandar Malaysia, at much lower than market rates from the government, incurring losses to the state.
"A company with RM1 million capital, with no assets, cannot borrow 42,000 times its capital with no collaterals. That 1MDB is able to do so is because of government guarantees," Mr Mahathir said in his blog.
"In other words it is government which is borrowing the money. If 1MDB loses money, the government will bear the loss."