Malaysia task force to freeze accounts in Najib money probe

[KUALA LUMPUR] A Malaysian task force ordered a freeze on six bank accounts believed linked to a money trail that allegedly showed funds connected to a state investment company ending up in Prime Minister Najib Razak's personal accounts.

The team obtained documents related to 17 accounts from two banks, the attorney general's office said in a statement issued jointly with the central bank, police and anti-corruption commission. The statement didn't name the banks or say who the accounts belong to.

"The investigation is ongoing," the task force said. "We appeal to everyone to give their fullest cooperation to complete this investigation."

A legal letter has been sent to the Wall Street Journal after its July 3 report that about US$700 million may have moved through government agencies and companies linked to debt-ridden 1Malaysia Development Bhd. before apparently appearing in Mr Najib's personal accounts, Mr Najib's spokesman Tengku Sariffuddin Tengku Ahmad said.

The crisis is the biggest to hit Mr Najib since he came to power in 2009 and has contributed to a fall in the ringgit. His deputy has called for the claims against him to be fully investigated, and the allegations come as Mr Najib's popularity with voters has declined amid concern over his handling of the economy.

Still, Mr Najib retains broad support among division heads alongside rank and file members of the ruling coalition, and some ministers have publicly backed him, saying the probe should be allowed to run its course. The task force has given no indication of how long its investigation will take. It conducted raids on July 3 on the premises of three companies linked to the funds.

LEGAL LETTER

The legal letter criticises the Wall Street Journal's reports and asks the newspaper to clarify whether it is alleging that Mr Najib misappropriated funds from 1MDB, according to a copy obtained by Bloomberg News. The letter, from law firm Hafarizam Wan & Aisha Mubarak, said the attorneys are advising Najib on a possible legal response to the articles.

Two calls and one e-mail to a spokeswoman for Wall Street Journal publisher Dow Jones & Co in Hong Kong were not answered. The law firm acting for Mr Najib did not immediately respond to a call seeking comment.

Financial woes at 1MDB led it in February to announce plans to wind down much of its business. A month later the government ordered the Auditor-General to verify 1MDB's accounts, and Mr Najib asked investigators to expedite the process in May. The Auditor- General said last week it completed an interim report and will submit it on July 9 to a parliamentary committee that's also probing 1MDB.

GOVERNMENT MINISTERS

Mr Najib has called the claims he received 1MDB funds part of a campaign of political sabotage aimed at ousting him.

While Deputy Prime Minister Muhyiddin Yassin has called on Mr Najib to give a convincing explanation or denial, Home Minister Ahmad Zahid Hamidi has said attempts to undermine a serving leader may be a risk to national security, while Defence Minister Hishammuddin Hussein said it's reckless to criticize Mr Najib as the truth has not been determined.

It's unnecessary for Mr Najib to take a leave of absence pending the investigation as he hasn't been charged with any crime, the Malay Mail Online reported Monday, citing Youth and Sports Minister Khairy Jamaluddin.

'ONLY IN MALAYSIA'

In other countries, political leaders would step down from their position and apologise for such a scandal, former premier Mahathir Mohamad, one of Najib's most outspoken critics, said in a blog post on Tuesday.

"Only in Malaysia there are people who defend their leader without reason, only to preserve their own position," he said.

Mr Mahathir, 89, who led the country for more than 20 years until 2003, has repeatedly called for Mr Najib to resign in recent months, prompting a public rebuke from Mr Najib.

"There is presently no formal need for him to resign," said Ooi Kee Beng, deputy director of Singapore's Institute of Southeast Asian Studies, speaking of Mr Najib. "He has to be convicted of a serious crime to be forced out."

BLOOMBERG

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