Najib's guilty verdict could strengthen new government's hand

Kuala Lumpur

SEEN as a test of Malaysia's anti-corruption credentials, the guilty verdict against former prime minister Najib Razak in the first of the 1MDB trials could strengthen the new government's hand after months of political turmoil.

The High Court on Tuesday sentenced Najib to 12 years in jail after finding him guilty of all seven charges in the case involving RM42 million (S$13.6 million) of funds deposited in his personal accounts from a former unit of troubled state fund 1MDB.

While Najib's lawyer said he would appeal the ruling, the decision provides Prime Minister Muhyiddin Yassin political capital at a time when his administration controls a razor-thin majority in parliament and talk of a snap election is heating up.

The verdict comes days after a US$3.9 billion settlement struck with Goldman Sachs Group to help resolve the 1MDB case against the bank, while seeing Malaysia recoup some of the money lost through the troubled state fund.

"Politically, it strengthens PM Muhyiddin's hand," said Wong Chin Huat, a political scientist and professor at Sunway University. "He could claim that the anti-graft drive that started under" the previous Pakatan Harapan government "is continuing under him".

GET BT IN YOUR INBOX DAILY

Start and end each day with the latest news stories and analyses delivered straight to your inbox.

Sign UpVIEW ALL

Mr Muhyiddin's government came to power earlier this year on the backing of the United Malays National Organisation, known as UMNO, the party once led by Najib.

Since then, the administration faced public backlash after prosecutors reached a deal to drop 1MDB-related charges against Najib's stepson Riza Aziz, even as Mr Muhyiddin himself repeatedly pledged to ensure justice. While the ruling on Tuesday means the prime minister could lose support from pro-Najib factions within UMNO, he may be able to pick it up elsewhere, which would be critical to securing majority support for the 2021 state budget set to be tabled in parliament this November, Prof Wong said.

The opposition has been planning to launch a no-confidence vote against Mr Muhyiddin for months, even as it struggled to agree on who should be its prime minister candidate.

"This story is far from over," said Peter Mumford, Southeast & South Asia practice head at risk consultancy Eurasia Group. "In some ways the outcome is better for Muhyiddin as it would be tricky for him to campaign in the likely upcoming election if there were accusations that he had somehow engineered an acquittal for Najib."

Delivering the verdict on Tuesday, High Court Judge Mohd Nazlan Mohd Ghazali told the court he found "the defence has not succeeded in rebutting the presumption on the balance of probabilities or raising reasonable doubt on the charge against the accused."

Najib was sentenced to 12 years in jail for one count of abuse of power, as well as 10 years each for three charges of money laundering and three criminal breach of trust charges, to be served concurrently. He must also pay a fine of RM210 million or face an additional five years imprisonment. He was released on bail late Tuesday.

"Najib's influence among conservative Malays is still strong," said Awang Azman Awang Pawi, an associate professor at the University of Malaya. "This does not mean the end of Najib's political life because there is an appeal process and anything can happen in politics."

Prosecutors questioned dozens of witnesses over months to build a case that showed Najib's "pervasive and imperious" role in SRC International Sdn, the former unit of 1MDB, the judge said in November.

On Tuesday, the former leader maintained he acted in the best interests of the country and said he never demanded the money and had no knowledge of it. His lawyers had argued he'd been misled by others, including fugitive financier Low Taek Jho.

Jho Low played a crucial role in transferring the funds to Najib's account, the judge said on Tuesday. BlackBerry Messenger conversations revealed the two were communicating, and there was no basis to claim the account balance was being hidden from Najib. Low has consistently denied wrongdoing.

The judge also dismissed the defence's premise that they believed the funds were a donation from the Saudi royal family. Najib could have verified it himself with the Saudi government, yet chose to take Low's word for it, the judge said. On charges of money laundering, the judge said Najib practiced "willful blindness" to the receipt of the proceeds.

The trial is only the first of at least three involving Najib, who faces dozens more corruption and money-laundering charges, including those linked to billion-dollar acquisitions and bond sales by the scandal-ridden fund. BLOOMBERG