from Asia Unbound

Malaysia’s Political Crisis Deepens

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August 3, 2015

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This past week, the crisis in Malaysia’s governing coalition has only grown deeper, with the sacking of several prominent ministers in a scene that could remind one of the Nixon administration’s October, 1973 Saturday Night Massacre. As stories continued to emerge alleging improprieties in Malaysia’s state 1MDB fund, including the alleged deposit of funds into the personal accounts of Prime Minister Najib tun Razak, sentiment in the governing coalition about Najib appeared to be split. According to numerous media reports, the Deputy Prime Minister, Muhyiddin Yassin, had become increasingly critical of Najib. Muhyiddin had publicly urged the prime minister to offer a clear explanation of how monies from 1MDB were utilized by the government. In private, the deputy appeared to have gone farther in his critique of the prime minister. In one video clip that has surfaced and been reported by multiple Southeast Asian media outlets, Muhyiddin Yassin is seen talking with the chief minister of Kedah state and several other people. In the video, Muhyiddin Yassin relates “a supposed conversation he had with Prime Minister Najib Razak about funds going into his personal bank account,” according to Singapore’s Channel News Asia. Other leading members of the United Malays National Organisation (UMNO), the dominant party in the governing coalition, also reportedly had begun questioning whether Najib could still lead.

Then, early last week, Najib abruptly dismissed his deputy prime minister, as well as four other ministers. Najib replaced them with some of the prime minister’s most trusted loyalists. He also dismissed the attorney general, a longtime party loyalist who, according to several Malaysian journalists, had nonetheless been willing to pursue a thorough investigation into 1MDB and the prime minister. When he was dismissed, the attorney general had only three months left before he was due to retire. In the process of the reshuffle, the prime minister elevated four people from a parliamentary committee that was supposed to investigate the state fund. This maneuver may slow the work of the committee’s investigation.

Although Najib’s actions may have removed the most imminent challenges to his power from within his cabinet, they are unlikely to stop the tension within the governing coalition. Former Prime Minister Mahathir Mohamad, who has been publicly criticizing Najib for months, is likely to step up his attacks now; even after last week’s Cabinet reshuffle, Mahathir still has powerful allies within UMNO, including Mahathir’s son. Mahathir’s allies are likely to continue to put pressure on Najib, within the coalition, to step aside, especially if other media outlets produce further revelations about 1MDB.

In addition, despite the removal of the attorney general, the potential weakening of the assets committee, and the dismissal of the deputy prime minister, Najib has not stopped all the investigations into 1MDB. According to Asia Sentinel, the respected central banker, Zeti Akhtar Aziz, continues to pursue a potentially explosive investigation into the dealings of the state fund. Some reports suggest the central bank has amassed a large pile of documents about 1MDB that might contain explosive information.

Removing Zeti would be difficult, since the head of the central bank cannot be directly removed by the prime minister. Even if Najib could manage a way to get her removed, by working through Malaysia’s king, removing her would be a serious blow for the independence of Malaysia’s central bank, at a time when investors are already wary of the country and the ringgit has fallen to sixteen year lows against the U.S. dollar.

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