Malaysia: Prime Minister implicated in financial scandals

Power struggle in UMNO party

On 27 July, Najib, the Malaysia Prime Minister, in a cabinet reshuffle, sacked his deputy Muhyiddin and some other leaders. This was in order to consolidate his power in the government and UMNO (United Malay National Organisation), the dominant ruling party in BN (National Front). Criticism of Najib is growing after he failed to explain the scandals of corruption and mismanagement of billions, related to 1MDB (1Malaysia development Berhad – a government-owned development company). Najib, who is also the Finance Minister, leads this company.

Various financial scandals involving Najib, his wife and family, and businessman have been revealed by media and opposition political leaders linked to 42 billion Ringgit (Malaysian currency) lost by 1MDB. Recently, the Wall Street Journal revealed that around $700 million dollars were channeled to Najib’s private bank account just before the last general elections in 2013. Now the government argues that it was ‘donations’ from some businessmen in the Middle East. The funds are also believed to have been used as election ‘goodies’ (bribes) in the last general elections.

This has created more anger and disgust towards the UMNO and the ruling government, and with the worsening economic conditions, this is leading to a power struggle in the UMNO that could create more chaos in Malaysian politics.

Partial investigation

Initially, under pressure, the government was forced to form a Public Accounts Committee (PAC) which also includes a few opposition political leaders, and a special Task Force with the chief of police, state bank, Attorney-General’s (AG) chambers and the Malaysian Anti-Corruption Commission (MACC) to investigate the IMDB scandals. In the cabinet reshuffle Najib offered government posts to the chief and some other members of the PAC, to invalidate its role. The AG who led the special Task Force on 1MDB was sacked on the same day, linked to his attempts to implicate Najib on 1MDB wrongdoings in court. With these developments, the Task Force and PAC were disabled. Even the police were instructed to investigate some members of Task Force for the accusation of revealing some findings of the investigation to the public. The interference of Najib and his government machinery in the PAC and Task Force showed that these investigation bodies are not independent.

In the last few weeks, Najib has also launched a crackdown on independent media, activists and opposition leaders, to crush public protests over the scandals. But this has created more suspicion of Najib and its government.

The 42 billion Ringgit that are missing in 1MDB are should be transparently investigated without any bias, and people have every right to know where the money has gone. But with the pro-capitalist agenda of the BN government, the 1MDB scandals showed that billions of Ringgit were siphoned off to the pockets of the political elite and big business for their luxury and profits. Socialist Alternative (CWI in Malaysia) did not trust the government and the elites in the investigations bodies, and demands the formation of an independent committee consisting of members with proven track records initiated by trade unions, social movements and human rights groups for fair and transparent investigation.

Conflict in UMNO party

Mahathir, the former Prime Minister has also openly criticizes Najib and pressured him to resign. Ironically, there were also many scandals, corruption and mismanagement of funds involving his cronies during Mahathir’s government of which no impartial investigation was conducted. Najib, who was groomed by Mahathir, has been trying to emulate Mahathir’s autocratic way of ruling to sustain his power. However, the weakening support for the government and the deteriorating economy could force him to resign. For now, he will try to keep power or to at least to suppress the accusations against him and his family in this scandal and others.

Najib has strengthened his grip on control of UMNO by appointing his supporters to key positions in the party, and postponed the UMNO leadership elections until after the next general elections expected in 2018. However, UMNO members, who are rooted in its nationalist and capitalist agenda, and are merely there for power and for profit through government projects via patronage politics etc., could opportunistically alter their loyalty to another leader if Najib’s scandals continuously weaken the party.

With the sacking of Muhyiddin and few others in UMNO from the government, a factional power struggle has started. Muhyiddin and Mahathir could join hands to launch further attacks on Najib which could lead to a clear rupture in UMNO. Najib could sack members of UMNO who go against him to consolidate his power, but this could give more ground for oppositionists to gain support, moving towards the next general election.

The ruling government, which has been power since so-called independence from Britain in 1957, has been losing its support, as shown in the last two general elections in 2008 and 2013, due to its autocratic rule and worsening social conditions. They managed to win the majority of seats with the advantage of first-past-the-post voting system and unfair elections, but lost popular support to the opposition. They could be further weakened with the current political conflicts and worsening economy.

Ringgit currency and economy weakening

Najib could also face the pressure from the capitalist class which is disappointed with the currently worsening economic conditions. The Ringgit, which slid to a 17-year low in value a few weeks ago, has been under tremendous pressure as weak sentiments continue, making it the worst performing currency in Asia. It is expected that the Ringgit could fall to 4.00 to a US dollar if crude oil prices decline further as Malaysia is an oil-exporting nation, and about 31% of government income comes from oil related sources. Other commodity prices such as palm oil are also on the decline, and the trade surplus and government reserves are narrowing.

Companies and businesses are cutting costs with increasing retrenchments. 10,000 workers have been retrenched in the last 6 months. With the continuous uncertainties in global economy and the recent decline in the Chinese economy, Malaysia can expect rocky times ahead.

A weakening Ringgit and economy would further burden the working class, young people and others who are already grappling with the increasing cost of living with a GST (Goods and Service Tax) implemented since April this year. Anger towards the government is growing day by day with the worsening living conditions. Without a working class leadership, this anger would be capitalized upon by the right wing opposition parties to gain power. With many unorganized workers and capitulating trade union leaders, the workers may appear helpless, but with deteriorating social and economic conditions, workers have no choice other than to struggle.

Fissures in PR opposition coalition

In the last two general elections, the coalition of right wing opposition parties, the People’s Coalition (Pakatan Rakyat – PR) exploited the weakening of the BN to gain votes. Posing as the alternative to the BN, with a populist agenda, they spoke of hope and change. Following their failure to come to power in the last general elections, fissures have begun to appear in the PR. PAS (Malaysia Islamic Party) is pushing its Hudud (Islamic criminal law) agenda once again as its main political agenda though the other parties of the coalition are against it. This became worse when Anwar, the coalition leader jailed for 6 years early this year failed in his court appeal against a ‘sodomy’ court conviction, which was used to undermine him politically.

The PR is disintegrating, with PAS conservative leadership openly backing UMNO and Najib in return for their support for Hudud implementation in the state of Kelantan, where PAS has formed a state government. Najib merely support PAS’s Hudud to weaken the PR.

The other parties in PR – the PKR (Justice Party) and DAP (Democratic Action Party) – are still in the coalition. In the PAS leadership elections in June this year, the conservative faction totally ousted the liberal faction which supported the PR. Recently, the liberal faction in the PAS announced that they would launch a new party, GHB (New Hope) as an alternative to the PAS. With the political conflicts in UMNO and weakening of the BN, the opposition parties could consolidate their coalition with a new formation of opposition parties and civil society organisations to put forward an alternative to the BN.

Socialist Alternative

The conflict within the right wing parties, the government and opposition once again proves that these parties exist for and are supported by the business class, and this reinforces the crucial need for the working class, young people and others to have their own independent party that represent their needs.

Although, with the current crisis in government, the opposition is expected to gain ground and possibly win the next general election, they have no solutions to the worsening social and economic conditions that affect the majority. Socialist Alternative (CWI in Malaysia) has been arguing that a socialist programme, for a planned economy controlled and managed democratically by the working class and ordinary people should be implemented as the alternative to the free market profit-oriented system. For this, an independent working class party with the support of young people and others should be built.

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