Financial crime and anti-corruption campaigners have expressed cautious optimism that Najib Razak’s conviction over the 1MDB corruption scandal will mark a turning point for Malaysia as it seeks to combat political graft.
On Tuesday the Federal Court in Putrajaya denied Najib’s final appeal and ordered the former prime minister to serve a 12-year prison sentence. Sources in Malaysia said it was still uncertain how long Najib would spend in jail, however, as he has the option of seeking a royal pardon.
Clare Rewcastle, the journalist who broke the 1MDB story, said Najib had already been transferred to Kajang lockup by 8pm local time. Najib was now facing “a night on a hard floor,” said the founder of the Sarawak Report, who was banned from Malaysia and threatened with arrest over her reporting.
“Finally, over the past days as reality closed in that he had failed to convince anyone of his innocence, we saw Najib Razak express emotion in the form of immense self-pity,” Rewcastle told Thomson Reuters Regulatory Intelligence (TRRI).
“Yet he has shown no remorse for the crimes he committed or the damage those crimes did to people’s lives in his own country. Perhaps, away from the adulation he was born into, he will have time to reflect on why he deserved to be punished.”
In Malaysian legal circles there has been jubilation over the result, which demonstrates that the country’s legal system is independent and can resist the pressure of high-level political influence.
Ambiga Sreenevasan, a lawyer and former president of the Malaysian Bar Council, said the result was “great for Malaysia” and would allow the country to move forward in the fight against financial crime and graft. She said Najib had little hope of any further legal challenge.
“Najib is expected to seek a judicial review of the Federal Court decision but this is an unusual procedure. They need to show that there has been a major jurisdictional error,” she said.
Chean Chung, a politician with the People’s Justice Party (PKR), said the case would demonstrate to the world that Malaysia is serious about fighting corruption.
“The international community can see that Malaysians respect the rule of law, regardless of rank. We need to continue to uphold this level of professionalism,” Chung said.
“I very much hope this is a strong reminder to our politicians to keep our political culture more transparent and clean. Courts continue to look at other cases of corruption and I hope the courts subject them to the same standard of trial.”
Nigel Morris-Cotterill, a financial crime compliance consultant who focuses on Asia, said there was still plenty more to come in the 1MDB case following this landmark decision. Despite the news headlines, it remained to be seen whether Najib would spend 12 years in jail, he said.
“It’s the final judicial appeal but there is one more possible avenue: a plea for a pardon. No one is taking bets on Najib serving that or any other sentence,” he said. “There are other charges pending and confiscation hearings. Then there are the cases against his wife, family and associates. It’s a long way from over.”
Najib is now expected to apply for a royal pardon from King Abdullah, who is a childhood friend.
Chung said there was no clear process for seeking a pardon and there were very few precedents where a politician had been pardoned.
“They are very rare,” he said. In one extraordinary case in 2018, Malaysia’s former Deputy Prime Minister Anwar Ibrahim was released from prison after receiving a full pardon from the king. He went on to forge for a political alliance with Mahathir Mohamad and ousted Najib from power in the May 2018 election.
Money laundering conviction upheld
On Tuesday, Malaysia’s top court ordered Najib to begin a 12-year prison sentence after upholding a guilty conviction on charges related to $10 million he received from SRC International, a former unit of 1MDB. His conviction was upheld on charges of money laundering, criminal breach of trust and abuse of power. He must also pay a 210 million ringgit ($46.84 million) fine, or face an additional five years’ imprisonment.
The Federal Court also denied Najib’s request for a stay of sentence. Najib, who is now 69, was initially found guilty by a lower court in July 2020.
Chief Justice Tengku Maimun Tuan Mat said the court had unanimously dismissed Najib’s appeals and that the lower courts’ convictions must stand.
“The defence is so inherently inconsistent and incredible that it has not raised reasonable doubt on the case … We also find that the sentence imposed is not manifestly excessive,” she said.
Najib was seated in the dock as the verdict was read out. His wife, Rosmah Mansor, and three children were seated behind him.
The court had earlier rejected a last-ditch effort from Najib to forestall the final verdict by requesting the removal of the chief justice from the panel.
“It’s the worst feeling to have to realise that the might of the judiciary is pinned against me in the most unfair manner,” Najib had told the court.
Winds of change
Simon Baker, a London-based economic and financial crime investigator, said the decision would come as a relief to everyone who was involved in the 1MDB case.
“Corruption on this scale represents a huge challenge and, in some cases, high risk to the welfare of those whose job it is to investigate. It’s a huge relief to all who believe in the rule of law applying equally to all, regardless of their position in communities,” Baker said.
The 1MDB case has led prosecutors to chase billions of dollars in stolen funds around the world. U.S. prosecutors have said Goldman Sachs helped 1MDB arrange $6.5 billion of bond sales, but $4.5 billion was diverted via bribes and kickbacks to government officials, bankers and others.
Xavier André Justo, the founder of Expose Advisory Services and one of the key 1MDB whistleblowers, said the case was a “major victory for justice and for Malaysia”.
“It shows they have an independent system of justice that many doubted. But it’s not over. We must not forget that this is the SRC case and not 1MDB. There are many other cases related to 1MDB still ongoing and hopefully they will have the same conclusion — sending criminals to jail,” Justo said.
The 1MDB whistleblower said it is critical that the stolen assets must now be repatriated to Malaysia from abroad, including from “safe havens” such as Switzerland. He said it was highly unlikely, however, that Malaysia would be able to retrieve all of the embezzled funds.
“Unfortunately, I do think that a lot of money has been lost forever. I just hope that Switzerland will act soon,” he said.
The butterfly effect
Civil asset recovery experts are hopeful that Najib’s imprisonment will encourage other people to come forward with new information about 1MDB. A senior adviser to Malaysian opposition leader Anwar Ibrahim said the government was working to recover the lost funds.
“There are many 1MDB trials underway involving Najib and the prosecution are actively encouraging new witnesses and evidence,” the adviser said. “I do not expect this verdict to send Malaysia shooting up the Transparency International corruption perceptions index. But it certainly won’t do the country’s image any harm. In the longer term we will see Malaysia’s political elite rethinking their stance on corruption.”
Tommy Thomas, the country’s former attorney general, captured the country’s jubilation and said that “justice had been served” after four years.
“Former prime minister and serial fraudster, Najib Razak lost his final appeal and starts 12 years’ jail. Hallelujah,” Thomas told TRRI.
Other officials said the court’s decision on Tuesday was a turning point for Malaysia in its battle against kleptocracy.
Wong Chen, chairman of Malaysia’s international relations and trade select committee, said: “Malaysia should not rejoice that a former prime minister has been sent to jail but Malaysia should rejoice that we have an independent judiciary, unafraid of executive powers. This ruling has given much needed hope to Malaysia’s long struggle to get rid of blatant corruption and abuses of power.”
(Additional reporting by Rozanna Latiff and Zahra Matarani, Reuters)
This article first appeared on Thomson Reuters Regulatory Intelligence and features on Business Insight with permission.