Malaysian probe into fund scandal stalls after PM sacks deputy

KUALA LUMPUR - Reuters

Malaysia's Prime Minister Najib Razak (R) shakes hands with his newly-appointed Deputy Prime Minister Ahmad Zahid Hamidi (L) after addressing a press conference at the Prime Minister's office in Putrajaya on July 28, 2015, following a cabinet reshuffle. AFP Photo

A Malaysian parliamentary investigation into a graft scandal at a state investment fund embroiling Prime Minister Najib Razak has been put on hold as cracks in the long-ruling party appeared to widen on July 29.

The allegations of extensive graft at the debt-laden fund are the biggest threat to Najib's credibility since he took office in 2009 and could threaten the grip his United Malays National Organisation (UMNO) party has kept on politics since independence in 1957. 

Najib sacked his deputy on July 28 after he called on Najib publicly to explain the situation around 1Malaysia Development Bhd (1MDB), which has debts of more than $11 billion and is being investigated for financial mismanagement and graft. 

The man overseeing the parliamentary investigation into 1MDB, Public Accounts Committee (PAC) chairman Nur Jazlan Mohamed, was appointed a new deputy home minister on July 28 and said in a statement he would therefore resign from his committee post. 

"All proceedings that had been arranged for August, including 1MDB, will be halted until the new PAC line-up is announced at the next Dewan Rakyat sitting," he said, referring to parliament. 

Members of the PAC are not allowed to hold any position in the cabinet. Parliament will choose new PAC members in October. 

An opposition member of the PAC, Tan Seng Giaw, said the  committee should continue its investigation in line with parliamentary rules, media reported. 

Najib has denied taking any money for personal gain, saying the corruption allegations are part of a malicious campaign to force him from office. 1MDB has denied transferring funds to Najib and an interim government report has found nothing suspicious. 

Sacked deputy prime minister Muhyiddin Yassin held a news conference on July 29 amid speculation opposition to Najib within the ruling UMNO would build around him. 

Muhyiddin was conciliatory, saying he would not be involved in efforts that would cause a break-up of the party. He said the party came first and he did not feel his position as UMNO deputy president was threatened. 

"I've been in the party for long. Though I am no longer hold a government post but I do not abandon my role in the party. I will still continue my part as deputy party president," he told reporters. 

"Not good at all" 

Asked if he would support an opposition call for a no-confidence motion against Najib, Muhyiddin said he would stick to the party line. 

"All theses are hypothetical. Until then... we wait. As a party member that is responsible. I will make a decision based on the whip of parliament." 

Several UMNO party leaders were reported to have visited Muhyiddin at his home on July 28 after he was dropped from the cabinet. 

Muhyiddin warned on the weekend that Barisan Nasional, the ruling coalition led by UMNO, would lose power if it did not do a better job of explaining the scandal to the public. 

Najib responded in a televised statement on July 28 by saying cabinet ministers airing differences in the open could turn public opinion against the government. 

Muhyiddin said later he accepted Najib's decision with an open heart, while maintaining his view on 1MDB. 

Muhyiddin had been a frequent critic of Najib, who was already under pressure from influential former prime minister Mahathir Mohamad, who has called for him to step down. 

Mahathir, who has not commented on the scandal in recent days, said in April Muhyiddin would make a better prime minister than Najib, media has reported. 

Among the politicians who visited Muhyiddin on July 28 was Mahathir's son, Mukhriz Mahathir, media reported. 

UMNO deputy permanent chairman Mohamad Aziz said Najib's decision to drop Muhyiddin could destroy the party. 

"If it happens we know who is to blame," he was quoted telling The Star newspaper.