The power and property fund, a pet project of current Prime Minister Najib Razak, with assets worth US$14 billion (S$19.4 billion), was hit by losses last year and nearly defaulted on a loan payment. The near miss drove down the ringgit and Malaysian government bonds, and prompted calls from opposition leaders to make the fund’s accounts more transparent. The state fund’s RM42 billion (S$15.7 billion) debt includes a US$3 billion bond sale in 2013 that was one of the largest global issues from South-east Asia.
“An audit of its financials by the Auditor-General as ordered by (the government) earlier this week is not enough to uncover the truth behind the debt-ridden state investment vehicle,” Dr Mahathir said yesterday.
“What is needed is more than the normal audit of the account books. What is needed is a forensic investigation by the police on the accusations made against several people who are involved in managing 1MDB’s finances,” he said in a blog posting.
The blog post soon attracted so many hits that webmasters temporarily suspended the personal blog and limited access to the chedet.cc website to prevent the servers from crashing. They later said they were working to restore access.
Malaysian businessman Low Taek Jho has also been drawn into the 1MDB controversy when media reports said he was tied to a company called PetroSaudi International. Whistleblower site Sarawak Report ran an expose accusing Mr Low, better known as Jho Low, of siphoning off US$700 million from 1MDB and using PetroSaudi as a front in a 2009 joint venture. Mr Low has denied any allegations of wrongdoing and said the issue is being politicised.
In the original blog post, the 89-year-old Dr Mahathir warned the ruling Barisan Nasional coalition that it risked losing the next general election if the government fails to clear the air over the numerous allegations levelled against 1MDB.
He added that if the cloud of allegations continued to hang over the fund, the people’s support for the coalition would continue to fall. “And when this happens, there is a strong possibility that BN will lose the general election in 2018,” Dr Mahathir said.
Last Wednesday, Mr Najib ordered the Auditor-General to independently verify 1MDB’s accounts, with the findings to be passed on to the Public Accounts Committee (PAC).
However, Dr Mahathir said appointing the Auditor-General to audit 1MDB’s books would not answer many questions posed by the people.