1MDB case: Ex-PM Najib Razak’s lawyer arrested in Malaysia

DAVOS/SWITZERLAND, 25JAN13 - Mohd Najib Bin Tun Abdul Razak, Prime Minister and Minister of Finance of Malaysia discusses during the session 'The Economic Malaise and Its Perils' at the Annual Meeting 2013 of the World Economic Forum in Davos, Switzerland, January 25, 2013. Copyright by World Economic Forum swiss-image.ch/Photo Michael Wuertenberg

The investigation into the Malaysian state fund 1Malaysia Development Berhad (1MDB) went took a fresh turn on 13 September with the arrest at the Selangor Airport of Muhammad Shafee Abdullah, a lawyer representing former Malaysian prime minister Najib Razak. Shafee, who in addition to acting as Najib’s defense counsel served as a Malaysian ambassador-at-large and led the prosecution against former deputy prime minister Anwar Ibrahim, pled not guilty to two counts of evading taxes through filing incorrect income tax returns and two counts of money laundering.

The four counts were linked to 9.5 million ringgit (US$2.3 million) of payments he received from Najib. Shafee was released on 1 million ringgit ($241,000) bail, and ordered to surrender both his ordinary and diplomatic passports. The payments span the period when Shafee was the prosecutor in the appeal of the Ibrahim case, who was jailed for a sodomy conviction.

Shafee’s arrest is the latest development in a complicated case that has ensnared courts from Singapore to Switzerland. Current Malaysian leader, 93-year-old former strongman Mahathir Mohamad, who pulled off a shock election victory in May to become Prime Minister, is trying to recoup some $4.5 billion allegedly siphoned off from government investment company 1MDB through an elaborate scheme of money laundering and shell companies. 1MDB was set up by Najib in 2009 to turn Kuala Lumpur into a global financial centre.

A vast number of high-profile Malaysian businessmen and politicians have gotten caught up in the international probe— from billionaire financier Jho Low, who reportedly led the efforts to divert money away from 1MDB and handed kickbacks to Malaysian officials, to Najib himself, who has been charged with criminal breach of trust, abuse of power and money laundering. Of particular question in Najib’s case is whether a $681 million payment to his personal bank account was part of Low’s kickbacks, as US investigators have asserted, or a donation from the Saudi royal family as Najib claims.

Najib, who has consistently denied any wrongdoing, is scheduled to go to trial in February 2019; how the new charges against his lawyer will affect his case remains unclear.

Najib swiftly issued a statement decrying the investigation into his attorney, questioning its timing and calling it an attempt to prevent his having a fair trial by intimidating Shafee and his other legal counsel. Najib also raised concerns about the broader implications of his lawyer’s legal troubles, insisting that any money Shafee had received was payment for legal services rendered, and that charging him for receiving these payments “sets a very dangerous legal precedent for all lawyers, professionals and businesses”, arguing that “no one will be safe if the government chooses to victimise or to politically persecute you”.

Shafee’s next case management is scheduled for October 2nd. In the meantime, Shafee has indicated his intention to challenge the jurisdiction his case is heard in. In open court, he vowed to file a formal motion asking federal judge Sri Ram to recuse himself from the case due to an alleged conflict of interest, while at a press conference following the hearing he suggested that he and his counsel felt the case would be better heard in High Court than Sessions Court.