Malaysia PM slams corruption report as continuing "political sabotage"

Malaysian Prime Minister Najib Razak slammed a newspaper report that said investigations into troubled state fund 1MDB have traced nearly $700 million of deposits into accounts that allegedly belonged to him, claiming it was a "continuation of political sabotage".

The Wall Street Journal's report, if true, would be the first time the beleaguered prime minister has been directly linked to accusations of corruption surrounding the fund.

Reuters could not independently verify the report.

"There have been concerted efforts by certain individuals to undermine confidence in our economy, tarnish the government, and remove a democratically elected prime minister," Najib's office said in a statement on his Facebook page.

"These latest claims, attributed to unnamed investigators as a basis to attack the prime minister, are a continuation of this political sabotage," it said.

The statement said documents cited in the report should not be accepted as genuine unless verified by appropriate authorities. It pointed to reports about criminal leaking of documents, doctoring and extortion related to 1MDB that has been recently published in the media.

The Wall Street Journal did not immediately respond to a request for comment on the statement by Najib's office.

Early reactions from within Najib's party, the United Malays National Organisation (UMNO), showed support for the 61-year-old leader.

"If they (the Wall Street Journal) were dead serious about the authenticity, the reports should have named the sources," Abdul Rahman Dahlan, the minister for Urban Well-being, Housing and Local Government, said in a tweet.

Two opposition parties called on Najib to take a leave of absence while the allegations are investigated, and another said he must declare his assets publicly in a sworn statement.

However, commentators said Najib would likely hold firm.

"The prime minister is in a very influential position within the party right now," said Wan Saiful Wan Jan of the Institute for Democracy and Economic Affairs (IDEAS) think tank in Kuala Lumpur. "If he says something, it's likely people will listen."

Najib looked relaxed at a Ramadan fast-breaking dinner with other leaders and local officials in the southern city of Johor Bahru on Friday evening.

PM WAS ALREADY ON A BACK FOOT

Najib, the son of a former primer minister, has been weakened by attacks from the opposition and from within his own party by charges of graft and mismanagement. However, he retains support within the long-ruling Barisan Nasional (BN) coalition.

Former leader Mahathir Mohamad, who was once Najib's patron and remains highly influential, has previously called for the prime minister to step down over the 1MDB furore.

Malaysia's longest-serving prime minister, Mahathir withdrew his support for Najib after the BN coalition fell short of a popular majority in 2013 elections but retained power.

In a blog released late in the day, Mahathir made no mention of the report and instead made allegations about people in power dodging taxes.

Najib, now in his second term, has also been under pressure over his management of the economy and a scandal arising from the high-profile killing of a Mongolian model nine years ago.

He says he had nothing to do with the murder of Altantuya Shaariibuu, and has even sworn an oath to that effect on the Koran in a mosque. Two officers who were part of Najib's security detail at the time were found guilty of her murder.

Financial markets were barely affected by the newspaper report. The Malaysian ringgit fell marginally but reached a fresh 10-year low, while stocks closed fractionally higher.

1MDB bonds due 2023 were down a point at 88/89 with a lot of trading activity following the report.

"UNSUBSTANTIATED" ALLEGATIONS

1MDB has faced a storm of criticism over its debt of nearly $11.6 billion and financial mismanagement. Najib chairs the fund's advisory board.

The Wall Street Journal, citing documents from a government probe, said there were five deposits into Najib's account.

The two largest transactions, worth $620 million and $61 million, through a chain of companies linked to 1MDB were done in March 2013 during the election campaign, it said.

The fund is currently facing separate investigations by the country's central bank, auditor-general, police and the parliament's Public Accounts Committee.

1MDB described the allegations as "unsubstantiated" and said it had never provided any funds to the prime minister.

"To suggest otherwise, as some media outlets have done, is highly irresponsible and a deliberate attempt to undermine the company," the fund said in a statement.

Najib has previously denied any wrongdoing in connection with 1MDB and has accused opponents of spreading misinformation.

Two opposition groups, the Democratic Action Party and the People's Justice Party (PKR), called on Najib to take leave immediately to allow an unfettered probe into the allegations.

"In order to protect whistleblowers and allow a free and independent investigation, he cannot hold the post of prime minister," PKR lawmaker Tian Chua said.

"He must set himself aside; it would show that he is confident of his innocence. If he refuses, there will be suspicion that someone is trying to cook the books."