(Bloomberg Businessweek) -- Abdul Razak Hussein, a revered former premier in Malaysia, didn’t think his son was cut out for politics. Turns out Prime Minister Najib Razak is quite skilled at the mortal combat required for public life, despite his stately manner and posh, accented English. He’s withstood a multibillion-dollar financial scandal at a state fund, known as 1MDB, that caught the attention of investigators in the U.S., Singapore, and Switzerland. His onetime political mentor has also turned on him, posing a serious challenge to Najib. Yet he’s still favored to prevail in a May 9 election that could keep him in power well into the next decade.
His political instincts and cunning have allowed him to sideline threats at home and conduct affairs of state unimpeded overseas, even charming Donald Trump at the White House last September. Malaysia’s image may have taken a hit from the 1MDB scandal, yet there’s no denying that 64-year-old Najib, the prime minister since 2009, has survived challenges that would have leveled most leaders in Western democracies. “I’ve gone through some hard times,” he said in an April 24 interview with Bloomberg News, his first with an international media organization in more than three years. “Not only recently, but when I started in politics—the rough-and-tumble world of politics. I’ve learned to get along with difficult people, difficult circumstances.”
Najib spoke at his party’s headquarters in Kuala Lumpur, where, during this election period, he often meets with people seeking help getting seats in the legislature. “I believe in developing personal relationships within the party, so even during difficult times the party stood by me,” he says. As for the opponents who tried to topple him in the past: “They couldn’t shake me. The support base was strong. I may appear to be mild in my temperament, but I have a strong resilience in me.”
For all of Malaysia’s trappings of multiculturalism and wealth—it’s home to both classic Ottoman-style mosques with blue-tiled minarets and the César Pelli-designed Petronas Twin Towers—muted racial and religious tensions among Chinese, Indians, and the predominant Malay population have shaped government policies, and political calculations, since the country’s independence in 1957.
Najib’s Barisan Nasional ruling coalition, anchored by the United Malays National Organisation, the country’s biggest party, is trying to prolong a six-decade run in power. It has unveiled a big-spending manifesto, with promises of debt forgiveness for farmers, more affordable housing, and infrastructure projects that are targeted mainly to its base of ethnic Malays, who are the core of what is called the bumiputera, or “sons of the soil.” Najib has warned his supporters that a win by the opposition coalition, which he says is led by an ethnic Chinese party, would turn the bumiputera into “vagabonds, beggars, and destitutes in their own land.”
Business leaders, including property and commodities billionaire Robert Kuok and Najib’s own younger brother Nazir Razak, a banker, have argued against the affirmative-action program favoring the bumiputera, with some saying it impedes competitiveness and shackles the economy at a time when regional peers are opening their markets to lure investment. The government says the programs are still needed to improve the economic plight of Malays, even 47 years after the so-called New Economic Policy sought more wealth for them.
“Change—that’s a cliché,” Najib says. “Everyone talks about change. But you can’t be ahead of the curve, doing something people aren’t ready for. I believe in change, but I also believe you have to set a timetable for change that is constant with the acceptance and willingness of people.”
Najib has also indulged in some Trumpian flourishes, ranging from his campaign slogan (“Make My Country Great With BN”) to his tweet blasts at opponents. On April 2, Parliament passed a “fake news” law that calls for sentences as long as six years and big fines for creators or publishers of information “wholly or partly false.”
The prime minister’s nemesis is his former patron, Mahathir Mohamad, 92, who had been the longest-serving premier. He defected from Najib’s party in 2016. Mahathir has said Najib’s tenure has hurt Malaysia’s global standing and that his economic policies will leave the country awash in debt. “Najib has to be stopped,” he wrote in a blog post in February, urging voters to come out in force and support the Pakatan Harapan coalition. “Companies and businesses, big and small, are closing down. People have to pay more because of high cost of living.”
Yet the four-party alliance Mahathir leads faces several obstacles. Anwar Ibrahim, who helped the opposition win the popular vote in 2013, is in jail on a sodomy conviction. A key Muslim party that won almost a third of the opposition’s votes quit in 2015 because of differences over Shariah, or Islamic, law. In March, Najib’s allies in Parliament pushed through electoral maps that critics say favor the ruling parties. Then, on April 5, Mahathir’s Malaysian United Indigenous Party received a 30-day ban from campaigning for failing to meet a deadline for documents—a decision the High Court has suspended while it hears an appeal.
“Najib is not a firebrand like Mahathir, but he knows how to play the game and he plays the game very well,” says Ahmad Martadha Mohamed, an associate professor at Universiti Utara Malaysia. “Mahathir had that charismatic leadership whereas Najib’s style is more of a transactional and situational leader.”
Najib’s family is political royalty in Malaysia. He was a teenager when his father became the country’s second prime minister. (His uncle was the third.) He studied industrial economics at the University of Nottingham in England, then spent two years at state oil company Petroliam Nasional Bhd., before the sudden death of his father in 1976 at the age of 53. Najib stood for his father’s parliamentary seat and was elected unopposed at the age of 22.
In 2009 he caught a break when Mahathir, who gave up his premiership in 2003, orchestrated a campaign to push out Abdullah Ahmad Badawi, his successor in the long-ruling coalition, which had lost its two-thirds parliamentary majority the year before. Najib then assumed the office of prime minister, promising to revamp the economy and abolish outdated British colonial-era laws. He launched his 1Malaysia campaign, a government-led drive to promote ethnic harmony. An existing sovereign wealth fund was renamed 1Malaysia Development Bhd., with Najib serving as chairman of its advisory board, with a mission to invest in energy, real estate, and tourism.
Concerns about 1MDB’s debt levels and the fees it paid for bond sales started to surface in 2013. Then leaked documents showed that about $700 million may have moved through government agencies and companies linked to 1MDB before appearing in Najib’s personal accounts. That set off a firestorm. In August 2015, hundreds of thousands took to the streets of Kuala Lumpur to vent their rage—much of it directed at Najib. Investigators in the U.S., Switzerland, Singapore, and other countries started uncovering what they alleged was a labyrinth of embezzlement and money laundering.
The U.S. Department of Justice is seeking to seize about $1.7 billion in what it says are misappropriated funds used to purchase a 300-foot yacht, luxury homes, artwork, and stakes in several Hollywood films, including The Wolf of Wall Street, starring Leonardo DiCaprio. As for the $681 million that showed up in his bank account, Najib said it was a political donation from a royal family in Saudi Arabia and that most of it was returned. Saudi Foreign Affairs Minister Adel Al-Jubeir has backed him up on this point.
The scandal hurt the prime minister, but it hasn’t sunk him. For ordinary Malaysians, the troubles at 1MDB, with its maze of bonds, syndicated loans, and debt guarantees, didn’t register. A professor who researched local politics said at that time “the only bond that most Malaysians know is James Bond.”
Najib received an opportunity to smooth ties with the U.S. after his robust response to the assassination of Kim Jong Nam, the half-brother of North Korean leader Kim Jong Un, at Kuala Lumpur International Airport in February 2017. Malaysian and U.S. authorities say the attack was ordered by Kim and involved the use of VX, a widely banned nerve agent. The once-cozy ties between Kuala Lumpur and Pyongyang went into a deep freeze after Najib expelled the North Korean ambassador and banned travel between the countries. Malaysia has since drastically reduced imports from the isolated regime.
Investigations by the Justice Department aside, the Trump administration considers close ties with Malaysia a priority. It’s a moderate Muslim nation that borders the Straits of Malacca, a narrow waterway and trade route between the energy-rich Middle East and the world’s biggest oil consumers. Malaysia has helped pursue Islamic State-linked terrorist groups based in the southern Philippines. At the same time, China is Malaysia’s biggest trading partner, and Beijing wants to deepen its defense ties with the country. “We believe in good relations with major global powers—China and the U.S.,” Najib says. “Both countries have a role to play in Asia.”
Trump praised Najib for not doing “business with North Korea any longer” in remarks during their White House meeting last fall. His guest came bearing gifts: a pledge to buy $10 billion worth of Boeing 737 MAXs and 787 Dreamliners over the next five years and a commitment to join the U.S. in “ideological warfare” to “win the hearts and minds of the Muslim world.”
At home, the 1MDB affair now seems less immediately threatening to Najib. A Malaysian inquiry cleared him of wrongdoing. While multiple probes continue, he hasn’t been identified as a target in any. Only 6 percent of young Malaysian adults said 1MDB was a top concern for them, according to a survey by the Merdeka Center for Opinion Research last year. Najib’s integrity was a concern for 5 percent.
“You cannot just accuse somebody of being a thief unless there is evidence,” he says. “I stand by it: There’s no wrongdoing. The Saudi government has come out with a statement admitting it’s an official donation. The facts speak for themselves, but it’s been turned into a political issue.”
Malaysia’s economic recovery has also strengthened his position. The unemployment rate held at 3.3 percent in February, the lowest level since 2015, and wages are on the rise. Gross domestic product increased 5.9 percent in 2017, the fastest pace in three years.
“We have been able to grow the economy and ensure fiscal discipline,” Najib says, adding that Malaysia has had a “tremendous turnaround” in reducing dependence on oil revenue by two-thirds in recent years. “We will continue to make Malaysia a globally competitive nation.”
All the same, he needs a decisive win. In 2013, under his watch, the ruling coalition failed to win a majority of the popular vote. While Najib has made the tax system more progressive, removed subsidies that have burdened government finances, and implemented a minimum wage, he’ll need greater political clout to do more.
Najib needs a victory for yet another reason. If Mahathir’s coalition were to somehow pull off an upset, it has pledged it will set up a commission to investigate the 1MDB mess and arrest officials implicated in the scandal. As Najib knows, Malaysian politics can be a nasty business.
To contact the author of this story: Shamim Adam in Singapore at sadam2@bloomberg.net.
To contact the editors responsible for this story: Rosalind Mathieson at rmathieson3@bloomberg.net, Brian Bremner Howard Chua-Eoan
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