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2 Malaysian fund critics charged with economic sabotage

October 12, 2015

KUALA LUMPUR, Malaysia (AP) — A former leader of Malaysia’s ruling party and his lawyer were charged Monday with economic sabotage over reports lodged abroad against a debt-laden state investment fund.

Khairuddin Abu Hassan, a former leader in Prime Minister Najib Razak’s ruling Malay party, and his lawyer Matthias Chang were charged with attempting to sabotage the economy, as well as the financial and banking system.

They face up to 15 years in jail if found guilty.

The earlier arrest of the duo under a security law allowing detention without trial to fight terrorism has sparked criticism that Najib’s government is abusing the law to clamp down on opponents of the controversial fund 1MDB.

1MDB was set up by Najib in 2009 to develop new industries, but faces accusations of graft and mismanagement after it accumulated at least 42 billion ringgit ($10 billion) in debt.

Earlier this year, Khairuddin lodged reports against 1MDB in France, Britain, Switzerland, Hong Kong and Singapore.

The 1MDB scandal has landed Najib in a political crisis, especially after documents leaked in July showed he received some $700 million in his private accounts from entities linked to the fund. He has denied any wrongdoing, saying the money was a donation from the Middle East.

Najib has fired a deputy who was critical of him, four other Cabinet members and the then-attorney general investigating him.

On Monday, former Prime Minister Mahathir Mohamad, who has led calls for Najib to resign over the 1MDB issue, slammed the prosecution of Khairuddin and Chang, and their arrest under the Security Offences Act.

“They are defining sabotage according to their own needs,” Mahathir said. “We see a climate of fear among the people. They have a lot of concerns, but they say they have no avenues to express their views.”

In a blog posting last week, he also warned that Malaysia has become a “pariah state” for abusing the law to cover up the 1MDB case.

The 1MDB crisis has been partly blamed for the sharp plunge in the Malaysian ringgit, which fell to a 17-year low against the dollar in late August.

The central bank, which has been investigating the fund, said last week that it has pressed for criminal prosecution of 1MDB for violating foreign exchange rules, but the attorney-general’s chambers said it had found no wrongdoing by fund officials.

The 1MDB scandal has also sparked concern among Malaysia’s nine state leaders, who issued a rare statement last week calling for a quick and transparent investigation into the fund. They said that the government’s failure to give convincing answers and clarifications on 1MDB had led to a “crisis of confidence” in the country.