Malaysian police search houses of Najib, prime minister's office in 1MDB probe

KUALA LUMPUR (Reuters) - Malaysian police on Thursday searched ousted Prime Minister Najib Razak's home and other places linked to him in connection with a probe into scandal-plagued state fund 1Malaysia Development Berhad (1MDB), a senior police officer said.

Armed police entered Najib's family home on Wednesday night, a drama thousands watched unfold as it was streamed live and an extraordinary scenario that few could have predicted before the country's May 9 general election that he was expected to win.

Amar Singh, the director of police commercial crime investigations, told Reuters that searches were continuing at that house, at the prime minister's office and a residence he had used, as well as two apartments owned by his family.

"We are in the midst of collecting information, we will have more details once we have completed our search," he said, confirming that the searches were related to investigations into the 1MDB scandal that had dogged Najib since 2015.

The multi-billion-dollar scandal over the fund founded by Najib is being investigated by police in at least six countries, including the United States. Najib has denied any wrongdoing.

A lawyer for Najib, Harpal Singh Grewal, said early on Thursday police seized only a few personal items from his family home. "They found nothing incriminating," he said, adding that a couple of handbags were among items police took away.

When asked whether Najib would be arrested, he said: "There is no indication that they (the police) will do it."

He said Najib and his family were cooperative with police. "They (the police) also acted professionally," he said.

Later, however, a police truck packed full with big, blue boxes left the compound of the house, a Reuters witness said. There was no immediate word on what was in the boxes.

Days after Malaysia's long-ruling political coalition was defeated in the election, new Prime Minister Mahathir Mohamad barred Najib and his wife, Rosmah Mansor, from leaving the country.

Najib was once a protégé of Mahathir, 92, who now says there is sufficient evidence to investigate the scandal at 1MDB.

Asked about the searches at a news conference, Mahathir said it was a police matter, and he had little information. But he added: "I suppose the police have enough reasons to raid."

Mahathir has replaced the country's attorney-general and officials at the anti-graft agency, in what appears to be a purge of people seen as close to the former premier.

SEA-CHANGE

U.S. authorities allege that over $4.5 billion was stolen from 1MDB in a fraud orchestrated by a financier known to be close to Najib and his family. Attorney-General Jeff Sessions has called the 1MDB scandal "kleptocracy at its worst".

Filings by the U.S. Justice Department in a civil lawsuit indicated nearly $30 million of the money stolen was used to buy jewelry for the prime minister's wife, including a rare 22-carat pink diamond set in a necklace.

Malaysian politics has undergone a sea-change in the last eight days with the stunning defeat of Najib, his replacement by Mahathir and the pardon and release of jailed reformist Anwar Ibrahim on Wednesday.

Anwar teamed up with Mahathir, his ally-turned-foe-turned-ally, to oust Najib. The relationship between the two remains volatile, however, and will likely determine what course Malaysia will chart in the coming months.

Central bank Governor Muhammad Ibrahim said on Thursday that Malaysia was unlikely to be hit with any financial uncertainty because of the political upheaval, although there were some worries about the fiscal balance.

"All data shows there is certainty and confidence," he said, after announcing that GDP growth in the first quarter of 2018 was 5.4 percent, close to estimates. "What is less certain is the fiscal side."

Mahathir's government has announced that a goods and service tax, which contributed 18 percent of total revenues, will be effectively scrapped from June 1 and be replaced by a sales tax.

Analysts said the gap between the two actions will be key for government revenues.

(Additional reporting by A.Ananthalakshmi, Joseph Sipalan and Liz Lee; Writing by Raju Gopalakrishnan; Editing by John Chalmers)

05/17/2018 4:57

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