Malaysia’s widening anti-graft probe zeroing in on high-profile corporate bailouts of the Mahathir era

Dr Mahathir’s two children have received extensions until sometime later this month to make the declarations.

While the anti-graft crackdown on high-profile individuals by Prime Minister Anwar Ibrahim’s administration has attracted widespread public attention, MACC officials and lawyers noted that the framing of firm corruption charges is unlikely to take place anytime soon.

“It is a lengthy and cumbersome process for both the accused and the (MACC) investigators because there will be a lot of to-ing and fro-ing in cases like this,” said one lawyer involved in the ongoing anti-graft crackdown, who declined to be named.

Still, the ongoing anti-graft campaign is expected to stir public debate and lift the lid on the controversial corporate bailouts during the regional financial crisis of the late 1990s that had become a source of serious friction between Dr Mahathir and Mr Anwar, who at the time was his No. 2.

While Dr Mahathir was bent on using state funds to protect troubled businessmen that his government had entrusted to take on quasi-official projects under the country’s privatisation programme, Mr Anwar, who was finance minister at the time, favoured a more free-market approach to deal with the country’s economic woes and advocated a policy of high interest rates to attract foreign funds to prop up the Malaysian currency, the ringgit, that had sharply fallen in value. 

But the high interest rates choked economic activity and, more importantly, became a direct threat to Dr Mahathir’s economic model because it made it difficult for the well-connected political business groups to service their debts and finance big-ticket infrastructure projects. 

The bailout by state oil corporate Petronas of Mr Mirzan’s Konsortium Perkapalan was the first among a series of controversial corporate deals that sowed the seeds for the Mahathir-Anwar policy face-off that later morphed into a full-blown political battle that lingers to this day.

SOURCE OF FRICTION

Posting on social media in recent weeks, Dr Mahathir accused Mr Anwar of politically victimising his family and alleged that the ongoing MACC probe, which stems from disclosures in the Pandora Papers, were selective. The Pandora Papers are leaked documents that exposed the holdings of global politicians and other wealthy personalities in offshore tax havens.

He named several other individuals, including Deputy Prime Minister Ahmad Zahid Hamidi and Tengku Zafrul Aziz, who is the Investment, Trade and Industry Minister, who were cited in the leaked documents and yet are not facing any publicly known probe.

“But instead, my son (Mirzan) was threatened that if he does not take action that the prosecutors consider contrary to the allegations levelled against him, he will be imprisoned for five years. There was no mention that he will be brought to court,” Dr Mahathir said in a post on X, formerly known as Twitter.

Mr Anwar, who is being sued for defamation by Dr Mahathir, has accused his former boss of enriching members of his family and close business associates by awarding them lucrative government contracts.

The premier has also insisted in his responses in the defamation suit that Dr Mahathir had abused his position as premier to direct Petronas to take over the shipping assets belonging to Mr Mirzan despite his objections to the deal.