Former Malaysian prime minister Najib Razak arrives in court in Kuala Lumpur on July 4 2018. Picture: REUTERS
Former Malaysian prime minister Najib Razak arrives in court in Kuala Lumpur on July 4 2018. Picture: REUTERS

Kuala Lumpur — Malaysia’s former leader Najib Razak has pleaded not guilty to charges of corruption and criminal breach of trust in connection with a multibillion-dollar scandal surrounding state fund 1MDB.

Appearing in the High Court on Wednesday, Najib was granted bail of 1-million ringgit ($247,000) and ordered to surrender his passports.

He faces three counts of criminal breach of trust, and one charge under the anti-corruption act, and could be jailed for up to 20 years and fined. The former prime minister is seeking a trial for all charges.

While the breach of trust charges carry punishments that include whipping — usually done with strokes of a rattan cane — Najib may be exempted for being more than 50 years old.

Prime Minister Mahathir Mohamad, whose coalition ousted Najib in May, has sought to recoup $4.5bn potentially siphoned from 1MDB. A parliamentary committee in 2016 identified at least $4.2bn in irregular transactions by the fund, with the US Department of Justice saying some cash was used to purchase a 300-foot yacht, luxury homes, artwork, and stakes in several Hollywood films, including The Wolf of Wall Street.

The charges allege that between December 24 and December 29 2014, at AmIslamic Bank, Najib as prime minister and finance minister was given the mandate to manage 4-billion ringgit of funds belonging to SRC International and that he committed a breach of trust on 27-million ringgit.

Over the same period he is alleged to have committed a second breach of trust on 5-million ringgit. And from February 10 to March 2 2015, he committed a third breach of trust on 10-million ringgit, the charges note.

The court also heard Najib allegedly used his position to gain gratification of 42-million ringgit for himself by granting a government guarantee on 4-billion ringgit of loans from Kumpulan Wang Persaraan (Diperbadankan) to SRC International between August 17 2011 and February 8 2012.

Najib’s next court dates were tentatively set for February 8-18, March 4-8 and March 11-15 for the trial, totalling 19 days of hearings, said Judge Mohd Sofian Abd Razak.

Video apology

In a video posted on Najib’s official Twitter account on Tuesday night, he apologised to the nation while saying not all of the accusations against him were true and that he would defend himself. Invoking the afterlife, the caption said: "I accept that today is the day my family and I face the world’s tribulation."

Najib was arrested on Tuesday, less than two months after a surprise election loss that toppled his party’s six-decade rule. His former government had previously cleared him of wrongdoing.

The scandal had cast a cloud over doing business in Malaysia and unnerved investors.

Markets were spooked by the May 23 disclosure that government debt and liabilities had jumped to 1.087-trillion ringgit ($268.4bn), inflated by state guarantees for borrowing at 1MDB.

The ringgit slid to a six-month low and overseas ownership of the nation’s bonds dropped to the lowest since August.

The challenge now for Mahathir is to make good on his promises to root out the corruption he has said is rife in many government departments.

Malaysia’s police last week said they had seized about $273m of items in raids linked to Najib. They included stacks of cash, Hermes International handbags, Rolex watches, a diamond necklace and more than 200 pairs of designer sunglasses.

The arrest on Tuesday was made in connection with SRC International, according to a statement from the task force.

SRC International was a former unit of 1Malaysia Development. Bernama reported in May that investigators had asked Najib about an unspecified amount of funds he had received from the company.

In January 2016, former attorney-general Mohamed Apandi Ali cleared Najib of wrongdoing in connection with SRC, saying there was no evidence he knew that money from the company was transferred into his personal accounts.

Meanwhile, Swiss investigators said in October 2016 that about $800m in natural-resource investments from SRC International appeared to have been misappropriated, hidden in part through the creation of a Ponzi scheme.