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Malaysia's Ex-Leader Najib Razak Quits Party After Election Loss -- Update

12 May 2018 9:38 am
By James Hookway and Yantoultra Ngui 

KUALA LUMPUR, Malaysia--Malaysia's former Prime Minister Najib Razak resigned as leader of his political party Saturday and promised to abide by a travel ban, as his successor Mahathir Mohamad struggled with factional infighting to assemble a new cabinet.

Mr. Najib and the ruling United Malays National Organization suffered a devastating loss in national elections May 9, paving the way for the first transfer of power in the tropical, resource-rich nation since independence in 1957.

Mr. Mahathir, who is 92 and led the country for 22 years before stepping down in 2003, built much of his campaign on allegations that Mr. Najib has siphoned hundreds of millions of dollars from a state investment fund that is at the center of probes in several countries.

U.S. authorities allege that at least $4.5 billion was misappropriated between 2009 and 2015, including $681 million allegedly received by Mr. Najib, whom lawsuits in the U.S. referred to as "Malaysian Official 1." Mr. Najib and the fund, 1Malaysia Development Bhd., have denied wrongdoing, and Malaysian investigations carried out during Mr. Najib's premiership have cleared him.

Mr. Mahathir has said he would reopen an investigation into the scandal. On Saturday, he confirmed to reporters that he had ordered the travel ban on Mr. Najib and his wife Rosmah Mansor. He also said he had instructed police to release from the Official Secrets Act an earlier report from Malaysia's auditor general into the fund, known as 1MDB. "We have to act quickly because we don't want to be saddled with extradition from other countries," he said.

Mr. Mahathir also said that he had removed Mohamed Apandi Ali as attorney general, who was appointed by Mr. Najib and helped quash investigations into the scandal. "At the moment there is no attorney general," he said, opening the way for Mr. Mahathir to appoint his own choice for the role and increasing the pressure on Mr. Najib as the new administration continues to collect evidence against him.

Earlier Saturday, the country's immigration chief said Mr. Najib and Ms. Rosmah had been banned from leaving the country. Mr. Najib acknowledged the travel ban and promised to stay within the country.

Later, at a press conference at UMNO's headquarters, he announced he was stepping down from the party. Flanked by deputies and wearing a powder-blue jacked, he said that the party lost the election because it lost what he called "the battle of perception" with Mr. Mahathir.

While Mr. Najib was announcing his resignation, Mr. Mahathir was naming the key posts in his cabinet on the other side of town.

He appointed as finance minister Lim Guan Eng, the former chief minister, or governor, of the industrial hub Penang. Economists said one of Mr. Lim's chief roles will be to revise a series of large-scale construction projects undertaken by Mr. Najib's administration.

The home ministry will be headed by a staunch Mahathir loyalist, Muhyiddin Yassin, while the defense portfolio will be handled by Mohamad Sabu, the leader of a small Islamist party.

People familiar with the situation said there had been significant wrangling over the composition of the new cabinet. Mr. Mahathir leads a diverse alliance that includes a predominantly Chinese party and a large multiracial group, as well as smaller Islamist and other ethnic-based groups. The announcement of the cabinet lineup was delayed several times, and its full composition remains unclear.

"There is a lot of last-minute wrestling," one of the people said.

Mr. Mahathir also named a council of elders who he said would advise the government on key policy matters. It includes prominent figures who will likely help reassure financial markets when they reopen for trading Monday after closures for election day on Wednesday and then two special holidays on Thursday and Friday.

Among them are the widely respected former central bank Governor Zeti Akhtar Aziz and Malaysian-born Hong Kong tycoon Robert Kuok. Another prominent name is Daim Zainuddin, who worked closely with Mr. Mahathir during his first stint in government.

Write to James Hookway at james.hookway@wsj.com and Yantoultra Ngui at yantoultra.ngui@wsj.com

(END) Dow Jones Newswires

May 12, 2018 05:38 ET (09:38 GMT)

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