Mahathir says Malaysia will seek to retrieve laundered funds

KUALA LUMPUR, Malaysia (AP) — New Malaysian Prime Minister Mahathir Mohamad said Wednesday that his government will seek to retrieve billions of dollars from a state investment fund believed to have been laundered in the United States, Switzerland, and several other countries.

The government also said it plans to abolish an unpopular 6 percent goods and services tax next month.

Mahathir reopened a probe into a massive corruption scandal surrounding the 1MDB fund after his alliance won a stunning election victory last week, ending the National Front’s 60-year grip on power. Defeated leader Najib Razak started the fund in 2009 and U.S. investigators say at least $4.5 billion was stolen and laundered by Najib’s associates, some of which landed in his bank account.

Mahathir, 92, said an initial investigation showed the scale of wrongdoing by Najib’s administration was more serious than expected.

Mahathir said he has met with ousted Attorney General Abdul Gani Patail, who said he was preparing to file criminal charges against Najib when he was abruptly removed in 2015. Gani led an investigation by multiple agencies into the scandal at the time, which was later closed after Najib was cleared of wrongdoing.

“The focus on corruption is important because we need to get back money which is still in Switzerland, the U.S., Singapore and maybe Luxembourg. For this, we will contact the governments of the countries to recover the money there,” Mahathir said.

“The money belongs to Malaysia and it came from 1MDB. We will appeal for the money to be returned to Malaysia.”

Mahathir said the money will be used to repay government debts that have piled up over the years. He said the government is also committed to repaying any debts linked to the fund that it has guaranteed.

The government will make arrests as soon as there is clear evidence, he said, reiterating that there will be “no deal” for Najib in the scandal.

Najib and his wife have been barred from leaving Malaysia. The government has also told the current attorney general, who cleared Najib of wrongdoing in 2016, to go on leave, and has relieved the country’s treasury chief, who is also the 1MDB chairman, of his duties.

Mahathir, who was prime minister for 22 years until in 2003, emerged from retirement to join hands with former political foes to oust Najib amid anger over the 1MDB scandal. He said his new government is also seeking to cut wastage in the government, including possibly axing 17,000 political appointees.

The finance ministry said in a statement Wednesday that a 6 percent goods and services tax introduced by Najib in 2016 to boost government revenues will be abolished June 1. The tax has been blamed for raising the cost of living and has angered many Malaysians.

After being sworn in as Malaysia’s seventh prime minister last Thursday, Mahathir moved swiftly to name new finance, home affairs and defense ministers but has not appointed a full Cabinet amid horse trading among his four-party alliance for posts. He said he hoped this week to have a 10-member Cabinet before expanding it later but acknowledged it was a challenge navigating his alliance.

“It is difficult. It is time consuming and energy consuming and I don’t get much sleep but I have to do it because they appointed me as prime minister. I cannot complain very much,” he said.