• Bloomberg


Malaysian Prime Minister Najib Razak removed his deputy in a Cabinet reshuffle, potentially widening their public rift over financial scandals linked to the state investment company.

Facing his biggest crisis in six years in power, Najib named Ahmad Zahid Hamidi to replace Muhyiddin Yassin, who had called for answers on the 1Malaysia Development Bhd imbroglio, including its investment decisions. Najib announced the changes in a televised broadcast.

Multiple probes are underway into 1MDB, which was the subject of a July 3 Wall Street Journal report that $700 million may have moved through government agencies and state-linked firms to accounts bearing Najib’s name. The prime minister has denied taking money for personal gain and has described the furor as political sabotage, part of a campaign to remove him from office.

Zahid, who is home minister, and Defense Minister Hishammuddin Hussein are among Cabinet members expressing support for Najib. Muhyiddin had earlier called on Najib to give a detailed explanation or denial of the claims, and on Sunday said Malaysians want “the real truth” on 1MDB.

Controversy over 1MDB’s finances has dogged Najib for months, though an initial audit report didn’t reveal any suspicious activity. Najib chairs the advisory board of 1MDB and has resisted calls from ex-Prime Minister Mahathir Mohamad to step down over the fund’s performance as it amassed about 42 billion ringgit ($11 billion) of debt in less than five years.

If elections took place now, it’s unlikely the ruling National Front coalition led by the United Malays National Organisation (UMNO) would win, Muhyiddin said Sunday. At the last ballot in 2013, the coalition lost the popular vote for the first time even as it retained office.

Najib, 62, last reshuffled his Cabinet in June 2014 when he named six members from his coalition’s Chinese party to key posts. He stocked the Cabinet with party stalwarts after the 2013 ballot.

Najib’s office said Monday that 1MDB investigators should be given space to perform their tasks and infighting within UMNO would erode support for the government and the party.

“All parties, especially members of the administration including Deputy Prime Minister Muhyiddin Yassin, need to wait for the results of the investigations,” his office said in a statement. “We should avoid making statements that could cloud the perceptions of the people toward the country’s leaders, the government and UMNO.”

Najib has built a support network since coming to power in 2009 that ranges from government ministers to party division heads. He’s rallied rank and file members with a variety of pro-Malay policies in the past 18 months.

Najib doubles as finance minister and is party chief. Muhyiddin is a deputy president of UMNO while Zahid and Hishammuddin are vice presidents.

The prime minister told Malaysians in a speech this month to be wary of threats, including interference from foreign powers that may undermine the country’s stability and sovereignty. Zahid has said attempts to undermine the government could be a threat to national security.

There are issues chipping away at Najib’s popularity. Economic growth is slowing and he’s still working to bed down an unpopular goods and services tax. The most recent major opinion poll conducted in January showed his approval rating at 44 percent from 48 percent in October, near a record low of 42 percent at the start of last year.

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