The Malaysian state investment fund 1MDB offices were raided on Wednesday for reportedly transferring cash from a public fund to Malaysian Prime Minister Najib Razak’s personal bank account, a claim that the Malaysian PM described as "political sabotage."
The raid came after a Wall Street Journal (WSJ) report that claimed corruption in the debt-laden state fund involving Najib. If the Wall Street Journal report is verified by officials, the Malaysian PM would be directly subjected to a corruption probe for the first time.
Najib has denied all allegations and is said to be considering legal action against the WSJ.
"There have been concerted efforts by certain individuals to undermine confidence in our economy, tarnish the government, and remove a democratically elected prime minister. These latest claims, attributed to unnamed investigators as a basis to attack the prime minister, are a continuation of this political sabotage," Najib Razak said on his Facebook page.
1MDB, the government run strategic development company, confirmed the raid.
"We can confirm that a number of officials from the task force, conducting an enquiry into 1MDB, visited our offices today," 1MDB said in a statement.
"They were provided with a number of documents and materials to aid with the investigations currently taking place."
The company has been criticised over its debt of more than $15 billion and inability of the financial management since Najib Razak founded it in 2009. Najib also chairs its advisory body. The WSJ report claims that the cash had circulated among government agencies, banks and companies linked to 1MDB until it reached to Najib Razak’s accounts.
1MDB has described the allegations as "baseless and unsubstantiated," but investigators announced on Tuesday that half a dozen bank accounts were frozen in relation to the allegations, but did not provide any information about these accounts. They also seized documents connected to 17 accounts in two banks.
The task force that investigates the allegations includes Malaysia's attorney-general, the central bank governor, the inspector-general of police and the head of the anti-corruption commission.
Attorney-general Abdul Gani Patail said that the documents disclosed in the WSJ report were already the subject matter of their previous investigation.
"A further concern was that the documents were allegedly leaked from within the investigation itself," he said.
Najib Razak instructed his lawyers to consider action against the Wall Street Journal in return, his law firm, Hafarizam Wan & Aisha Mubarak said in a statement on Wednesday.
"Once our client has obtained all necessary facts and the position of WSJ is ascertained, we have strict instructions to immediately exhaust legal avenues and remedies," it said.
Singapore's central bank, which is reportedly linked to one of the large transactions to Najib's account said that it will provide assistance to Malaysia and share information where it is legally able to.
"In this connection, MAS has been in close contact with the relevant financial institutions," a MAS spokeswoman wrote in an email.
According to the WSJ report, one of the transactions came from a company registered in the British Virgin Islands via the Singapore branch of a Swiss private bank. Malaysian police conducted raids against three companies earlier this week, said to be involved in the transactions.
The latest allegations of corruption have created a storm in Malaysian politics and also badly affected the economy.
Opposition parties demanded a full explanation into the allegations from the government and resignation of Najib until a probe is completed. Opposition lawmakers also have called for a caretaker government and fresh elections next year.
"This money is linked to the last general election. So we must have a new election as soon as possible. We want a clean election to appoint a clean government," Democratic Action Party secretary-general Lim Guan Eng told MPs in Parliament, according to the Strait Times report.
Najib's cabinet and members of his party, United Malays National Organisation (UMNO), stood behind the prime minister.
"We did have a discussion about current issues including the Wall Street Journal article. There was discussion that was started off by Prime Minister, explaining to us that he is still considering legal action, as you all know by now, that the lawyers representing the Prime Minister will send out pre-demand letter to the Wall Street Journal," Minister for Youth and Sports, Khairy Jamaluddin Abu Bakar told reporters after a cabinet meeting with Najib.
The country's national currency, ringgit, fell to a 16-year low against the dollar and the stock index dropped to its lowest in a week, Reuters reported.
According to Transparency International’s corruption perception index for 2014, Malaysia ranked 50th among 175 countries although Rajib’s government have an intense battle with the bribery.