Ex-Malaysia PM Najib Razak hit with $556m bill for unpaid taxes

Former Malaysian prime minister Najib Razak has been ordered to pay $556m in back taxes, days ahead of a verdict in the first of several corruption trials he faces.

Former Malaysia prime minister Najib Razak. Picture: AFP

Former Malaysian prime minister Najib Razak has been ordered to pay $556m in back taxes just days ahead of a verdict in the first of several corruption trials he faces over the multi-billion-­dollar misappropriation scandal involving the 1MDB state development fund.

The Kuala Lumpur High Court on Tuesday ordered Mr Najib to settle his RM1.69 billion unpaid tax bill, which includes penalties and interest for late payment, accumulated from 2011 to 2017 when he was in office.

High Court judge Ahmad Bache ruled in favour of the Inland Revenue Board’s application to bypass a full trial in a judgement that found that while “this provision of ‘pay first, talk later’ may arguably be a harsh one, it is an intentional provision of the legislature, having regard to the incidence of tax evasion”.

Mr Najib, 67, is expected to appeal to the Special Commissioner of Income Tax. He has argued that much of the income on which the tax has been calculated was actually donations from an Arab sponsor, and some of that money was returned.

It is the same defence he has used against allegations that close to $1bn of 1MDB state funds was transferred into his personal accounts while he was prime minister, money he has said was a donation from a Saudi royal.

Mr Najib faces 42 charges of corruption, money laundering and criminal breach of trust related to the misappropriation of $US4.5bn from the 1Malaysia Development Fund, including that he received $13.8m in his personal accounts from SRC International, a 1MDB subsidiary.

He has denied wrongdoing, and a verdict on the first seven charges related to SRC Inter­national is due next Tuesday.

Mr Najib has also denied all wrongdoing in relation to charges he abused his position to enrich himself of $878m from 1MDB to his personal accounts.

The 1MDB scandal sparked investigations in at least five countries, led to the 2018 election loss of the ruling United Malays National Organisation and more than a dozen senior party leaders being charged with corruption.

Among those to face charges was Mr Najib’s wife, Rosmah Mansour, and her son from her first marriage, Riza Aziz, whose US-based company produced the Wolf of Wall Street movie.

The prospects for those facing corruption charges has improved markedly in the four months since UMNO’s return to power in a parliamentary coup that toppled the reformist Pakatan Harapan coalition.

In May, the new Attorney-General dropped all charges against Mr Riza in a settlement in that he pay the Malaysian government $108m — less than half the $248m he was charged with laundering from the 1MDB fund.

Last month, the A-G also dropped dozens of corruption charges against senior UMNO leader Musa Aman, leading to speculation a similar deal could be struck with Mr Najib.

Former Malaysian prime minister Mahathir Mohamad told the Malaysian Insight news site on Wednesday that if Mr Najib was found not guilty, he would once again seek office.

Mr Najib, who remains a key UMNO powerbroker, supports an early general election this year which most pundits believe would return UMNO — and perhaps Najib — to power without the need for its current shaky ­coalition with defectors from the former Mahathir-led Pakatan Harapan reform government.

Malaysia analyst James Chin said before that could happen, UMNO must clear up its 1MDB mess. “There is a consensus among the current UMNO leadership that Najib and 1MDB caused UMNO to lose power in 2018,” he wrote this month.

“If Najib and 1MDB can be ‘cleaned’ quickly, the process of rehabilitating the UMNO brand can begin. Otherwise voters will associate UMNO with 1MDB and corruption for years.”