Malaysian politics is often a tumultuous and headline-grabbing affair. Yet the current crisis is unprecedented. In a Wall Street Journal report last week, Prime Minister Najib Razak was accused of embezzling almost US$700 million (2.6 billion Ringgit). The days since, which have also seen the release of redacted supporting documents by the WSJ, have only deepened the crisis embroiling the Prime Minister. 

The 1Malaysia Development Berhad (1MDB), a state investment fund, was set up by Najib in 2009. Even before the current accusations, the fund was entangled in controversy as its debt had ballooned to US$11 billion. 

Much of the controversy over 1MDB has been led by former PM and power-wielder Mahathir Mohamad. His blog offers a long, running commentary on the 1MDB fund and at every turn attempts to throw Najib under the bus. Mahathir has spent much of the past year campaigning for Najib's resignation.

Troublingly, Najib was slow to outright dismiss claims of corruption, taking to Facebook for a weak and deflective rebuttal, arguing that the charges were politically motivated and aimed at 'removing a democratically-elected prime minister':

These attacks began when I refused to implement Tun Mahathir's personal demands. I refused, because I do not believe it is right for Malaysia to be ruled by proxy.

What Najib seemingly failed to understand early on was that these accusations go far beyond mere ad hominem attacks (as previous attacks have been). These accusations have captured headlines and tarnished the economy. Following the WSJ report the Malaysian Ringgit plummeted to a 10-year low. Najib's slow response has opened up the possibility of his ultimate fall from office and fueled concern that the accusations may indeed be of substance.

Najib's most recent Nixon-esque response to the claims doesn't bode well either. On Sunday he bluntly told reporters 'I am not a thief.'  

Last week the opposition called for Najib to 'step aside' and take temporary leave from office to allow an independent investigation. The Attorney General is charged with leading the current investigation. The independence of the AG, given he was appointed by Najib, has obviously been brought into question. Given these ties, there will be pressure on the AG from opposition groups to affirm the wrongdoing of Najib.

Reiterating previous sentiments, the opposition leader said that Najib should take the 'gentlemanly' way out and step aside for an independent investigation (presumably one free of the AG's involvement). This echoes calls that led to the resignation of former PM Badawi, who faced similar pressure from Mahathir to resign from office. But Najib is more defiant than his predecessor and he is unlikely to go without a fight.

For Najib, the current investigation could have one of two results, both bad: either he is charged, which would be a career-ending embarrassment, or he is exonerated, which would lead many to see a conspiracy between Najib and his AG. 

A vote of no-confidence is also possible, forcing Najib to either resign or dissolve the government and hold elections. What might stop such a move are concerns that the ruling Barisan Nasional coalition (many of whose members would have to break ranks for a no-confidence vote to succeed) could lose government entirely if a general election were subsequently called.

Najib faces a challenging few weeks. Regardless of the veracity of the accusations, they will linger. Mahathir has maintained the pressure on Najib and may soon claim another scalp. In comments to the media on Wednesday, Mahathir put it simply:

It is very easy for him (Najib) to prove that it is not true. He has these accounts in the bank. All he has to do is say 'you examine my accounts, you look at it'.

That may indeed be the only way for Najib to clear his name. 

Photo by Flickr user Firdaus Latif.