By Rozanna Latiff and Liz Lee
Former Malaysian premier Najib Razak was charged with six counts of criminal breach of trust involving government funds worth more than $1.5 billion on Thursday, adding to the 32 charges he already faces for money laundering and graft.
His former treasury chief, Irwan Serigar Abdullah, was also charged with criminal breach of trust, becoming the highest-ranking civil servant to be charged since Najib was unexpectedly ousted in a general election in May.
The two pleaded not guilty to all the charges. Each charge carries a jail term of up to 20 years, a financial penalty and a whipping sentence, but both Najib and Irwan would be exempted from whipping as they are over the age of 50.
The new administration led by Mahathir Mohamad has been cracking down on corruption and has charged several former senior government officials, including Najib's former deputy.
A particular focus is how billions of dollars went missing from state fund 1Malaysian Development Berhad (1MDB), founded by Najib in 2009.
Four of the six charges filed on Thursday involving about 4.78 billion ringgit relate to a settlement agreement between 1MDB and Abu Dhabi state fund IPIC, said Azam Baki, a deputy commissioner at the anti-graft agency.
In 2017, 1MDB had agreed to pay $1.2 billion to the Abu Dhabi fund, in a settlement agreement following a dispute between the two over bond payments, according to the companies.
The 1MDB-linked charges allege Irwan and Najib committed the breach of trust offense with 220 million ringgit of government funds meant for Kuala Lumpur International Airport Berhad, 1.3 billion ringgit meant for a subsidy and cash aid program and 3.3 billion ringgit of other government funds.
Najib's lawyer Muhammad Shafee Abdullah said his client did not personally benefit from these transactions.
"These were funds that were initially allocated for a purpose, but on priority was revised, in the face of urgency and dire straits the nation was placed into. For the purposes of settlement of the IPIC issue, an executive decision had to be undertaken very honestly," Shafee told the court.
He said the other two charges relate to a pipeline project and the East Cost Rail Link (ECRL), a $14 billion project that was the centerpiece of China's infrastructure push in Malaysia.
The project, signed under Najib's premiership, was suspended by Mahathir who has said the deal was "unfair" to Malaysia.
The judge released Najib and Irwan after setting a bail of 1 million ringgit each.
Prosecutors had earlier asked for 3 million ringgit bail for Najib, but the former premier's lawyers said it was getting difficult for Najib to settle bail after having paid 4.5 million ringgit in bail since July.
"I would like to ask that my client is given at least three weeks for him to settle the 1 million bail because it has become very difficult for my client, even before and in the latest case," Shafee said, adding Najib's bank accounts remain frozen.
The judge ordered the bail be paid in 10 days.
Najib is already facing 32 money laundering, graft and breach of trust charges over transactions linked to 1MDB. He has pleaded not guilty and his trial is due to begin next year.
His wife, Rosmah Mansor, was charged with money laundering earlier this month and had to pay bail of 2 million ringgit.
U.S. authorities allege that $4.5 billion was siphoned from 1MDB and that about $700 million was diverted into Najib's personal bank accounts.
($1 = 4.1660 ringgit)
(Reporting by Rozanna Latiff and Liz Lee; Additional reporting by Joseph Sipalan; Writing by A. Ananthalakshmi; Editing by Michael Perry)