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FILE PHOTO: Malaysia’s former Prime Minister Najib Razak prays before he attends the United Malays National Organisation (UMNO) 72th anniversary celebrations in Kuala Lumpur, Malaysia May 11, 2018. REUTERS/Athit Perawongmetha/File Photo

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By Rozanna Latiff and A. Ananthalakshmi

KUALA LUMPUR (Reuters) - The government of former Malaysian prime minister Najib Razak spent years systematically obstructing probes into the alleged looting of state fund 1MDB, while also ruthlessly muzzling critics, according to current and former government officials.

They said the meddling in the investigation by the Malaysian Anti-Corruption Commission (MACC) effectively shut down local inquiries into the scandal at 1Malaysia Development Berhad (1MDB) even as five other countries, including the United States, Switzerland and Singapore, carried out their own probes.

Any suppression of the probe in Malaysia ended abruptly in May when Najib lost power in an election. On Tuesday, Najib was arrested by the Malaysian authorities in relation to a probe into SRC International, a former 1MDB unit, according to an investigating task force. Sources close to the matter said he may face several charges.

Najib, who lost power in an election last month, has consistently denied any wrongdoing in relation to 1MDB and SRC. A current Najib aide declined to respond to allegations there was meddling and a cover-up.

Interviews by Reuters with a dozen current and former government officials show that the obstruction of investigators occurred on multiple levels.

One senior MACC investigator said he was convinced there was tampering with key witnesses. The official, who declined to be identified because he is still involved in the 1MDB probe, said he felt that by the time MACC got to talk to the witnesses they had been coached on what to say or were too frightened to talk because they had been threatened.

Other witnesses couldn't be found. "There were some witnesses who disappeared, ran abroad," and some were clearly told by officials from other government agencies to do so, said the MACC official. He didn't name these witnesses because some of them are still being sought.

Najib's office also sought to tightly control any public comment on 1MDB.

MACC is supposed to be an independent government agency that works without government interference, but three former MACC communications officers told Reuters that many of the press releases on the 1MDB probe issued by MACC were written by the prime minister's office.

    And it wasn't just at the anti-corruption agency that the heat was intense.  

    New Finance Minister, Lim Guan Eng, told Reuters there was an "extensive cover up" at the ministry of finance (MOF).

"ALMOST PERFECT CASE"

Malaysia's new Prime Minister Mahathir Mohamad told Reuters the week before last that he holds Najib fully responsible for the 1MDB scandal and that Malaysian authorities have "an almost perfect case" against him.

As a result of an anti-kleptocracy probe, the U.S. Department of Justice has alleged more than $4.5 billion (£3.4 billion) was misappropriated from 1MDB and that about $700 million of the fund's money ended up in Najib's personal bank accounts.

    Najib told Reuters in an interview last month he shouldn't be blamed for any of the problems at the fund and declared he knew nothing about why hundreds of millions of dollars from 1MDB allegedly appeared in his bank account.

Some of the ways in which those looking into the 1MDB scandal had been sidelined have been known for some time.

For example, in July 2015, Najib removed the then attorney general Abdul Gani Patail for "health reasons" at a time when the official was preparing to charge Najib. He also removed deputy prime minister Muhyiddin Yassin the same month after he had criticised Najib over his handling of the scandal.

But the intensity of the pressure that MACC faced from other arms of government is only now becoming clear.

BULLET SENT TO HIS HOME

In May, about two weeks after Najib's ousting, the newly appointed head of the MACC, Mohn Shukri Abdull, recalled how his investigation into 1MDB had been blocked in 2015.

Shukri, who had been deputy commissioner at MACC until he retired two years ago, recalled how he had faced threats to his job and worse - a bullet was sent to his home in 2015. He sought and received U.S. police protection during a visit to Washington and New York because he felt he was being followed by Malaysian government agents.

"We didn't know who were the main people who were putting the pressure on MACC, but there were many of them," another MACC official said. It "was coming from all sides."

    The senior MACC official also said police interfered in MACC's investigations as they closed in on a probe on how about $10.6 million from SRC went into Najib's bank account.

    He said some witnesses in that probe could not be found because they were being held at police headquarters.

Malaysian police did not respond to an emailed request for comment.

    Khalid Abu Bakar, who was Malaysia's police chief from 2012-2017, has been barred from leaving Malaysia since the election. Mahathir has said Khalid would be investigated for his role in the 1MDB probe.

    Khalid did not respond to a request for comment.

    When asked about the sacking and transfer of officials involved in the probe, the Najib aide said the actions were to suppress a "political coup". He denied there had been intimidation.

AUDITORS IN THE DARK

A senior government source said civil servants at the MOF, which was also run by Najib, were instructed to cover up the 1MDB affair.

    "Decisions were made at PMO (prime minister's office). And MOF had to find a way to hide it and figure out a way to pay for it," this person said.

Checks and balances were ignored. For example, a member of the auditor general's team who looked at 1MDB's finances in 2015 said the fund was highly secretive, and did not release all its documents and hard disks to the auditors.

    Najib acknowledged in the Reuters interview that "there were certain short-term payments that needed to be done" in relation to 1MDB after the fund had become so politicised that it couldn't act on its own.

(Reporting by Rozanna Latiff and A. Ananthalakshmi; Additional reporting by Praveen Menon, Joseph Sipalan and John Geddie; Editing by Martin Howell)

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