KUALA LUMPUR (BLOOMBERG) – The guilty verdict against former prime minister Najib Razak in the first of the 1MDB trials could strengthen the current government’s hand after months of political turmoil.

Najib faces at least 12 years in prison after the High Court on Tuesday (July 28) found him guilty of all seven charges in a case involving millions he received from a former unit of troubled state fund 1MDB.

He’s out on bail and his lawyer said he would appeal the ruling, but a criminal conviction would complicate any efforts by Najib to seek office again.

The decision could bolster Prime Minister Muhyiddin Yassin’s political capital at a time when his administration controls a razor-thin majority in parliament and talk of a snap election is heating up.

The current leader relies on Najib’s United Malays National Organisation (Umno) party for support and was seen to be at risk of succumbing to pressure from Umno on policy matters – including on how he treats the 1MDB cases.

Muhyiddin may now be able to quell some of those concerns, with the added advantage that Najib’s conviction could split Umno into those who support the ex-premier against those who want to move on and work with Muhyiddin’s government.

The verdict comes days after a $3.9 billion (S$5.37 billion) settlement Malaysia struck with US investment bank Goldman Sachs to help resolve the country’s 1MDB case against the bank.

That deal enables the country to recoup some of the money lost through the troubled state fund.

“Politically, it strengthens PM Muhyiddin’s hand,” said Wong Chin Huat, a political scientist and professor at Sunway University.

“He could claim that the anti-graft drive that started under” the previous Pakatan Harapan government “is continuing under him.”

Muhyiddin’s government, which includes a breakaway faction from the Pakatan Harapan administration, came to power earlier this year on the backing of Umno, the party once led by Najib.

The fledgling government faced public backlash after prosecutors reached a deal to drop 1MDB-related charges against Najib’s stepson Riza Aziz, even as Muhyiddin himself repeatedly pledged to ensure justice.

BUDGET VOTE

While the ruling on Tuesday means the prime minister could lose support from pro-Najib factions within Umno, he may be able to pick it up elsewhere, which would be critical to securing majority support for the 2021 state budget set to be tabled in parliament this November, Wong said.

Sticking to the reforms promised by the last government may also help him in the event of an election.

The opposition has been planning to launch a no-confidence vote against Muhyiddin for months, even as it struggled to agree on who should be its prime minister candidate.

“This story is far from over,” said Peter Mumford, Southeast & South Asia practice head at risk consultancy Eurasia Group.

“In some ways the outcome is better for Muhyiddin as it would be tricky for him to campaign in the likely upcoming election if there were accusations that he had somehow engineered an acquittal for Najib.”

NO ‘REASONABLE DOUBT’

The case that concluded this week involved 42 million ringgit (S$13.6 million) of funds deposited in Najib’s personal accounts from a former unit of 1MDB.

Delivering the verdict on Tuesday, High Court Judge Mohd Nazlan Mohd Ghazali told the court he found “the defence has not succeeded in rebutting the presumption on the balance of probabilities or raising reasonable doubt on the charge against the accused.”

Najib was sentenced to 12 years in prison for one count of abuse of power, as well as 10 years each for three charges of money laundering and three criminal breach of trust charges, to be served concurrently.

He must also pay a fine of 210 million ringgit or face an additional five years imprisonment.

He was released on bail late Tuesday.

Najib is a divisive figure in Malaysian politics, even as he remains popular in some quarters.

Many Malaysians celebrated his conviction on social media, like former lawmaker Rafizi Ramli, who was imprisoned for leaking the contents of a 1MDB audit report to the public amid the scandal in 2016.

Rafizi said on Twitter that he “never expected much from those years, but I did feel that all the heartbreaks were well worth it today.”

Yet as the verdict hearing dragged on through the day, hundreds of Najib’s supporters crowded outside the courthouse, some wearing masks and others not.

“Najib’s influence among conservative Malays is still strong,” said Awang Azman Awang Pawi, an associate professor at the University of Malaya.

“This does not mean the end of Najib’s political life because there is an appeal process and anything can happen in politics.”

The trial is only the first of at least three involving Najib, who faces dozens more corruption and money-laundering charges, including those linked to billion-dollar acquisitions and bond sales by the scandal-ridden fund.

“The verdict is a huge win for Malaysians,” the opposition Pakatan Harapan alliance wrote in a statement.

“This process would certainly have not started if the people had not risen up and secured Pakatan Harapan’s victory” in the 2018 election, when the coalition ousted Najib in the country’s first change of government since its independence on a wave of public anger over the 1MDB scandal and rising living costs.

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