VZCZCXRO0886
OO RUEHCHI RUEHDT RUEHHM RUEHNH
DE RUEHKL #0575/01 1891149
ZNY CCCCC ZZH
O 071149Z JUL 08
FM AMEMBASSY KUALA LUMPUR
TO RUEHC/SECSTATE WASHDC IMMEDIATE 1306
INFO RUCNASE/ASEAN MEMBER COLLECTIVE PRIORITY
RUEHAK/AMEMBASSY ANKARA PRIORITY 0115
RUEHLO/AMEMBASSY LONDON PRIORITY 0435
RUEHBY/AMEMBASSY CANBERRA PRIORITY 2571
RUEKJCS/SECDEF WASHDC PRIORITY
RHHMUNA/CDR USPACOM HONOLULU HI PRIORITY
RHEHNSC/NSC WASHDC PRIORITY

C O N F I D E N T I A L SECTION 01 OF 04 KUALA LUMPUR 000575 
 
SIPDIS 
 
FOR EAP AND INR 
 
E.O. 12958: DECL: 07/07/2028 
TAGS: PGOV PREL PINR KDEM MY
SUBJECT: NAJIB FIGHTS BACK; WEEKEND PROTEST FAILS TO IMPRESS 
 
REF: A. KUALA LUMPUR 572 - NAJIB IMPLICATED IN MURDER 
     ¶B. KUALA LUMPUR 570 - GOM DELIVERS PROTEST TO USG 
     ¶C. KUALA LUMPUR 563 - ANWAR ON OFFENSIVE 
     ¶D. KUALA LUMPUR 557 - ANWAR TAKES REFUGE 
     ¶E. KUALA LUMPUR 73 - PROSECUTOR DOWNBEAT ON MURDER 
        CASE 
     ¶F. 07 KUALA LUMPUR 291 - ALTANTUYA MURDER 
 
Classified By: Political Section Chief Mark D. Clark, reason 1.4 (b and 
 d). 
 
Summary 
------- 
 
¶1.  (C) As de facto Opposition leader Anwar Ibrahim went on 
the offensive last week, Deputy Prime Minister Najib Tun 
Razak wasted no time in denying any link to the Altantuya 
murder case, while diffusing another bombshell by admitting 
he previously had met the man accusing Anwar of sodomy.  On 
July 4, the private investigator who had implicated Najib in 
the murder case sat by silently as a lawyer read out a 
retraction of his statement publicized only 24 hours earlier. 
 The rising political boil led to rumors of potential arrest 
for Anwar the night of July 3.  A major Opposition political 
rally in the Kuala Lumpur vicinity failed to attract critical 
mass, as some supporters took heed of police warnings and 
talk of using the military to ensure order.  U.S. remarks 
related to the allegations against Anwar continued to 
generate opportunistic GOM criticism, including a letter from 
Foreign Minister Rais Yatim to the Secretary.  Prime Minister 
Abdullah felt it necessary to announce that his government is 
stable, in the face of rumors to the contrary, while UMNO 
leaders prepared themselves for party elections.  A key 
lieutenant for Anwar Ibrahim assessed that PM Abdullah did 
not support use of emergency measures against the Opposition 
at this time, and said Anwar would continue with public 
rallies.  End Summary. 
 
Najib: I Met Anwar's Accuser, But Not Altantuya 
--------------------------------------------- -- 
 
¶2.  (C) DPM Najib wasted little time in defending himself 
publicly following Anwar's July 3 press conference featuring 
private investigator Balasubramaniam and his explosive sworn 
statement linking Najib to the murder of Mongolian national 
Altantuya.  Speaking with reporters, Najib explicitly denied 
ever meeting Altantuya, and suggested Anwar's public 
revelations were an attempt to distract the public from the 
sodomy allegations against the Opposition leader.  Najib, 
however, admitted that he had met Anwar's accuser, Saiful 
Bukhari Azlan, who had come to Najib's home several days 
before filing a police complaint, but this did not reflect a 
conspiracy.  In a July 30 interview, Najib had insisted he 
was not involved in the case at all, while Opposition sources 
told us they had evidence and witnesses to the contrary 
(suggesting to us that Najib corrected the public record in 
order to preempt another disclosure by Anwar). 
 
ISA Fears 
--------- 
 
¶3.  (C) In the immediate aftermath of the private 
investigator's statement tying Najib to the Mongolian murder 
victim, swirling rumors regarding Opposition protests, and 
public statements by the police alluding to a possible role 
for the military in maintaining order, Opposition sources 
told us Anwar feared he could be arrested under the Internal 
Security Act (ISA) as early as the evening of July 3.  As a 
precaution, Anwar completed a number of legal declarations 
with his lawyer during the July 3 afternoon.  To mitigate 
risks that the planned July 6 anti-government rally could 
provide a pretext for a security crackdown, the Opposition 
decided to shift the venue from an open park to an enclosed 
stadium in Shah Alam in line with a request from police. 
 
Investigator's 24-Hour Turn-Around 
---------------------------------- 
 
¶4.  (C) Najib's camp appeared to conduct a major 
counterstrike on July 4, as Balasubramaniam sat in a hastily 
arranged press conference beside a lawyer who read out a 
retraction of the private investigator's statement that he 
publicized only 24 hours earlier.  The PI's new statutory 
declaration refutes all allegations connected to Najib, 
explicitly repeating each of the statements now declared 
false, and states that the earlier affidavit was completed 
under duress.  Balasubramaniam remained silent and glum in 
the quick press encounter, in contrast to his open demeanor 
the previous day.  His about-face occurred after being called 
to a police station on July 3, shortly after the Anwar press 
conference.  Following his retraction, Balasubramaniam with 
his immediate family disappeared from public view, with some 
rumors that he is abroad. 
 
Tepid Turnout for Key Rally 
--------------------------- 
 
¶5.  (C) Rumored plans by the Opposition to stage a protest 
march in Kuala Lumpur on July 4 after Friday Muslim prayers 
failed to materialize, though police briefing detained two 
activists at the National Mosque.  Anwar traveled to 
Opposition-held Penang on Saturday, July 5, to preside over 
an Opposition rally there which drew an estimated 30,000 
supporters.  The big Opposition event, however, was slated 
for Sunday, July 6, in Shah Alam in Selangor state, also in 
Opposition hands.  Police issued warnings regarding the 
illegal nature of the July 6 rally, and set up road-blocks in 
the vicinity, actions that deterred attendance; however, 
police did not otherwise attempt to stop the event.  The 
all-day affair, at one time billed as a "million-man" rally, 
attracted only a modest turnout of some 20,000, less than the 
50,000 capacity of the stadium.  Anwar exhorted the crowd to 
throw out PM Abdullah's National Front (BN), but did not 
mention his earlier deadline of September 16 to bring down 
the government through the defection of BN members of 
parliament.  The greatest stir of the rally came earlier in 
the day when a rock band singer flashed his buttocks to the 
audience during a performance, outraging the crowd and 
causing some conservative Muslim participants from the 
Islamist PAS party to abandon the stadium. 
 
U.S. Remarks in the Mix 
----------------------- 
 
¶6.  (SBU) GOM and UMNO party officials continued to criticize 
both the U.S. and Anwar over the State Department Spokesman's 
June 30 remarks affirming our support for rule of law in 
light of the sodomy allegations against the Opposition 
leader.  Foreign Minister Rais Yatim over the weekend 
confirmed that he had sent a letter of protest to Secretary 
Rice over U.S. interference in Malaysia's internal affairs. 
Home Minister Syed Hamid Albar called Anwar America's 
"snitch."  Education Minister and UMNO Youth leader 
Hishammuddin said the UMNO Youth wing would protest at the 
U.S. Embassy, as well as at the Turkish embassy (for 
sheltering Anwar June 29-30) and the Singapore high 
commission (for articles published in Singapore critical of 
DPM Najib's wife, Rosmah).  Some 40-50 persons, purportedly 
from the Muslim Consumers Association, demonstrated briefly 
and peacefully at the U.S. Embassy on July 4; some carried 
signs equating the U.S. and Anwar with Zionism.  (Note:  We 
forwarded the Foreign Minister's July 4 letter to EAP/MTS. 
Despite the high-level criticism, we enjoyed good Malaysian 
official turnout at our Independence Day reception, held on 
July 3.  End Note.) 
 
Prime Minister:  Everything Under Control 
----------------------------------------- 
 
¶7.  (SBU) With the political scene buffeted by the 
Anwar-Najib maelstrom, and respected international media 
beginning to remark on Malaysia's "turmoil," as did the Asian 
Wall Street Journal, Prime Minister Abdullah tried to 
publicly reassure citizens and the international community 
alike.  On July 3, Abdullah publicly stressed, "this 
government is a stable government, please believe that.... 
Don't panic about what is happening."  On July 6, the PM's 
comments turned more defense and emotional, as he hit out at 
"rampant" "slandering" and Opposition protests.  "I don't see 
the rationale for the continued demonstrations, or to play 
politics purely to create instability that could jeopardize 
the people's safety and it is also aimed at toppling the 
government elected by the people," Abdullah told reporters. 
 
UMNO in Election Mode 
--------------------- 
 
¶8.  (SBU) Meanwhile, PM Abdullah's dominant UMNO party 
officially begins its election cycle in 10 days time, with 
the first phase, party branch elections, scheduled July 
17-August 24.  Most senior UMNO leaders are devoting 
increasing time, particularly their weekends, to contact work 
with their respective party branches and divisions.  While 
elections for the presidency, deputy presidency and other 
national leadership positions do not take place until 
December, successful candidates must lay the ground work now 
to ensure their nominations later in the process.  For 
example, internet journalists reported on July 7 that all 13 
UMNO division leaders in Abdullah's home state of Penang had 
already decided to nominate Abdullah for reelection as party 
president, a move supposedly intended to forestall a push by 
Najib's supporters. 
 
Down from the Boiling Point, for Now 
------------------------------------ 
 
¶9.  (C) Polchief met on July 7 with Sivarasa Rasiah, vice 
president in Anwar's Peoples Justice Party (PKR) and one of 
Anwar's lawyers.  Sivarasa said last week's political scene 
was volatile and "boiling," but the situation now had calmed 
down to a "simmer."  He downplayed the immediate risk of the 
GOM employing emergency measures, such as ISA detention for 
Anwar and other opposition leaders, in large part because he 
believed PM Abdullah was not supportive of such measures at 
this stage.  Even though the police could arrest and hold 
Anwar for a period of 60 days, Abdullah would need to be on 
board with the decision.  Second, Sivarasa argued that use of 
ISA against Anwar also entailed a willingness to declare a 
state of emergency to contain and tamp down street protests 
that would erupt, a step that again Abdullah, but also the 
King and fellow traditional rulers and perhaps the security 
forces were not backing at this time. 
 
¶10.  (C) Sivarasa said Anwar would continue holding rallies, 
particularly in Opposition-held states, but would be careful 
to minimize the risk of these getting out of hand and 
creating a pretext for harsh government action.  Sivarasa 
acknowledged that in the July 6 rally Anwar had not mentioned 
his now famous September 16 deadline for bringing down the BN 
government, and Sivarasa appeared to imply that this date did 
not reflect a particular plan, at least not one that he was 
privy to.  Sivarasa downplayed the possibility of Anwar 
contesting in a by-election in the near future. 
 
¶11.  (C) The PKR VP and lawyer thought that the police 
investigation into the sodomy allegations against Anwar had 
failed to turn up enough information for prosecutors to 
justify an actual indictment, though the police would never 
speak up to clear Anwar's name and the allegations, or an 
open investigation, would linger.  Sivarasa stated that 
private investigator Balasubramaniam had confided in him, 
along with a number of others, some two months ago regarding 
information linking Najib to the Altantuya murder case. 
Anwar would bring forward these witnesses to 
Balasubramaniam's remarks when needed. 
 
Comment 
------- 
 
¶12.  (C) Last week's palatable political tension, stoked by 
Anwar's offensive in face of the sodomy investigation and GOM 
counterattacks, has receded somewhat as of today.  The 
under-attended Opposition rally of July 6, considered by 
itself, failed to impress or convey a sense of popular 
momentum.  BN leaders, Najib in particular, have been quick 
to conclude that the rally's failure to attract a packed 
crowd reflects a lack of support for Anwar.  Police warnings 
and reference to bringing in the military to ensure order no 
doubt dampened enthusiasm among Opposition supporters.  The 
political status quo threatens Anwar and plays into Najib's 
hands, however, suggesting that the Opposition leader will 
come out with fresh challenges to the BN government. 
 
¶13.  (C) Najib and UMNO may have suffered longer term blows 
to their public credibility in the exchange of allegations 
with Anwar.  Detailed revelations about Najib, even retracted 
the next day, will tend confirm the widespread public belief 
that the DPM is linked to the Altantuya murder.  The 
allegations against Anwar, however, appear as a repeat of the 
politically-motivated charges of 1998, even to those who put 
some stock in the reports.  For Najib this comes at the 
inopportune time with the start of the UMNO election cycle, 
and will dampen the possibility his camp can generate enough 
grassroots backing for a Najib bid to replace Abdullah as 
party leader come December. 

KEITH