Around 2 a.m. Thursday, as it became evident that Malaysia’s effective one-party state had come to an end after 61 years, Prime Minister Najib Razak was in shock.
At his private residence in Kuala Lumpur, surrounded by family and close aides, Mr. Najib chewed over the events of the past 24 hours, when Malaysians voted in droves for the opposition—bucking poll predictions and knocking the ruling party out of power it had held since independence from the U.K. in 1957.
As a stream of advisers and family members hurried in and out, Mr. Najib and his wife, Rosmah Mansour, watched the results on a television, the mood somber, according to a person present. Some counseled the prime minister to step aside gracefully, given that his National Front coalition had won only 79 seats in the 222-seat parliament.
Others told Mr. Najib to stand firm: There was still the possibility of prying away some lawmakers from the opposition Alliance of Hope coalition, a collection of parties that had won 122 seats in a shocking landslide. Such ruthlessness had paid off for Mr. Najib before, they reminded him, when he was faced with an arrest warrant for corruption in 2015.
In the end, he charted a middle ground. At a news conference on Thursday, a downcast Mr. Najib acknowledged the election defeat—but appeared to stall for time. He pointed out that no single party had won a simple majority, meaning it was up to the king to decide who should form the next government.
Back to the Future
Mahathir Mohamad's alliance broke the National Front's hold on the countryside to defeat the UMNO-led coalition that had ruled Malaysia since 1957.
Election results:
parliamentary seats
china
National Front
Alliance of Hope
Others*
South
China Sea
Area of detail
Previous seats
Malaysia
National Front
Kuala Lumpur
Alliance of Hope
Others*
Vacant
indonesia
Election results:
parliamentary seats
china
National Front
Alliance of Hope
South
China Sea
Others*
Thailand
Area of detail
Malaysia
Previous seats
Kuala Lumpur
National Front
Alliance of Hope
indonesia
Others*
Vacant
Election results: parliamentary seats
china
National Front
Alliance of Hope
Others*
South
China Sea
Area of detail
Previous seats
Malaysia
National Front
Kuala Lumpur
Alliance of Hope
Others*
indonesia
Vacant
china
Philippine
Sea
PHILIPPINES
Bay of
Bengal
Area of detail
Indonesia
Election results: parliamentary seats
Malaysia
National Front
Alliance of Hope
Others*
Kuala
Lumpur
Previous seats
Malaysia
National Front
Alliance of Hope
Others*
Vacant
Kuala
Lumpur
*Pan-Malaysian Islamic Party and others Note: Current results for Alliance of Hope include seats for the Warisan party and an independent in Kuala Lumpur.
Source: news reports and Malaysia Election Commission (results); Tindak Malaysia (previous seats)
In a subsequent news conference, Mahathir Mohamad, the fiery, 92-year-old leader of the opposition—and former longtime prime minister—said his coalition controlled the necessary majority. Dr. Mahathir, set to meet the king in the late afternoon, urged Mr. Najib to step aside by the end of the day, in line with the nation’s constitution.
Mr. Najib’s office didn’t respond immediately to a request for comment.
Mr. Najib’s reluctance to cede power is likely due in part to the shame of being the first leader of the United Malays National Organization, the largest party in the ruling coalition, to lose power. Both his father and uncle served as prime minister. The Razak clan styles itself as Malaysia’s Kennedy family. UMNO had remained in power all these decades by delivering economic growth, but endemic graft has eaten away at its popularity in recent years.
Another likely factor: fear of legal repercussions from the 1MDB affair. A corruption scandal at 1MDB—a state fund the prime minister established, formally named 1Malaysia Development Bhd—played a major role in his election failure. Three years ago, as the attorney general prepared an arrest warrant for the prime minister in connection with the scandal, Mr. Najib fired him, along with a number of cabinet ministers.
Mr. Najib’s office didn’t respond immediately to a request for comment Thursday.
The Wall Street Journal, citing Malaysian investigative documents, reported in July 2015 how $681 million of 1MDB money had been deposited into personal accounts belonging to Mr. Najib. Authorities in the U.S., Singapore and Switzerland have launched criminal investigations of the fund.
Mr. Najib has denied wrongdoing.
In addition to firing the attorney general, Mr. Najib mothballed a 1MDB investigation by the Malaysian Anti-Corruption Commission, which had recommended his arrest for corruption.
He installed a new attorney general, Mohamed Apandi Ali, who said the money that landed in the prime minister’s accounts was a gift from Saudi Arabia that had later been returned. The U.S. Justice Department, which said in lawsuits in July 2016 that at least $4.5 billion had gone missing from 1MDB, rejected that explanation, saying the $681 million originated with the fund.
The opposition coalition’s election manifesto pledged to reopen 1MDB investigations within 100 days of taking office. A person involved with the original draft arrest warrant said the incoming government would likely press Mr. Apandi Ali—whom the new prime minister could dismiss—to act against Mr. Najib.
“The charges and evidence are in the files,” the person said. “All that is needed is for current AG to read the files with a fresh and open mind and act professionally, and if he can’t then he should be sacked and the new AG does so.”
Mr. Apandi Ali couldn’t be reached for comment.
Switzerland’s attorney general has publicly complained that Malaysia’s lack of cooperation with its 1MDB probe has hobbled the investigation. The U.S. Justice Department had to rely on secret document transfers from Malaysian officials to file its civil lawsuits in July 2016, according to people familiar with the matter.
The U.S. is seeking to seize assets worth nearly $2 billion—mansions, a yacht, even the proceeds of Hollywood films—financed with money allegedly taken from 1MDB. Along with its civil asset-forfeiture case, the Justice Department is building a criminal case against individuals involved in 1MDB.
The target is Jho Low, a 36-year-old Malaysian financier and associate of Mr. Najib, whom the Justice Department lawsuits paint as the ringleader of the fraud. Mr. Low’s whereabouts is unknown, but he has been living recently in Bangkok and Shanghai.
Under pressure from the new government, Mr. Apandi Ali, the attorney general, could start cooperating with overseas prosecutors by sharing investigative documents with the U.S., Singapore and Switzerland, according to the person who was involved with the original arrest warrant.
Write to Tom Wright at tom.wright@wsj.com
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