(July 3): Former Malaysian leader Najib Razak was arrested in connection with an investigation into scandal-hit state fund 1MDB and was expected to be charged on Wednesday in Kuala Lumpur, according to the task force investigating the case.

See: MACC confirms arrest of Najib

Najib was taken into custody on Tuesday at his residence in Langgak Duta in Kuala Lumpur, the task force said. The arrest was made in connection with SRC International, a company linked to 1Malaysia Development Bhd.

The ex-prime minister was brought to the Malaysian Anti-Corruption Commission’s headquarters in Putrajaya, an officer on duty who declined to be named told reporters. Najib’s spokesman did not immediately respond to calls. He has previously denied wrongdoing in relation to 1MDB.

Prime Minister Mahathir Mohamad, who took power after a shock election win two months ago, has revived a probe into the state investment company set up under Najib’s watch. His government has sought to recoup US$4.5 billion ($6.15 billion) of funds that were potentially lost through 1MDB, as well as fees paid to Goldman Sachs Group. A parliamentary committee in 2016 identified at least US$4.2 billion in irregular transactions by the fund.

See: MACC summons 'Wolf of Wall Street' producer for 1MDB probe

Handbags and Diamonds

Malaysia’s police last week disclosed about 1.1 billion ringgit ($372 million) of items that included Hermes International handbags, Rolex watches and cash in raids linked to Najib.

Luxury goods such as a 6.4 million ringgit diamond necklace and more than 200 sunglasses valued at 374,000 ringgit were taken from five residences and an office linked to Najib, Amar Singh, commercial crime investigation department director at the police, told reporters.

See: Police seized $372 mil worth of handbags, jewellery in 1MDB-linked raids

KPMG, the state fund’s auditor, retracted audit reports for financial years ended March 2010, 2011 and 2012, as it didn’t have access to relevant documents that Malaysia’s new government has since declassified, 1MDB said in a statement on June 26. The accounting firm told 1MDB not to rely on its reports over those three years as they don’t show “true and fair” assessment for finances.

See: KPMG tells 1MDB to not rely on audit reports over 3 years after access to withheld documents

SRC International was set up by 1MDB in January 2011 using a 15 million ringgit government grant, out of the approved 20 million ringgit, according to an executive summary of a declassified report by the auditor general. SRC received a 2 billion ringgit loan from state pension fund Kumpulan Wang Persaraan (Diperbadankan) in August of that year, which carried a state guarantee of 2.9 billion ringgit to cover the interest.