KUALA LUMPUR (Reuters) - A Malaysian inquiry panel recommended on Thursday that veteran former leader Mahathir Mohamad and his one-time deputy, Anwar Ibrahim, face a criminal investigation into a multi-billion ringgit foreign exchange scandal in the 1990s.
The move against Prime Minister Najib Razak's most dangerous political rivals comes ahead of national polls that must be called by August next year.
An investigation into Mahathir and Anwar could help Najib deflect the opposition's accusations over his role in the billions of dollars that allegedly went missing from state fund 1Malaysia Development Berhad (1MDB). Najib has denied any wrongdoing related to 1MDB, though the long-running scandal continues to dog his premiership.
In a report presented to parliament, a royal commission said that Mahathir and Anwar, who was also finance minister, may have committed criminal breach of trust and cheated by allegedly underreporting losses of up to 30 billion ringgit ($7.34 billion) borne by Bank Negara Malaysia (BNM) between 1992 and 1994.
"The minister of finance was also the main person responsible for withholding the fact and information of the forex losses to the Cabinet," the commission said in its recommendations.
"The prime minister, who also had knowledge of the forex losses, did not correct or offer more information when the losses informed to the cabinet were not the actual losses," the report read.
Najib's government said in June it had ordered a commission be formed to delve into the matter after a preliminary investigation found evidence of a possible cover up over the size of the losses.
Now aged 93, Mahathir served as prime minister for 22 years until he stepped down in 2003, and he currently chairs a fractured opposition alliance.
Last year, Mahathir set aside his old enmity with Anwar - who he had sacked in 1998 on charges of sodomy and corruption - in a bid to stop Najib winning a third consecutive term.
Anwar, arguably Malaysia's most charismatic politician, was convicted of sodomy for a second time in 2015, and is serving a jail sentence that prevents him from campaigning or contesting the coming election.
While Malaysian investigations into 1MDB have cleared Najib, probes into where its money went have been launched in several other countries.
The U.S. Department of Justice, without naming Najib, has launched a series of civil suits, under its anti-kleptocracy programme, to seize assets believed to have been bought using money stolen from the state fund.
(Reporting by Joseph Sipalan; Editing by Simon Cameron-Moore)