Later Saturday, Najib told a news conference that he was stepping down with immediate effect as president of the United Malays National Organization as well as chairman of the National Front coalition. USA investigators say Najib's associates illegally took billions from the fund, with millions ending up in Najib's bank account or being used to buy jewelry for his wife. Najib has denied any wrongdoing.
On Friday, he held a meeting of top alliance partners as he got down to the business of forming a government that, for the first time in the country's history, would not be from the Barisan Nasional coalition.
Mahathir's comeback is full of interesting plot twists.
The first three ministers appointed are leaders of three of the four parties in the coalition that routed the Najib-led Barisan Nasional that had governed Malaysia for 60 years.
Najib lost the election at least partly because of popular disgust over the 1MDB scandal.
Xavier Jayakumar, a vice-president of Anwar´s party, said the jailed politician was expected to be released from prison Tuesday.
Anwar was Mahathir's heir apparent until the premier sacked him in 1998 over political differences, and he was subsequently jailed on charges of sodomy and abuse of power that were widely seen as trumped-up.
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Incoming Prime Minister Mahathir Mohamad said he prevented Najib from travelling to "avoid problems with extradition". "Therefore, I am willing to cooperate and listen to the criticism toward my old party". Thus, he said the lifespan of this team will be 100 days.
He plans to cancel an unpopular goods and service tax and has criticised a "fake news" law brought in by the National Front before the election. Malaysia's electoral commission also redrew the country's districts in an aggressive gerrymandering exercise that clearly benefited Najib, and the government even temporarily dissolved Mahathir's party in April. "This will be very important for the country's institutional integrity".
Malaysian ex-leader Mahathir Mohamad, 92, met with the king Thursday, May 10 as he sought permission to swiftly form a government and quell concerns around the succession after a stunning win over the coalition that has ruled for six decades.
The setting up of the advisory council underlines Mahathir's preference for old hands and his focus on 1MDB, on which he said there was enough evidence to reopen a probe. "Our focus is to help Malaysians". If Mahathir sticks to his campaign promises, he will do that, he added. Lim is the chief minister of Penang state, but is largely unknown in global financial circles.
The announcement comes after he was defeated in general elections on Wednesday by former strongman Mahatir Mohamad, once Najib's mentor. "Capital control would become necessary in unusual situations". "It has been the honor of my lifetime to serve you and Malaysia", he said. Mahathir's heavy-handed approach worked: Malaysia recovered from the crisis to establish itself as a commodities juggernaut.
"The Malaysian people were defrauded on an enormous scale", said the Federal Bureau of Investigation, or FBI, at the time.
Under Dr Mahathir's rule, Malaysia grew to be one of the Asian economic tigers of the 90s, proving his ambitions were far-reaching.