In the final spin to 48 hours of election drama, Malaysia’s new prime minister, 92-year-old Mahathir Mohamad, declared yesterday he had set in motion plans for a royal pardon for Anwar Ibrahim – the former ally who was sacked and jailed when Mahathir was previously in power and who could now become his successor.

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“The [king] has indicated he is willing to pardon Anwar immediately,” Mahathir told a news conference in Petaling Jaya. “We will begin the .. proper process of obtaining a pardon. This means a full pardon. He should be released immediately when he is pardoned.”

The unlikely alliance of Mahathir and Anwar has been one of the many unusual aspects of this election. When Mahathir was prime minister the first time round, between 1981 to 2003, Anwar was his protege and deputy, tipped for the top job until Mahathir thought he was getting too powerful. After a prosecution for corruption and sodomy that was widely believed to be politically motivated, he was jailed in 1999.

But this year, in the bid to remove Najib Razak, who is accused over a $3.2bn corruption scandal, Mahathir joined the opposition and agreed to run as its leader, get a royal pardon for Anwar (who is still behind bars on a second charge of sodomy) and then make way for him to become prime minister.

However, Anwar’s lawyer, Sankara Nair, told the Guardian he would be telling Anwar – who is due to be released on 8 June – not to ask for the pardon, but for the whole case to be reviewed. When Anwar was jailed for sodomy a second time, in 2015, the charges were condemned by Human Rights Watch and other groups.

“He has sufficient evidence for the case to be reviewed, and then he won’t need a pardon because he can walk off scot-free,” Sankara said. “During his second sodomy trial we won at the high court but then Najib’s judges found him guilty in appeal. Everybody at the time said it was clearly a political decision, not based on law, so I believe a review of the case by new judges, who are under no stress from Najib, would prove his innocence.”

There is a certain irony in that as Anwar finally emerges from prison, the prospect of prosecution looms large for Najib, who following his overwhelming election defeat in the early hours of Thursday, still did everything he could to hold on to power.

The source of Najib’s fear is 1MDB, the Malaysian government fund that was set up and overseen by Najib, which had $3.2bn embezzled from it. The money was used on a global spending spree of mammoth, indulgent proportions: it funded the purchase of yachts, Manhattan property, Picasso paintings and even the film The Wolf of Wall Street. $681m of the money was alleged to have ended up in Najib’s own bank account, funding his wife’s multimillion pound jewellery habit. He denies any wrongdoing.

Investigations into the scandal by the US Department of Justice pulled no punches. “A number of corrupt officials treated this public trust as a personal bank account,” said the US attorney general at the time, Loretta Lynch. The figure named in the report simply as “Malaysian Official Number One”, accused of stealing millions, is widely regarded to have been Najib.

Najib thwarted all efforts to have the matter investigated in Malaysia, firing the attorney general and the prosecutors who reportedly found evidence of criminal misappropriation, then covered up the report and made it secret. None of the 1MDB financial accounts was given to investigators.

Mahathir has made 1MDB the focus of his campaign. Speaking after he was sworn in on Thursday, he said: “If Najib has done something wrong, then he will have to pay the price.” Figures from the opposition said Mahathir had sent orders to make sure Najib does not leave the country.

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Mahathir is “going in for the kill”, Sankara said. “Najib and his wife and his cohorts are the loneliest people in Malaysia. He has lost the support of the country and the support of his party because he has run them into the ground. And he has nowhere to run.”

An independent royal commission of inquiry is likely to be established, setting the stage for Najib’s prosecution. Tony Pua, an opposition MP who has spent the past two years trying to get justice for 1MDB, said he “absolutely believed that Najib will be implicated”.

“Up till now bank statements and important documents have been concealed. Finally we can have a proper 1MDB investigation in Malaysia,” he said.

While it was clear that Najib has few allies left in Malaysia, the most cutting accusations of corruption and abuse of power following his defeat came from within his family, from his estranged stepdaughter Azrene Ahmad, the daughter of his second wife, Rosmah.

“I witnessed many trespasses, deals and handshakes these two made for the benefit of power and to fuel their appetite for greed,” she wrote on Thursday. “The amount of money in briefcases exchanging hands and being spent like water not for the benefit of the rakyat [citizens] but to be spent like water on jewels, bribery of officials and used in the pursuit of gaining more power.”