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By Niluksi Koswanage
KUALA LUMPUR (Reuters) - Malaysia's divisive election has left a bitter taste for millions of people that risks creating a long-term problem of legitimacy for Prime Minister Najib Razak's long-ruling Barisan Nasional (BN) coalition.
The outrage was clear at a busy intersection across from one of Kuala Lumpur's fanciest shopping malls, where a huge poster of Najib and his deputy had been defaced -- a rare display of public disrespect in the Southeast Asian nation.
One of the scrawled comments poked fun at the unconvincing share of the votes won by Najib's ruling coalition in its May 5 election victory: "47 percent PM," it said.
"If you don't like it, you can leave," mocked another, alluding to a comment by Najib's new home minister that those unhappy with the result -- and the electoral system that produced it -- should pack up and emigrate.
The tense political atmosphere threatens to prolong policy uncertainty that investors hoped the polls would put to rest, as Najib braces for a possible leadership challenge and the opposition mounts a noisy campaign to contest the result.
By securing 60 percent of parliamentary seats with less than 50 percent of the popular vote, the BN's victory has served to expose starkly the unfairness of a gerrymandered electoral system that is also prone to cheating and bias.
That has galvanized the opposition, led by former deputy prime minister Anwar Ibrahim, into holding a series of big rallies as it refuses to accept the result and prepares legal action to challenge the outcome in nearly 30 close-run seats.
Disgruntled Malaysians have submitted over 220,000 signatures to the White House online petition page, exceeding the number required for a response from President Barack Obama.
In response, divisions have appeared in the United Malays National Organization (UMNO), the main party in the ruling coalition -- in power since independence from Britain in 1957.
Hardliners have urged a crackdown on dissent and blamed minority ethnic Chinese voters for deserting the ruling coalition. That has raised racial tensions in a country whose ethnic Malay majority dominates politics and enjoys special privileges to offset what its leaders see as its disadvantaged position compared to relatively wealthy ethnic Chinese.
Reformers have urged Najib to press ahead with social and economic reforms to blunt the opposition's appeal and address the concerns of discontented young and urban voters. That includes many ethnic Malays who voted for the opposition.
"Every day Najib sees angry Malaysians on the Internet. It is not an easy thing to swallow," said a senior government official who declined to be identified. "There are people in his cabinet asking for a crackdown and there are others asking for him to brandish his reformist side."
The hard liners appeared to gain ground last week when police used the colonial-era Sedition Act to detain three opposition politicians and activists and charged a student with inciting unrest.
The three arrested were later released after a court rejected the police remand order, but could still face charges.
Najib is under pressure from UMNO conservatives such as Mahathir Mohamad, who served as prime minister for 22 years, to show a tougher side ahead of a leadership election that could be held as early as August. At least until then, planned reforms such as steps to widen Malaysia's tax base and reduce heavy food and fuel subsidies are likely to stay on hold.
"Najib is not in a very strong position," Mahathir told reporters in Tokyo on Saturday, saying there was a risk that his majority could be weakened further if some ruling coalition politician defected to the opposition.
"When you are concerned about that, the focus on development, economy and all that will be affected. That is Najib's problem."
The opposition has yet to present clear evidence of widespread fraud, but Reuters interviews with 15 polling agents give an indication of why many Malaysians have lost faith in an electoral system that clearly favors the governing coalition.
A majority said that officials of the Election Commission (EC), which is part of the Prime Minister's Department, did not follow procedures or were ill-equipped to oversee the polls.
"Some, not all, officials were not trained enough or did not have the experience to determine what was a spoiled vote," said a counting agent in the Segamat parliamentary seat in southern Johor state, where the BN candidate won by a slim 1,200 majority with 950 votes deemed as spoiled.
"I cannot speculate on whether it was deliberate but there was quite a bit of incompetence," said the agent, who declined to be identified due to the sensitivity of the issue.
Anwar's three-party alliance says it has evidence that BN officials bought votes with cash and transported immigrants granted citizenship on shaky grounds to vote in areas with close races.
While its legal action, due to be filed with courts around the end of May, is unlikely to succeed, it will keep the electoral fraud issue in the spotlight for months ahead.
In Selangor state near Kuala Lumpur, a Reuters examination found at least 2,000 voters had identity cards deemed "dubious" by a commission of inquiry in Malaysia's Borneo island state of Sabah. That commission is investigating longstanding allegations that the ruling coalition handed out citizenship for votes to immigrants.
The government denies the fraud claims, accusing the opposition of being sore losers and of trying to stir up an Arab Spring style revolt. The EC says it took a tough approach in eradicating possible fraud in the electoral rolls.
"The opposition did not lose because of election rigging, it lost because they did not get the vote," EC Chairman Abdul Aziz told Reuters.
Deep concerns over the integrity of Malaysia's elections are nothing new. The government has been shaken by huge street rallies in recent years organized by the influential Bersih (clean) movement that has called for sweeping reforms, including a clean-up of the electoral roll and equal access to media.
After a violent police response to a 2011 rally, Najib burnished his reform credentials by rolling back some draconian security laws and introducing limited electoral reforms.
Bersih says those reforms did not go far enough, and is refusing to recognize the election results until it has verified hundreds of allegations of fraud in a "people's tribunal". It has previously highlighted instances of voters over 120 years of age and hundreds of voters living at a single address.
Likely far more influential than fraud are electoral boundaries that have been manipulated over the years to favor the BN. Pro-opposition constituencies in urban areas have up to nine times the number of voters than pro-government seats.
The opposition won just 89 seats in the 222-seat parliament, despite winning more than 51 percent of the vote.
"Najib won on malapportionment rather than his policies to eradicate corruption and reform the economy as voters felt he wasn't sincere," said Ooi Kee Beng, Singapore-based deputy director of the Institute of Southeast Asian Studies.
Najib, the 59-year-old son of a former prime minister, is unlikely to countenance deeper electoral reforms, a move that could be political suicide for the BN.
Reformists within UMNO are urging him, however, to ignore calls for a security crackdown and push ahead with steps to tackle corruption and make the ruling coalition more appealing to urban and ethnic Chinese voters who have deserted it.
"Of course the debate on whether we are truly a majority government will go on. But we can gain respect from the people," said Saifuddin Abdullah, a prominent reformist who is a member UMNO's Supreme Council.
(Additional reporting by Stuart Grudgings, Siva Sithraputhran and Al-Zaquan Amer Hamzah in Kuala Lumpur, and Yoko Kubota in Tokyo.; editing by Stuart Grudgings and Ron Popeski)