* Najib: People expect a former PM to be "treated with decorum"
* Najib says never in "wildest dreams" did he expect police raids
* Najib said opponents deliberately sought to tarnish his image
* Mahathir: Najib knew he could end up in jail if he lost election
* For updated Najib interview highlights, see
By Joseph Sipalan and A. Ananthalakshmi
LANGKAWI/KUALA LUMPUR, Malaysia, June 22 (Reuters) - The police kept watch close to a holiday villa where Najib Razak this week gave his first sit-down interview since his shock election defeat last month, a reminder for the former Malaysian prime minister that he may not have much more time to relax.
He is under investigation for corruption, has been labelled a crook by his successor, is banned from travelling overseas, and has watched while his family's homes have been raided and luxury goods hauled away by officers.
Only hours before - also in an interview with Reuters - his mentor-turned-tormentor, the new Prime Minister Mahathir Mohamad, reeled off the charges he is looking to bring against Najib for his alleged role in a scandal that saw billions of dollars go missing from state fund 1MDB. They included embezzlement, bribery, losing government money.
"People would expect a former prime minister to be treated with decorum. Instead, I've been subjected to raids and all the other things," said Najib.
Plain clothes officers from the police's special branch intelligence arm were an obvious presence in and around the five-star hotel where he and his family were staying.
No criminal charges have been brought against Najib, and he said he did not know if hundreds of millions of dollars that moved through his personal account was from 1MDB.
Instead, Najib said 92-year-old Mahathir, the veteran leader who once helped engineer Najib's political ascent before turning on him, appears to be being vindictive.
Since his defeat in a May 9 general election, nearly 300 boxes of designer handbags and dozens of bags filled with cash and jewellery were among the items taken away by police in 1MDB-related searches at properties linked to Najib's family.
"I never in my wildest dreams expected something like that to happen," said Najib. "Even my grandchild's shoes were taken away. In my son's apartment, his assistant, his 'Man Friday' if you like, who does everything for him, even his cheap watches were taken away. What's that got to do with 1MDB?"
"They wanted to tarnish my image in the court of public opinion," he added.
Najib's insistence in the interview that he should not be blamed for the multi-billion-dollar scandal at 1MDB, a fund he had founded in 2009, triggered scorn across the country from some politicians and members of the public on Thursday.
"Najib always assumes that people are stupid," Mahathir told the Malay Mail in an interview on Thursday in reference to Najib's comments to Reuters.
DOZENS OF SUITCASES
Mahathir, who previously ruled the country from 1981-2003, is seen as the father of modern Malaysia.
And that is especially the case in Langkawi, a tourist island near the Thai border, which Mahathir developed during his previous tenure and which is now his constituency after he won it from Najib's coalition in the election last month.
Najib said he also helped upgrade Langkawi during his reign and has a close affinity with the island, but when images of his family arriving for their holiday with dozens of suitcases started circulating on social media over the weekend, some people said they thought he was trying to flee.
He has denied he has ever had plans to flee, saying he wants to clear his name and doesn't want to be a fugitive.
Najib, who was in power for about a decade, said that like so much of the good he did in government, his legacy has been tainted by the attacks from Mahathir and the winning coalition of parties.
"It was a hate campaign...They came up with very scurrilous allegations to defame me and the government. Unfortunately after a period of time, it changed public opinion," Najib said.
Najib faced criticism himself ahead of the election for the last-minute redrawing of electoral boundaries that was allegedly meant to favor his Barisan Nasional coalition, the introduction of a "fake news" law just weeks before polls, and the decision to hold the vote on a Wednesday, which made it very difficult for some Malaysians to return to the places where they were registered to cast their ballots.
Speaking from Najib's vast former office in the administrative capital of Putrajaya, Mahathir told Reuters that he has no doubt Najib is "totally responsible" for the 1MDB scandal. He also blames Najib for the corruption of the entire government machinery, including the way contracts were awarded – many times without tenders.
But in a country where institutions have been tainted by years of score-settling, Mahathir is also wary about moving too fast.
"Now the people are asking since you said he is guilty of this, why aren't you doing anything," said Mahathir, a self-proclaimed workaholic whose desk was strewn with documents.
"But of course we have to investigate very carefully. On the one hand, politically we can say he has done wrong things. But if you are going to a court of law, you must have full proof. Evidence that can hold up in a court of law."
Mahathir said he was quite surprised to have won the election because Najib knew "that if he loses, he may land up in jail".
"I thought he would have something up his sleeve", Mahathir said.
MAHATHIR SOUGHT TO PULL THE STRINGS
For Najib, the ties with Mahathir deteriorated some time ago.
After Mahathir helped him to power in 2009, Najib said their relationship started to sour as his mentor tried to pull the strings behind the scenes.
"He was insistent on telling me what to do and telling what sort of direction I should take."
Najib said Mahathir, for example, told him to sell a jet aircraft because it was too ostentatious, and advised him to set up a 'council of elders' with Mahathir as chairman. He pushed back on both ideas.
Then in late 2015, as 1MDB became the subject of investigations in multiple countries and fingers started to be pointed at Najib, Mahathir turned on him. In the run up to the election, Mahathir described helping Najib to the top as the biggest mistake of his life.
Yet for Najib, there remains a begrudging respect for his mentor even in defeat.
"He (Mahathir) knew everything about the system so he operated from within and from without, so that had a distinct advantage.
"He was quite clever in a way that he summarised everything in very simple terms, and repeated ad nauseum the same thing over and over again."
Even though Mahathir is touting charges against him that carry hefty fines and even jail sentences, Najib, a keen golfer, still compares the election contest to a game.
"It is like football, you play by the rules. Somebody else wins because they didn't play by the rules," Najib said. (Reporting by Joseph Sipalan, A. Ananthalakshmi and Praveen Menon Writing by John Geddie Editing by Martin Howell)
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