The Ringgit screwed by Fed’s Decision to raise interest rates


December 16, 2016

The Ringgit screwed by Fed’s Decision to raise interest rates–Wake Up Finance Minister Najib Razak

by Bernama

The ringgit opened lower for the last trading day of the week, dampened by external sentiment, a dealer said.

At 9am, the ringgit was traded at 4.4660/4690 versus the US dollar from 4.4440/4480 at yesterday’s closing.

The strengthening of the US dollar due to the recent announcement by the Federal Reserve on interest rates has affected Asian currencies as well as emerging market currencies, and Malaysia is not excluded.

FXTM Research Analyst Lukman Otunuga said from a technical standpoint, the dollar is heavily bullish on the daily timeframe with yesterday’s hawkish surprise sending the US Dollar Index to fresh 14-year highs above 102.50.

Image result for A Depressed Najib Razak

“The dollar’s strength could become a key theme in 2017 as the improving sentiment towards the US entices bullish investors to propel the greenback higher,” he said in a statement.

Against a basket of major currencies, the ringgit traded higher. Vis-a-vis the Singapore dollar, the ringgit rose to 3.0945/0983 from 3.1049/1096 and versus the yen, it improved to 3.7758/7796 from 3.7846/7894 yesterday.

Against the British pound, the local currency appreciated to 5.5320/5380 from 5.5873/5949, while against the euro it rose to 4.6518/6563 from 4.6851/6921.

– Bernama

 

Dr. Teck Ghee–Lim on Thomas Piketty’s Capital


October 5, 2016

Dr T G Lim on Thomas Piketty’s Capital

We need bold solutions to our growing problem of inequality. A wealth tax on what is classified as illicit financial outflows would be a good beginning.

Image result for thomas piketty capital in the twenty-first century

The publication of the book, “Capital in the Twenty-First Century” by French economist, Thomas Piketty in 2013, immediately ignited a controversy among economists on both sides of the Atlantic. This debate still continues today.

The issues raised by the book touch on the forces that drive and shape the accumulation of capital. This is of special interest to many people primarily because it deals with the key dilemma of how wealth is distributed in society and what should be done to ensure its more equitable distribution. Such questions have preoccupied social scientists and scholars going back in time to Karl Marx and even before him.

In his work, Piketty analysed data from 20 countries – some going as far back as the 18th century – to uncover what are the key economic and social patterns in capital. Among some of his main findings are that the return on capital is greater than overall growth and that the rich have acquired an ever increasing proportion of the economic pie.

These findings by themselves appear to be unsurprising or controversial although some critics have faulted his data and basic assumptions. What has provoked fierce dissent are his proposals to correct this phenomenon through what is seen as a ‘soak the rich’ approach so as to bring about greater equality. This strategy proposes counter measures such as higher income and inheritance taxes as well as a progressive tax on wealth levied globally to prevent the rich from evading their contribution to the state coffers.

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Piketty’s policy proposals have mostly been dismissed as a non-starter. In the United States, for example, a wealth tax is regarded as illegal as well as unconstitutional whilst in Britain, it has been pointed out that “eating capital is the best way to impoverish a nation, reduce productivity growth and keep wages down…societies where the most successful entrepreneurs are rewarded by the state seizing their assets don’t prosper,” (Allister Heath, “Thomas Piketty’s bestselling post-crisis manifesto is horrendously flawed”, (The Daily Telegraph, 29 April 2014).

Illicit Financial Outflows

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Malaysia’s Mafioso of Illicit Money

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How these issues and proposals are finally resolved in the West should be of interest to Malaysians as we grapple with our home grown pattern of capital and wealth formation and distribution. In our case though the spotlight initially should be on the more pressing issue of what has been categorized as illicit financial outflows. This outflow of wealth is where Piketty’s proposal for a global wealth tax could be immediately applicable.

Recently, the Global Financial Integrity (GFI), a US-based anti-corruption watchdog estimated that Malaysia was fifth in the world on cumulative total illicit financial flows (‘IFF’) since 2003. For 2012 alone, this amounted to approximately U$49 billion (approximately RM170.7 billion) and over the cumulative 10 year period from 2003-2012, illicit outflows was estimated at a staggering US394.87 billion. If taxes were levied on the illegal outflows, the country’s finances could have benefitted to the tune of tens of billion US dollars .

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Readhttp://www.ipsnews.net/2016/04/opinion-illicit-financial-flows/– Professor Dr. Jomo Kwame Sundaram’s Opinion Piece here

Bank Negara Malaysia has disputed the GFI figures, saying that the estimates of illicit outflow were overstated as the estimates in trade mispricing had not been taken into consideration. The central bank argued that the GFI estimates were essentially unrecorded financial flows, which were not necessarily synonymous with illicit financial outflows.

However, BNM left unanswered the key question of what part of the IFF was caused by illicit transfers. In the language of GFI, these are “cross-border transfers of funds that are illegally earned, transferred, or utilized. These kinds of illegal transactions range from corrupt public officials transferring kickbacks offshore, to tax evasion by commercial entities, to the laundered proceeds of transnational crime.”

While the GFI study has been helpful in providing some hard data on the quantum of the illicit financial outflows, it does not provide much assistance on key details such as who are responsible for the outflow; the countries of fund relocation; etc. At this stage, we can only hazard a guess as to the likely individuals or parties involved in the non-transfer pricing outflow. The most likely culprits are those who have been able to accumulate considerable wealth and who find it expedient to conceal their wealth accumulation as well as to diversify their wealth havens and assets away from Malaysia.

Names which come to mind will include, for example, Taib Mahmud, the former Chief Minister of Sarawak who together with his immediate family is reputed to have shares in more than 330 companies in Malaysia alone and more than 400 companies in total around the globe worth several billion US dollars.

Various quarters have questioned the legitimacy of the wealth accumulation engaged in by the Chief Minister and his family members. A recent article in the blogsite, Sarawak Headhunter, provides in-depth details into what is alleged to be the income stream of the Chief Minister’s financial vacuum machine. But until a proper and full study is undertaken, we will have to assume that Taib Mahmud and his family’s wealth has been legally accumulated and has been taken out of the country with the full blessing of our financial authorities. Even then, such wealth should be eligible for taxation if Piketty’s proposal of a global tax on assets is implemented.

We need bold solutions to our growing problem of inequality. A wealth tax on what is classified as illicit financial outflows would be a good beginning.    

 

Looking Back in Time: Malaysia’s Lying Attorney-General cum Cover-Up Artiste


September 25, 2015

Looking Back in Time: Malaysia’s Lying Attorney-General cum Cover-Up Artiste

by John Berthelsen

http://www.asiasentinel.com

Opinion: The Lies of Malaysia’s Attorney General

The Crony Attorney-General Appandi Ali

When a Malaysian Deputy Prosecutor named Kevin Morais disappeared on September 4 last year after leaving his condominium in Kuala Lumpur on his way to work, the rumor spread that the 55-year-old Morais, who was gay, probably had tired of his job with the Malaysian Anti-Corruption Commission and had left with his lover, probably for London. And, newly-minted Attorney- General Mohamed Apandi Ali said, Morais had nothing to do with the controversial MACC probe into Prime Minister Najib Razak’s tangled financial affairs.

It is widely believed that that probe got former Attorney- General Abdul Gani Patail fired from his job in July, to be replaced by Apandi Ali, a UMNO stooge and loyalist who served in a variety of different capacities, including as the judge who ruled that Christians couldn’t use the word “Allah” to describe god.

That has been put to the lie as well. Morais’s brother in Atlanta, Ga. in the US turned up in Kuala Lumpur to issue a statement saying Morais was not only working on the Najib case, but he was either leading or co-leading the prosecution, and that he had sent him a USB drive containing information on the case. That has been corroborated by other sources in Kuala Lumpur.

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Clare Rewcastle Brown–Relentless in Pursuit of 1MDB Scandal

It has since become clear that Morais in addition was one of the sources of deeply detailed information on Najib’s finances that was being fed to Clare Rewcastle Brown, the editor and writer of Sarawak Report. So rather than being killed for revenge by an angry army doctor, it appears that he was killed for being a whistleblower.

 

A lot on his muddled head–Too many lies

 

What nobody expected was that Morais would turn up. The rumor about his disappearance was put to the lie when a CCTV camera, by chance, caught Morais’ car being rammed on a Kuala Lumpur street and him being dragged from it. Morais was later found in an oil drum filled with cement in a river in Subang Jaya, a Kuala Lumpur suburb. His burned car was found in a palm oil plantation in Perak. The Police said it was an open and shut case. Morais had been killed by confederates of an army doctor in revenge for prosecuting a case against him.

So why was Apandi Ali, the country’s chief law enforcement officer, lying about Kevin Morais’s activities? Why was the lie spread that he had left town with a homosexual lover? Why did the Attorney-General’s office say Morais had nothing to do with the Najib case?

Apandi Ali has now denounced a story by Sarawak Report – and a similar Asia Sentinel story quoting Sarawak Report –that the MACC had forwarded 37 criminal charges against Najib for prosecution. He has said he sent the case back to the MACC for further work. Is Apandi also lying about that as well?  Given the clear lies about Morais, who does the reader want to believe? Mohamad Apandi Ali or Asia Sentinel and Sarawak Report

Apandi Ali says he has sent the report back to the MACC for revision. He retires officially in three weeks, meaning he wants to pass the hot potato to his successor, expected to be another UMNO lawyer, Mohamad Shafie Abdullah.(This never happened. Apparently, he is still useful to Prime Minister Najib Razak.)

The story has earned a ban for Asia Sentinel in Malaysia from the Communications Ministry, which has issued a notice saying “This website is not available in Malaysia because it violates the national laws.” The ban has holes in it, but, say sources in Kuala Lumpur, it is likely to tighten.

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Hussain Najadi–Founder AM Bank

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Pascal Najadi seeks Justice for his father

It seems more likely that it is the Malaysian government that violates the national laws, not only in the case involving Kevin Morais but in a long list of other cases. For a second one, try the murder of Hussain Najadi, the retired founder of AMBank Malaysia, who was gunned down in a parking lot in 2013. Although law enforcement officials said he was shot in a dispute over a Hindu temple property matter, Hussain’s son Pascal has charged that his father was assassinated because he said he wouldn’t play along with financial irregularities involving the United Malays National Organization prior to his death, refusing to orchestrate a multi-billion ringgit property deal connected to the Kuala Lumpur City Center. On one occasion, he told his son that Prime Minister Najib Razak was “lining his pockets with billions of ringgit with no consideration for the future of the country.”

A gunman was almost immediately arrested. The property dispute story was widely accepted by everybody but Pascal Najadi. The supposed mastermind, one Lim Yuen Soo, went on the run for two years. But Lim, a Melaka gangster and nightclub owner, appeared to be hiding in plain sight. In fact, he was part owner of the Active Force Security Services Sdn Bhd. with the former Malacca Police Chief Mohd Khasni Mohd Nor.

When Police caught up with Lim at Kuala Lumpur International Airport, arresting him on an Interpol warrant, they held him incognito for eight days before they turned him loose for “lack of evidence.” But that story raised more questions than it answered. If he could be turned loose for lack of evidence, why wasn’t the original case reopened to find out who had actually paid the gunman to kill Hussain?

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As to the probe of Najib’s finances, it is clear from what has emerged in Sarawak Report that he may be a cheap crook as well as a thief of titanic proportions, given the huge amounts of money that apparently have been siphoned from 1Malaysia Development Bhd., the troubled state-backed investment fund.  The MACC, in its probe, found him to be using credit cards from SRC International, a Middle Eastern company supposedly involved in oil exploration that was funded by 1MDB. Najib ran up bills of RM449,000 on an SRC Visa card and another RM2.8 million on an SRC MasterCard in August 2014. That in effect was public money, spent on hotels, meals, jewelry, and other personal items in Italy and Monaco. 

He is already believed to have taken millions in kickbacks on defense contracts and purchases during his years as Defense Minister, particularly on the purchase of two French submarines as well as purchase of Sukhoi jet fighters at vastly inflated costs and other contracts. Yet, despite the tens of millions stolen, he still had to use credit cards from a publicly owned company to fund his wife’s vast needs for jewelry and handbags.
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It was Najib’s years as Defense Minister that ended up in the 2006 death of the Mongolian translator and party girl, Altantuya Shaariibuu, at the hands of two of Najib’s bodyguards. It has long been assumed that Altantuya was attempting to blackmail Najib’s close friend, Abdul Razak Baginda, over what she knew about the purchase of those submarines.

So in the long run, who do you believe about the deaths of Kevin Morais and Hussain Najadi and Altantuya Shaariibuu, and the subsequent statements by Mohamad Apandi Ali over the MACC probe?  The Malaysian government? Or Sarawak Report and Asia Sentinel, both of which are now banned in Malaysia? Neither publication is likely to stop investigating them.

 

The Panama Papers– Watch Video


 

May 11, 2016

The Panana Papers– Watch Video

Staggering  amounts of dubious/illicit money are involved. No small wonder the rich are getting richer and the gap between the filthy rich and the miserable poor is widening. The rest of us in between are suffering suckers who are made to bear the burden of heavy taxes.

It makes me wonder what central bankers and monetary and fiscal authorities around the world are doing to keep the financial system honest.–Din Merican

1MDB Buck passes on to Malaysian Taxpayers


May 5, 2016

MALAYSIA: Irresponsible Prime Minister Najib Razak passes 1MDB Buck to Malaysian Taxpayers

by Dr. Mahathir Mohamad

1MDB is not a wealth fund as it is touted to be. Except for the one million Ringgit contributed by the Government, the rest of the RM 42,000,000,000 (forty-two thousand million) is borrowed money. Borrowed money cannot be regarded or classified a wealth. It is a liability which imposes on 1MDB or in case of its failure the Government to repay the interest and the principal. The sum is so huge that if the Government cannot pay them it could be bankrupted. This has happened to Greece.

The possibility of this happening imposes a heavy responsibility on the management of 1MDB and oversight by the Government. And very quickly it became clear that the executives and Board of 1MDB did not take their responsibilities seriously.

Shahrol, the CEO of 1MDB, borrowed five billion Ringgit from the banks without the knowledge and approval of the Board of Directors. The borrowings were at high interest rates. In one case Goldman Sachs was paid a 10% commission for raising a loan with a 5.9% interest. This means that 1MDB gets only 90% of the loan but has to pay interest on 100%. It is the same with the principal.

The Former CEO of 1MDB– The Probable Scapegoat

The money was apparently used to buy power plants at well over the market price. The licences for some of the plants were due to expire. If the purchases were delayed until the expiration of the licences the prices would be for less than market price. But the management seemed not to care about getting the best prices. As a result when the plants were sold to the Chinese, 1MDB suffered a loss of more than one billion Ringgit. This is the 1MDB style of doing business.

There are two other cases where the CEO Shahrol had acted without the approval of the Directors of 1MDB. He entered into a joint venture (JV) with Petro Saudi before a proper and intensive due diligence was carried out. Then he invested USD 1 billion in the JV also without approval of the Board.

The investment was so big that it demands for thorough and extensive due diligence before it could request for approval by the Board of Directors. The CEO really has no authority to invest such a huge amount. But this was what he did.

It is unthinkable that on three occasions the CEO, Shahrol, would act without following the rules of the company. In the memorandum of the company Section 117 states that all the affairs of the company must be approved by the Advisor of 1MDB, i.e. by Dato’ Seri Najib, the Prime Minister and Minister of Finance.

While Shahrol may be brave enough to act without the Board’s approval, it is unthinkable that he would act without Najib’s approval. The responsibility for the three actions by Shahrol must have been made after, or on the instruction of Najib, the company’s Advisor. If not he would have been scolded and probably sacked by Najib.

Then 1MDB was unable to pay interest of two billion Ringgit on the loans. It had to borrow in order to pay. The borrowings have thus increased to RM 50 billion due probably to subsequent borrowings. This increase in the amount of borrowings is recorded in the PAC report.

Then it was reported that Najib had 681 million USD, equal to 2.6 billion Malaysian Ringgit in his personal and secret account in Ambank. No Prime Minister of Malaysia should have so much money in his own account. He should reject any such gift. If it is not a crime, it is morally wrong.

At first Dato’ Seri Najib denied the truth of the report. He said he could not be so stupid as to put the money in his account. His stooges all echoed his words.Then he admitted that he did have the 2.6 billion Ringgit in his account but it was a gift. Then he explained that it was a donation from an Arab for his actions against I.S. and his interest in Islam.Then the Arab became a prince and subsequently the late King of Saudi Arabia. What is next, only God knows.

None of his explanation can be believed. No one would give this huge amount to anyone even if he had done something for Islam or for any other cause. The belief is that the money came from 1MDB, the only source of such sums accessible to Najib. He denies, of course, but he has no documentary evidence to prove the money is not from 1MDB.

Then IPIC which was appointed as guarantor for the loans for 1MDB made a statement to the authorities in London that a sum of 1.7 billion USD which was due to it had not been paid by 1MDB. It therefore refused to pay the USD50 million interests due on the loan taken by 1MDB.

The Penang Born Crook Extraordinaire

1MDB said it had paid the money to a subsidiary of IPIC named Aabar PJS Ltd (British Virgin Islands)..IPIC says that Aabar PJS(BVI) is not an IPIC company although it has a company by almost the same name i.e. Aabar PJS Ltd. This company had received no payment from 1MDB. IPIC implied that the company the 1MDB paid to was a false company.

Attorney for the Southern District of New York, who is investigating 1MDB money laundering activities

There was a suggestion of fraud and Arul the CEO of 1MDB admitted that it may have paid to the wrong company. But 1MDB insist that IPIC should pay the USD50 million interests as it was the guarantor of the loan. 1MDB would not pay.

A guarantor could be obliged to pay if 1MDB was really incapable of paying. But a guarantor is not obliged to pay simply because 1MDB refused to pay. Besides IPIC as guarantor had not been paid the USD1.7 billion which was due.

As both 1MDB and IPIC would not pay the interest on the loans, there would be a default. This will cross default other loans taken by 1MDB. Since 1MDB is a fully-owned Government company the defaults will affect the Government’s credit-worthiness. The Government may not be able to borrow any more in the market.

The Government will have financial deficits which may lead to bankruptcy if the loans are not serviced and the principal paid.In the meantime the 2.6 billion Ringgit in Najib’s account were said to be moved into Singapore banks. Singapore was said to have frozen accounts of several people pending investigations for money laundering. Though no mention was made that the frozen accounts belong to Najib, as a financial center Singapore cannot be seen to cover up an obvious case of money laundering.

Bank Negara had made a report to the Attorney General presumably on Najib’s money in Ambank. But the Attorney-General (AG). dismissed the report, claiming that there was no wrongdoing by the Prime Minister. Similarly the report by MACC was also dismissed by the AG. The contents of those reports were made official secrets to prevent public scrutiny. But the OSA is not meant to cover up possible crimes.

RM42 Billion is no Peanuts

Zeti gets glowing tribute from Barrons’Pesek


May 3, 2016

Zeti gets glowing tribute from Barrons’Pesek

 by FMT Reporters
 www.freemalaysiatoday.com

It says smart, strong and charming Zeti Akhtar Aziz was “the glue that held Malaysia’s economy together amid failed reforms”.

None of these Task Force Professionals could stand up the Force behind Najib

Former Bank Negara Governor Zeti Akhtar Aziz has received a glowing tribute from American financial magazine barrons.com, in which she was called “the glue that held Malaysia’s economy together amid failed reforms and scandals”.

The magazine’s executive editor, William Pesek, wrote: “Globally respected Zeti was a vocal thorn in the Prime Minister’s (Najib Razak) side, calling for investigations into a state-owned fund he oversaw.” This was in reference to Najib’s link to 1MDB, as well as the billions in donations found in the premier’s personal accounts.

“Najib didn’t fire Zeti; he waited out the end of her term (last Friday). It comforted many that Najib didn’t replace her with a crony or a cousin, but with one of her deputy governors.Still, Najib dragged the decision out until the very last moment – two days before Zeti left the building. But let’s pause for a different snapshot: how Malaysia just lost its most globally respected public official and the implications of her departure,” the article said.

Pesek, a self-professed “unabashed Zeti fan”, said the “smart, strong and charming” Zeti was the reassuring face of “an economy with a knack for bizarre international headlines”. He listed instances where Zeti was apparently there to “calm nerves”, held things together and pushed back when the administration tried to “pull the wool over (the eyes of) 30 million people”.

“It was nothing short of breathtaking to watch her make uncharacteristically blunt statements about funding irregularities Najib tried to sell as a foreign conspiracy to destablise Malaysia.When Zeti said the scandal (1MDB) was denting confidence, she was fighting for Malaysians, not the ruling party – a rarity in Kuala Lumpur.As many foreign central bank peers and investors told me over the years, it made the outside world feel better to know Zeti was at the top of the power pyramid,” Pesek wrote.

He raised the question whether Zeti’s replacement, the “Harvard-educated Muhammad Ibrahim”, would follow in her reformist footsteps.

“Perhaps he too will have the mettle to speak truth to powers, both internationally and domestically. All we can do is hope.”

Pesek then called Malaysia’s affirmative action policies benefiting the majority Malay population as “apartheid economy which kills innovation and productivity, and drives many of Malaysia’s best and brightest to Singapore and Hong Kong”.

“It turns off foreign executives, investing in Indonesia, the Philippines and Vietnam instead.”

Zeti was also commended for taking a technocratic, rather than a blusterous approach, when the ringgit was falling and she was thrust to the limelight.

Pesek queried how anyone else but Zeti, especially someone beholden to Najib and his inner circle, would have fared in the last 10 months, as questions swirled around 1MDB.

Muhammad may be as “liberated and feisty” as Zeti during his stint, but there’s ample reason to worry as his every word, deed and gesture will be scrutinised for any signs of sympathy for Najib’s government, Pesek wrote.

Zeti’s departure isn’t a pretty picture for investors hoping for a more transparent and vibrant Malaysia, Pesek concluded.