Trump Organisation’s Web of Business Deals


September 15, 2016

ANNOUNCEMENT

All are welcome to this UC Public Lecture organised jointly by Techo Sen School of Government and International Relations, The University of Cambodia, and The US Embassy, Phnom Penh. Our guest speaker will be  Ms. Elizabeth Fisher Martin, an Emmy Award winning journalist and President, Fisher Martin Media. Please do not miss this opportunity to know about this exciting Hillary Clinton-Donald Trump Race to The White House. 

It will be moderated by Professor Dato’ Din Merican, Acting Dean, Techo Sen School (TSS). The lecture will also be streamed live on Facebook, University of Cambodia. Remember the Date and Time: September 22, 2016, 9.00–11.00 am.

Trump Organisation’s Web of Business Deals–A Threat to US National Security

by Kurt Eichenwald

http://www.newsweek.com/2016/09/23/donald-trump-foreign-business-deals-national-security-498081.html

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Never before has an American candidate for president had so many financial ties with American allies and enemies, and never before has a business posed such a threat to the United States. If Donald Trump wins this election and his company is not immediately shut down or forever severed from the Trump family, the foreign policy of the United States of America could well be for sale.

 

If Donald Trump is elected president, will he and his family permanently sever all connections to the Trump Organization, a sprawling business empire that has spread a secretive financial web across the world? Or will Trump instead choose to be the most conflicted president in American history, one whose business interests will constantly jeopardize the security of the United States?

Throughout this campaign, the Trump Organization, which pumps potentially hundreds of millions of dollars into the Trump family’s bank accounts each year, has been largely ignored. As a private enterprise, its businesses, partners and investors are hidden from public view, even though they are the very people who could be enriched by—or will further enrich—Trump and his family if he wins the presidency.

A close examination by Newsweek of the Trump Organization, including confidential interviews with business executives and some of its international partners, reveals an enterprise with deep ties to global financiers, foreign politicians and even criminals, although there is no evidence the Trump Organization has engaged in any illegal activities. It also reveals a web of contractual entanglements that could not be just canceled. If Trump moves into the White House and his family continues to receive any benefit from the company, during or even after his presidency, almost every foreign policy decision he makes will raise serious conflicts of interest and ethical quagmires.

The Mumbai Shuffle

The Trump Organization is not like the Bill, Hillary & Chelsea Clinton Foundation, the charitable enterprise that has been the subject of intense scrutiny about possible conflicts for the Democratic presidential nominee. There are allegations that Hillary Clinton bestowed benefits on contributors to the foundation in some sort of “pay to play” scandal when she was secretary of state, but that makes no sense because there was no “pay.” Money contributed to the foundation was publicly disclosed and went to charitable efforts, such as fighting neglected tropical diseases that infect as many as a billion people. The financials audited by PricewaterhouseCoopers, the global independent accounting company, and the foundation’s tax filings show that about 90 percent of the money it raised went to its charitable programs. (Trump surrogates have falsely claimed that it was only 10 percent and that the rest was used as a Clinton “slush fund.”) No member of the Clinton family received any cash from the foundation, nor did it finance any political campaigns. In fact, like the Clintons, almost the entire board of directors works for free.

On the other hand, the Trump family rakes in untold millions of dollars from the Trump Organization every year. Much of that comes from deals with international financiers and developers, many of whom have been tied to controversial and even illegal activities. None of Trump’s overseas contractual business relationships examined by Newsweek were revealed in his campaign’s financial filings with the Federal Election Commission, nor was the amount paid to him by his foreign partners. (The Trump campaign did not respond to a request for the names of all foreign entities in partnership or contractually tied to the Trump Organization.) Trump’s financial filings also indicate he is a shareholder or beneficiary of several overseas entities, including Excel Venture LLC in the French West Indies and Caribusiness Investments SRL, based in the Dominican Republic, one of the world’s tax havens.

Trump’s business conflicts with America’s national security interests cannot be resolved so long as he or any member of his family maintains a financial interest in the Trump Organization during a Trump administration, or even if they leave open the possibility of returning to the company later. The Trump Organization cannot be placed into a blind trust, an arrangement used by many politicians to prevent them from knowing their financial interests; the Trump family is already aware of who their overseas partners are and could easily learn about any new ones.

Many foreign governments retain close ties to and even control of companies in their country, including several that already are partnered with the Trump Organization. Any government wanting to seek future influence with President Trump could do so by arranging for a partnership with the Trump Organization, feeding money directly to the family or simply stashing it away inside the company for their use once Trump is out of the White House. This is why, without a permanent departure of the entire Trump family from their company, the prospect of legal bribery by overseas powers seeking to influence American foreign policy, either through existing or future partnerships, will remain a reality throughout a Trump presidency.

Moreover, the identity of every partner cannot be discovered if Trump reverses course and decided to release his taxes. The partnerships are struck with some of the more than 500 entities disclosed in Trump’s financial disclosure forms; each of those entities has its own records that would have to be revealed for a full accounting of all of Trump’s foreign entanglements to be made public.

The problem of overseas conflicts emerges from the nature of Trump’s business in recent years. Much of the public believes Trump is a hugely successful developer, a television personality and a failed casino operator. But his primary business deals for almost a decade have been a quite different endeavor. The GOP nominee is essentially a licensor who leverages his celebrity into streams of cash from partners from all over the world. The business model for Trump’s company started to change around 2007, after he became the star of NBC’s The Apprentice, which boosted his national and international fame. Rather than constructing Trump’s own hotels, office towers and other buildings, much of his business involved striking deals with overseas developers who pay his company for the right to slap his name on their buildings. (The last building constructed by Trump with his name on it is the Trump-SoHo hotel and condominium project, completed in 2007.)

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Trump and his many family members receive millions each year from the Trump Organization, which gets most of its profits from a complex web of licensing deals all over the globe.DENNIS VAN TINE/ABACAUSA/NEWSCOM

In public statements, Trump and his son Donald Trump Jr. have celebrated their company’s international branding business and announced their intentions to expand it. “The opportunities for growth are endless, and I look forward to building upon the tremendous success we have enjoyed,” Donald Trump Jr. said in 2013. Trump Jr. has cited prospects in Russia, Ukraine, Vietnam, Thailand, Argentina and other countries.

The idea of selling the Trump brand name to overseas developers emerged as a small piece of the company’s business in the late 1990s. At that time, two executives from Daewoo Engineering and Construction met with Trump at his Manhattan offices to propose paying him for the right to use his name on a new complex under development, according to former executives from the South Korean company. Daewoo had already worked with the Trump Organization to build the Trump World Tower, which is close to the Manhattan headquarters of the United Nations. The former Daewoo executives said Trump was at first skeptical, but in 1999 construction began on the South Korean version of Trump World, six condominium properties in Seoul and two neighboring cities. According to the two former executives, the Trump Organization received an annual fee of approximately $8 million a year.

Shortly after the deal was signed, the parent company of Daewoo Engineering and Construction, the Daewoo Group, collapsed into bankruptcy amid allegations of what proved to be a $43 billion accounting fraud. The chairman of the Daewoo Group, Kim Woo Choong, fled to North Korea; he returned in 2005, was arrested and convicted of embezzlement and sentenced to 10 years in prison. According to the two former Daewoo executives, a reorganization of Daewoo after its bankruptcy required revisions in the Trump contract, but the Trump Organization still remains allied with Daewoo Engineering and Construction.

This relationship puts Trump’s foreign policies in conflict with his financial interests. Earlier this year, he said South Korea should plan to shoulder its own military defense rather than relying on the United States, including the development of nuclear weapons. (He later denied making that statement, which was video-recorded.) One of the primary South Korean companies involved in nuclear energy, a key component in weapons development, is Trump’s partner—Daewoo Engineering and Construction. It would potentially get an economic windfall if the United States adopted policies advocated by Trump.

In India, the conflicts between the interests of the Trump Organization and American foreign policy are starker. Trump signed an agreement in 2011 with an Indian property developer called Rohan Lifescapes that wanted to construct a 65-story building with his name on it. Leading the talks for Rohan was Kalpesh Mehta, a director of the company who would later become the exclusive representative of Trump’s businesses in India. However, government regulatory hurdles soon impeded the project. According to a former Trump official who spoke on condition of anonymity, Donald Trump Jr. flew to India to plead with Prithviraj Chavan, chief minister of Maharashtra, a state in Western India, asking that he remove the hurdles, but the powerful politician refused to make an exception for the Trump Organization. It would be extremely difficult for a foreign politician to make that call if he were speaking to the son of the president of the United States.

The Mumbai deal with Rohan fell apart in 2013, but a new branding deal (Trump Tower Mumbai) was struck with the Lodha Group, a major Indian developer. By that time, Trump had an Indian project underway in the city of Pune with a large developer called Panchshil Realty that agreed to pay millions for use of the Trump brand on two 22-floor towers. His new partner, Atul Chordia of Panchshil, appeared awed in public statements about his association with the famous Trump name and feted Trump with a special dinner attended by actors, industrialists, socialites and even a former Miss Universe.

Last month, scandal erupted over the development, called Trump Towers Pune, after the state government and local police started looking into discrepancies in the land records suggesting that the land on which the building was constructed may not have been legally obtained by Panchshil. The Indian company says no rules or laws were broken, but if government officials conclude otherwise, the project’s future will be in jeopardy—and create a problem that Indian politicians eager to please an American president might have to resolve.

Through the Pune deal, the Trump Organization has developed close ties to India’s Nationalist Congress Party—a centrist political organization that stands for democratic secularism and is led by Sharad Pawar, an ally of the Chordia family that owns Panchshil—but that would be of little help in this investigation. Political power in India rests largely with the Indian National Congress, a nationalist party that has controlled the central government for almost 50 years. (However, Trump is very popular with the Hindu Sena, a far-right radical nationalist group that sees his anti-Muslim stance as a sign he would take an aggressive stand against Pakistan. When Trump turned 70 in June, members of that organization threw a birthday party for the man they called “the savior of humanity.”)

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A billboard for the luxury residential apartment complex Trump Tower Mumbai tries to lure in buyers by using the Trump name. Trump’s company hopes to invest aggressively in India, and critics wonder if an investigation into one of his major developments there will be dropped if he’s elected.INDRANIL MUKHERJEE/AFP/GETTY

Even as Trump was on the campaign trail, the Trump Organization struck another deal in India that drew the Republican nominee closer to another political group there. In April, the company inked an agreement with Ireo, a private real estate equity business based in the Indian city of Gurgaon. The company, which has more than 500 investors in the fund that will be paying the Trump Organization, is headed by Madhukar Tulsi, a prominent real estate executive in India. In 2010, Tulsi’s home and the offices of Ireo were raided as part of a sweeping corruption inquiry related to the 2010 Commonwealth Games held in New Delhi. According to one Indian business executive, government investigators believed that Ireo had close ties with a prominent Indian politician—Sudhanashu Mittal, then the leader of the Bharatiya Janata Party, India’s second largest political party—who was suspected in playing a role in rerouting money earned from Commonwealth Games contracts through tax havens into Ireo’s real estate projects. A senior official with Ireo, Tulsi is a relative of Mittal’s. No charges were ever brought in the case, but the investigation did reveal the close political ties between a prominent Indian political party and a company that is now a Trump partner.

No doubt, few Indian political groups hoping to establish close ties to a possible future American president could have missed the recent statements from the Trump family that its company wanted to do more deals in their country. As the Republican National Convention was about to get underway in July, the Trump Organization declared it was planning a massive expansion in the South Asian country. “We are very bullish on India and plan to build a pan-India development footprint for Trump-branded residential and office projects,’’ Donald Trump Jr. told the Hindustan Times. “We have a very aggressive pipeline in the north and east, and look forward to the announcement of several exciting new projects in the months ahead.”

That is a chilling example of the many looming conflicts of interest in a Trump presidency. If he plays tough with India, will the government assume it has to clear the way for projects in that “aggressive pipeline” and kill the investigations involving Trump’s Pune partners? And if Trump takes a hard line with Pakistan, will it be for America’s strategic interests or to appease Indian government officials who might jeopardize his profits from Trump Towers Pune?

Branding Wars in the Middle East

Trump already has financial conflicts in much of the Islamic world, a problem made worse by his anti-Muslim rhetoric and his impulsive decisions during this campaign. One of his most troubling entanglements is in Turkey. In 2008, the Trump Organization struck a branding deal with the Dogan Group, named for its owners, one of the most politically influential families in Turkey. Trump and Dogan first agreed that the Turkish company would pay a fee to put the Trump name on two towers in Istanbul.

When the complex opened in 2012, Trump attended the ribbon-cutting and declared his interest in more collaborations with Turkish businesses and in making significant investments there. In a sign of the political clout of the Dogan family, Turkish President Recep Tayyip Erdogan met with Trump and even presided over the opening ceremonies for the Trump-branded property.

However, the Dogans have fallen out of favor, and once again, a Trump partner is caught up in allegations of criminal and unethical activity. In March, an Istanbul court indicted Aydin Dogan, owner and head of the Dogan Group, on charges he engaged in a fuel-smuggling scheme. Dogan has proclaimed his innocence; prosecutors are seeking a prison sentence of more than 24 years.

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Trump tried to get into Dubai, but his deal with Nakheel LLC, run by Ali Rashid Lootah, in white, to build a tulip-shaped hotel died on the vine.SUBHASH SHARMA/POLARIS/NEWSCOM

According to an Arab financier with strong ties to Turkish political leaders, government connections with the Dogan family grew even more strained in May, when a consortium of news reporters released what are known as the Panama Papers, which exposed corporations, politicians and other individuals worldwide who evaded taxes through offshore accounts. One of the names revealed was that of Vuslat Dogan Sabanci, a member of Dogan Holding’s board.

With the Dogans now politically radioactive, Erdogan struck at the family’s business partner, Trump, for his anti-Muslim rhetoric. In June, Erdogan called for the Trump name to be removed from the complex in Istanbul and said presiding over its dedication had been a mistake.

This is no minor skirmish: American-Turkish relations are one of the most important national security issues for the United States. Turkey is among the few Muslim countries allied with America in the fight against the Islamic State militant group; it carries even greater importance because it is a Sunni-majority nation aiding the U.S. military against the Sunni extremists. Turkey has allowed the U.S. Air Force to use a base as a major staging area for bombing and surveillance missions against ISIS. A Trump presidency, according to the Arab financier in direct contact with senior Turkish officials, would place that cooperation at risk, particularly since Erdogan, who is said to despise Trump, has grasped more power following a thwarted coup d’état in July.

In other words, Trump would be in direct financial and political conflict with Turkey from the moment he was sworn into office. Once again, all his dealings with Turkey would be suspect: Would Trump act in the interests of the United States or his wallet? When faced with the prospect of losing the millions of dollars that flow into the Trump Organization each year from that Istanbul property, what position would President Trump take on the important issues involving Turkish-American relations, including that country’s role in the fight against ISIS?

Another conundrum: Turkey is at war with the Kurds, America’s allies in the fight against ISIS in Syria. Kurdish insurgent groups are in armed conflict with Turkey, demanding an independent Kurdistan. If Turkey cuts off the Trump Organization’s cash flow from Istanbul, will Trump, who has shown many times how petty and impulsive he can be, allow that to influence how the U.S. juggles the interests of these two critical allies?

Similar disturbing problems exist with the United Arab Emirates (UAE), another Muslim nation that is an important American ally. Trump has pursued business opportunities in the oil-rich nation for years, with mixed success. His first venture was in 2005, when the Trump Organization struck a branding deal with a top Emirates developer called Nakheel LLC, backed by Dubai’s royal family, that planned to build a tulip-shaped hotel on a man-made island designed to look like a palm tree.

In 2008, a bribery and corruption probe was launched involving the company’s multibillion-dollar Dubai Waterfront project. Two Nakheel executives were charged with fraud and cleared, but Nakheel’s financial condition deteriorated amid a collapse in real estate prices; the Trump project was delayed and then canceled.

So, in 2013, the Trump Organization struck another branding deal, this time with Nakheel’s archrival, Damac Properties, a division of the Damac Group, that wanted the Trump name on a planned 18-hole PGA Championship golf course. The deal was negotiated by Hussain Ali Sajwani, chairman of Damac, who had engaged in controversial land deals with senior government officials in the UAE. He met personally with Trump about the project, and their relationship grew, ultimately leading to Damac working with the Trump Organization on two branded golf courses and a collection of villas in Dubai. According to the former executive with the Trump Organization, Trump has said he personally invested in some of the Dubai projects.

In this case, even the possibility of a Trump presidency has created chaos for the Trump Organization. On December 7, when Trump called for a “total and complete shutdown” of Muslims being allowed into the United States, the reaction in the UAE was instantaneous: There were calls to boycott the Damac-Trump properties. Damac put out a statement essentially saying its deal with the Trump Organization had nothing to do with Donald Trump personally, a claim that fooled no one. On December 10, Damac removed Trump’s image and name from its properties. Two days later, the name went back up, setting off an even louder outcry. Damac’s share price dropped 15 percent amid the controversy, and it was forced to guarantee rental returns for some of its luxury properties bearing the Trump name.

Other UAE businesses with connections to Trump are also shunning the brand. The Dubai-based Landmark Group, one of the Middle East’s largest retail companies, said it was pulling products with Trump’s name off of its shelves.

With Middle Eastern business partners and American allies turning on him, Trump lashed out. Prince Alwaleed bin Talal—the billionaire who aided Trump during his corporate bankruptcies in the 1990s by purchasing his yacht, which provided him with desperately needed cash—sent out a tweet amid the outcry in Dubai, calling the Republican candidate a “disgrace.” (Alwaleed is a prodigious tweeter and Twitter’s second largest shareholder.) Trump responded with an attack on the prince—a member of the ruling Saudi royal family—with a childish tweet, saying, “Dopey Prince @Alwaleed_Talal wants to control our U.S. politicians with daddy’s money. Can’t do it when I get elected. #Trump2016.”

Once again, Trump’s personal and financial interests are in conflict with critical national security issues for the United States. During the Bush administration, Abu Dhabi, the UAE’s capital, and Washington reached a bilateral agreement to improve international standards for nuclear nonproliferation. Cooperation is particularly important for the United States because Iran—whose potential development of nuclear weapons has been a significant security issue, leading to an international agreement designed to place controls on its nuclear energy efforts—is one of the UAE’s largest trading partners, and Dubai has been a transit point for sensitive technology bound for Iran.

Given Trump’s name-calling when faced with a critical tweet from a member of the Royal Family in Saudi Arabia, an important ally, how would he react as president if his company’s business in the UAE collapsed? Would his decisions in the White House be based on what is best for America or on what would keep the cash from Dubai flowing to him and his family?

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The dashing and handsome Prince Alwaleed bin Talal, a nephew of Saudi Arabia’s King Abdullah and one of the world’s richest men, has traded insults with Trump over Twitter.NEIL HALL/REUTERS

A Strongman’s Best Friend

Some of the most disturbing international dealings by the Trump Organization involved Trump’s attempts to woo Libyan dictator Muammar el-Qaddafi. The United States had labeled Qaddafi as a sponsor of terrorism for decades; President Ronald Reagan even launched a military attack on him in 1986 after the National Security Agency intercepted a communications that showed Qaddafi was behind the bombing of a German discotheque that killed two Americans. He was also linked to the bombing of Pan Am Flight 103, which exploded over Lockerbie, Scotland, killing 259 people, in 1988.

But for the Trump Organization, Qaddafi was not a murdering terrorist; he was a prospect who might bring the company financing and the opportunity to build a resort on the Mediterranean coast of Libya. According to an Arab financier and a former businessman from the North African country, Trump made entreaties to Qaddafi and other members of his government, beginning in 2008, in which he sought deals that would bring cash to the Trump Organization from a sovereign wealth fund called the Libyan Investment Authority. The following year, Trump offered to lease his estate in Westchester County, New York, to Qaddafi; he took Qaddafi’s money but, after local protests, forbade him from staying at his property. (Trump kept the cash.) “I made a lot of money with Qaddafi,’’ Trump said recently about the Westchester escapade. “He paid me a fortune.”

Another business relationship that could raise concerns about conflicts involves Azerbaijan, a country the State Department said in an official report was infused with “corruption and predatory behavior by politically connected elites.” According to Trump’s financial filings, the Republican nominee is the president of two entities called OT Marks Baku LLC and DT Marks Baku Manaaina Member Corp. Those were established as part of deals the Trump Organization made last year for a real estate project in the country’s capital. The partner in the deal is Garant Holding, which is controlled by Anar Mammadov, the son of the country’s transportation minister, Ziya Mammadov. According to American diplomatic cables made public in 2010, the United States possessed information that led diplomats to believe Ziya Mammadov laundered money for the Iranian military. No formal charges have been brought against either Mammadov.

Once again, however, this exposes potential conflicts between Trump’s business connections and national security. While the development is currently on hold, it has not been canceled, meaning that Anar Mammadov could soon be paying millions of dollars to Trump. If American intelligence concludes, or has already concluded, that his business partner’s father has been aiding Iran by laundering money for the military, will Trump’s foreign policy decisions on Iran and Azerbaijan be based on the national security of the United States or the financial security of Donald Trump?

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A taxi drives past a billboard showing US real-estate magnate Donald Trump playing golf advertising the Trump International Golf Club Dubai in the United Arab Emirates on August 12, 2015. The empire of White House hopeful Donald Trump outside the United States extends to 12 countries including Turkey, South Korea, India, Brazil, and the United Arab Emirates.KARIM SAHIB/AFP/GETTY

An Oligarch in D.C.

The Trump Organization also has dealings in Russia and Ukraine, and officials with the company have repeatedly stated they want to develop projects there. The company is connected to a controversial Russian figure, Vladimir Potanin, a billionaire with interests in mining, metals, banking and real estate. He was a host of the Russian version of The Apprentice (called Candidate), and Trump, through the Trump Organization, served as the show’s executive producer. Potanin is deeply tied to the Russian government and obtained much of his wealth in the 1990s through what was called the loans-for-shares program, part of an effort by Moscow to privatize state properties through auction. Those sales were rigged: Insiders with political connections were the biggest beneficiaries.

Hoping to start its branding business in Russia, the Trump Organization registered the Trump name in 2008 as a trademark for projects in Moscow, St. Petersburg and Sochi. It also launched negotiations with a development company called the Mos City Group, but no deal was reached. The former Trump executive said that talks fell apart over the fees the Trump Organization wanted to charge: 25 percent of the planned project’s cost. However, the executive said, the Trump Organization has maintained close relations with Pavel Fuks, head of the Mos City Group. Fuks is one of the most politically prominent oligarchs in Russia, with significant interests in real estate and the country’s financial industry, including the Pushkino bank and Sovcombank.

The Trump Organization has also shown interest in Ukraine. In 2006, Donald Trump Jr. and Ivanka Trump met with Viktor Tkachuk, an adviser to the Ukrainian president, and Andriy Zaika, head of the Ukrainian Construction Consortium. The potential financial conflicts here for a President Trump are enormous. Moreover, Trump’s primary partner for his lucrative business in Canada, a well-respected Russo-Canadian billionaire named Alex Shnaider, is also a major investor in Russia and Ukraine, meaning American policies benefiting those countries could enrich an important business connection for the Trump Organization.

Meanwhile, Trump has raised concerns in the United States among national security experts for his consistent and effusive praise for Vladimir Putin, the Russian ruler who also now controls much of Ukraine. With its founder in the White House, the Trump Organization would have an extraordinary entrée into those countries. If the company sold its brand in Russia while Trump was in the White House, the world could be faced with the astonishing sight of hotels and office complexes going up in downtown Moscow with the name of the American president emblazoned in gold atop the buildings.

The dealings of the Trump Organization reach into so many countries that it is impossible to detail all the conflicts they present in a single issue of this magazine, but a Newsweek examination of the company has also found deep connections in China, Brazil, Bulgaria, Argentina, Canada, France, Germany and other countries.

Never before has an American candidate for president had so many financial ties with American allies and enemies, and never before has a business posed such a threat to the United States. If Donald Trump wins this election and his company is not immediately shut down or forever severed from the Trump family, the foreign policy of the United States of America could well be for sale.

Top UK Politician Held Interests In A Group Funded By Jho Low


September 8, 2016

Top UK Politician Held Interests In A Group Funded By Jho Low – EXCLUSIVE

Billionaire player in the Middle East - Thomas Kaplan of Electrum Group

Billionaire player in the Middle East – Thomas Kaplan of Electrum Group

http://www.sarawakreport.org

Sarawak Report has learnt that a senior UK politician who holds strong connections with the Middle East was linked to a company that received a $150,000,000 injection of money from Jho Low.

In late 2012, Jho Low’s Jynwel Capital invested $150 million into the newly formed Electrum Group run by Anglo-American billionaire Thomas Kaplan – money now suspected as having emanated from the looting of 1MDB.

The investment formed 7% of the fund’s total worth of over $1 billion, which is mainly owned by Kaplan’s private family trust, according to filings in the United States and it earned Jho Low a place on the board of Electrum.

Two other major institutions also invested in Electrum at the same time: Abu Dhabi’s Mubadala Sovereign Wealth Fund and the Kuwait Investment Fund together added a further $300 million of investment, the company has said.

However, Sarawak Report has learnt from inside sources that a senior British political figure also held an interest in the company and therefore stood to benefit from these injections of hundreds of millions of dollars from Malaysia and the Middle East.

Top connections – How Jho Low used his partners as referees

Jho Low was soon utilising his connections with Kaplan and also Mubadala to promote Jynwel’s credentials as a global investor and his own image as a man of vision and integrity. A corporate video commissioned by Jynwel in 2014 features Kaplan, extensively praising his new business partner:

“What do we look for in a partner? Someone first and foremost whose word is their bond, that when they say they’re going to do something, you can bank it.” [Jynwel promotional video]

Jho Low also joined the Board of Kaplan’s wild cat charity Panthera, contributing $20 million to the fund and promoting his ‘philanthropy’ in the process.

Abu Dhabi connection

The same promotional video also features Mubadala’s Deputy Group CEO, Waleed al Muhairi again praising Jho Low. By late 2012 Jho Low had already stolen hundreds of millions of dollars from 1MDB, according to the DOJ, in connivance with a fellow Abu Dhabi sovereign wealth fund manager, Aabar’s Khadem al Qubaisi:

“In Jynwel we have found a partner that not only shares the same passion for investing that we do, but also is a match for our values… we have worked hand in hand with Jynwel across multiple projects, multiple investments, across multiple geographies” explains Waleed Al Muhairi 

These joint investments have included, according to the Department of Justice seizure filing of 20th July, the purchase of EMI Publishing and also New York’s Park Lane Hotel Group, which Jho Low funded through money stolen from 1MDB.

The DOJ has already identified a record $1 billion in assets, now under seizure in the United States, as products of money laundering from 1MDB. However, it has stated that at least $3.5 billion was stolen in total from the Malaysian fund, leaving major question-marks over Jho Low’s other investments.

There is therefore considerable speculation over whether the money which flowed into Kaplan’s funds will also eventually be traced to 1MDB.

Spokesmen for Electrum (from which Low recently resigned his post) informed the Wall Street Journal that they are working with the US authorities and have ‘safeguarded and sequestered‘ any potentially tainted funds.

Potential for embarrassment

Jonathan Powell's memoir of his years working for Tony Blair

Jonathan Powell’s memoir of his years working for Tony Blair

Whether or not this turns out to be the case, Sarawak Report has been informed that the matter could cause  embarrassment for a senior UK political figure, whose involvement in the Kaplan fund was not previously known. This is particularly so, given the added investments made by the sovereign funds from the Middle East.

Kaplan, who studied at Oxford University, but is based in the United States, already has extensive links with well-known politically connected figures in the British establishment.

His former fellow undergraduate friend, Jonathan Powell, took up a position as a ‘Senior Advisor’ to Kaplan’s multi-billion dollar Tigris Financial Group in 2011. Powell has also acted as a member of Kaplan’s wild cat charity, Panthera’s Conservation Council.

At the front of his most recent book, ‘The New Machiavelle – How to Wield Power in the Modern World’, regarded as an anecdotal memoir of his 13 years serving under former UK premier Tony Blair, Jonathan Powell acknowledges the support and assistance of his ‘colleagues’ Thomas Kaplan, Ali Erfan and Aamer Sarfraz, who are all associated with Tigris Financial Group, in the writing of the book.

Jonathan Powell - Kaplan already has close business associations with the British establishement

It is well known that after Tony Blair left office Powell continued to play a senior role within his former boss’s private commercial operations, acting as a consultant to his private company Tony Blair Associates and working also with various linked PR and lobbying groups.

Blair was simultaneously Middle East envoy for the United Nations, European Union, United States, and Russia from 2007 until last year.

Considered a player, Powell was himself appointed as David Cameron’s personal Libyan Special Envoy in 2014, on the basis of his earlier diplomatic career and peace negotiations in Northern Ireland. His brother has long been close to the Conservative Party.

Billionaire businessman who stuck his nose into the Middle East

These links have now raised controversy, given Kaplan’s own interests and connections in the Middle East.

After years of non-disclosure, the billionaire has been revealed as the main funder of the campaigning organisation known as UANI (United Against Nuclear Iran), which has been the most vocal opponent of Obama’s recent peace initiatives with Iran, bitterly opposed by the Gulf States and also Israel, where Kaplan has strong ties.

For example, it has been pointed out that the Chief Executive of UANI, a former American Ambassador Mark Wallace, receives no current income from the non-profit group, yet has simultaneously acted as the CEO of Tigris Financial Group and also Chief Operating Officer of Electrum Group, both owned by Kaplan.

Investigative journalists have further identified at least three other staff connections between Kaplan companies and the UANI campaign group, which he funded to the tune of $843,,000 in 2013.

In this context, according to court filings against Kaplan (he was sued for defamation by a Greek businessman, Victor Restis) Jonathan Powell also featured as a board member for UANI in recent years:

“Jonathan Powell, an Advisory Board member of UANI and The Institute for Strategic Dialogue was a college classmate of Kaplan’s and serves as a Senior Advisor to Tigris Financial Group.” [How much money can these two Iran hawks make out of the Middle East?]

Powell's Powerbase resume includes Senior Advisor to Tigris and Advisory Board Member of UANI

Powell’s Powerbase resume includes Senior Advisor to Tigris and Advisory Board Member of UANI

Powell appears to have now resigned from this position, but archives show the link:

Screen Shot 2016-09-07 at 19.11.44

Politics or the business of instability?

Kaplan has himself claimed that his activities in the Middle East through UANI have made his organisation one of the most effective actors on the political stage and a combat force against Iran:

” “Hard to know what the outcome will be but I do know that as much as United Against Nuclear Iran may not have had Tomahawk missiles and aircraft carriers at its disposal, we’ve done more to bring Iran to heel than any other private sector initiative and most public ones.” [Video of Kaplan speaking on UANI]

However, critics have suggested that his driving motivation is financial.  His billion dollar business, mining precious metals, openly trades on the profitability of instability and conflict in places like the Middle East, they say.

One investigator, who exposed Kaplan as the primary funder of UANI, says there is ample evidence that Kaplan seeks investors in his gold and silver mining ventures by directly pointing to conflicts that threaten economic stability:

The 2002 annual report for Kaplan’s Apex Silver Mines, Ltd., which has since gone bankrupt, contained an insight into his thinking. The report, issued by Kaplan and Apex’s CEO, Keith R. Hulley, asks investors to “consider the following factors: destabilization in the Middle East and Persian Gulf, tensions between India and Pakistan, the potential for nuclear confrontation with North Korea and Iran, […] religious extremism and terrorism on a global scale and corporate hooliganism.”

The solution, explained Kaplan, is that the “trend to invest in companies with real assets and exposure to the non-correlated commodities sector is likely to prove to be long-term and secular rather than cyclical.”

In other words, if you believe political instability is likely, invest in assets like those mined by Apex.

And Wallace, as CEO of Tigris, oversaw similar language in a 2011 prospectus — after his stint with UANI commenced — for the Sunshine Silver Mine Corp., an Idaho mine owned by the group, which he played an active role in acquiring. “Investment demand for silver exposure remains strong,” said the prospectus, which was filed with the SEC, “driven in part by continued U.S. dollar weakness, ongoing economic uncertainty in Europe and political unrest in the Middle East.” [Eli Clifton, Document Reveals Billionaire Backers Behind United Against Nuclear Iran]

The message must surely be that politically connected people with links to the Middle East should shun business with Thomas Kaplan, if they want to avoid embarrassment, because his business benefits from further conflict and his organisation meddles actively in the politics of the region.

Trust, Sharing Economy and Behavioral Economics


August 22, 2016

Trust, the Sharing Economy and Behavioral Economics

By D’Arcy Coolican & Lucas Coffman

Trust. It’s a complex, tricky, hard to explain, harder to define concept, but it’s crucial for so many things.

As Adam Smith pointed out, a base level of trust in society is necessary for specialization and the economic growth that accompanies it. If we didn’t trust the butcher to give us quality meat without having to inspect the cow every time — or worse yet, if we needed to litigate after every grocery run — the whole system would come to a screeching halt.

This concept is even more critical in the sharing economy — which is often, quite appropriately, referred to as the trust economy.

The sharing economy requires an incredibly high degree of trust, often based off little more than a profile picture and rudimentary reputation system. One needs only a few examples to realize how much trust is actually involved.

  •  Think about the faith required to get into the backseat of a random person’s car late at night? Seemed like a leap, until Uber made it ubiquitous.
  • Or consider letting a complete stranger staying your guest bedroom? Even visionary investors thought it was a dangerous idea … until AirBnB proved that it wasn’t.

Maybe it’s a trust in the platform (i.e., I trust Uber to screen and monitor drivers) or just trust in people (i.e., that AirBnB host looks legit), but either way it requires a tremendous amount of trust.

These successes in the sharing economy startled more than a few cynics who assumed that this reliance on trust, reputation and goodwill would quickly become a giant scam or worse.

The Subsequent Fall of the Sharing Economy

But a concept that began with such promise is already going through some tough growing pains.In many ways, the sharing economy seems to be coming apart at the seams. Whether it’s Uber drivers attacking their passengers, or Lending Club defrauding users, these recent problems — and big problems they are — have re-emboldened the original pessimists who doubted the idea of a trust economy in the first place.

Given that trust that is so crucial to the sharing economy — and that many Silicon Valley darlings seem to be getting it wrong — we thought it was time to go through the important lessons from behavioral economics on how trust (and trustworthiness) actually works, and the important consequences for the sharing economy companies.

Lessons from Behavioral Economics for the Sharing Economy

Lesson 1: Trust begets trustworthiness

One of our favorite concepts in behavioral economics is the idea that signaling that you trust someone, is a strong way to get that person to act in a more trustworthy manner towards you.

Armin Falk and Michael Kosfeld provided the first evidence of this hypothesis in their seminal paper: “The Hidden Costs of Control”. We give details on the experiment here, but the takeaway was that when Person A chooses to control or limit Person B’s options, Person B acts in a less trustworthy way towards Person A.

Put another way: If you show you trust the person, they’ll act more trustworthy towards you. Trust is self-fulfilling.

In many ways this explanation can help us understand the initial success of the trust economy.

  • The stranger that is welcomed into someone’s AirBnB might be a little more conscientious of a guest knowing that the owner has trusted them to act appropriately. After all, trust does beget trustworthiness.

This positive — and counter-intuitive — outcome helps show that people are more trusting than skeptics usually assume, especially when someone else goes out on that limb first.

This idea — and the resulting spike in trust-based activity — helped fuel much of the early optimism of a utopian trust economy where we could all operate on a system of goodwill toward mankind.

Lesson 2: Trust and reciprocity are limited in time

The TED talk types are often inclined to focus on these surprisingly positive elements of trust, but they often ignore the limitations that are just as important. While trust and reciprocity are very real phenomena, they also have very real limitations.

Most importantly, trust and reciprocity decline quickly with the passage of time.

As Uri Gneezy and John List show in their wonderful paper on gift exchange, the warm glow and good feeling of a generous and trustworthy act begins to disappear very quickly and after a few hours there is no difference in outcomes.

As one gets farther from the moment when trust was shown, the less likely one is to act in a trustworthy way.

How does this concept affect the sharing economy?

  • Maybe that AirBnB guest will be conscientious on the first night, but after 10 days in your apartment, they might spilling things on the couch and leaving a mess in the bathroom.
  • Or that 36 month loan on Lending Club or Vouch will look very different in month 32 than it does in month 2.

Many of the challenges the sharing economy has seen recently can be traced back to the evidence documenting this very real limitation on trust and collaboration: timing matters.

Lesson 3: Trust and reciprocity are limited in scope

Just as time can work to diminish trust and goodwill, so too can it diminish with decreased social proximity.

As Arun Chandrasekar from Stanford, Cynthia Kinnan from Northwestern, and Horacio Larreguy from Harvard show in their paper on Social Networks as Contract Enforcement, people are much more likely to act appropriately (even without a contract) when they share many close social connections with the person on the other side of the table. As these common social ties decrease, the degree of cooperation declines significantly.

So what does this mean for the sharing economy?

  • One might be more conscientious of refilling the gas for the car sharing service they use by their apartment that they know their friends also use, but maybe not the car they use when they’re visiting a different city.
  • Or (more controversially) an AirBnB user might be more likely to rent a room to someone that looks and sounds like they do.

Again, this evidence doesn’t mean the sharing economy doesn’t work, but we need to be aware of what the behavioral evidence says we should expect to ensure the systems that are built are fair and durable.

Lesson 4: Don’t lose trust, because it’s really hard to get back

One of the most under-appreciated concepts in the world of sharing economy start-ups is the idea that once trust is lost, it can be extremely hard to get back. “Move fast and break things” might work for a social media company like Facebook, but it can destroy an industry that relies on sharing, trust and cooperation.

For an example of this we need to look no farther than the heartbreaking history of the Tuskegee Study.

The Tuskegee Study was an experiment that started in the 1930’s that aimed to study certain diseases in poor black sharecroppers. The horrifying part was that after a cure for the disease was discovered, doctors withheld treatment in order to continue studying the effects on their patients. Revealed to the public in 1972, it goes down as one of the darkest moments in US history.

In a new paper, Marcela Alsan from Stanford and Marianne Wanamaker from the University of Tennessee, showed that this helped create a post-1972 distrust between black males and the medical community that has persisted. Over the last 50 years this distrust has led to black males underutilizing doctors and dying almost 1.4 years younger.

As the post-2009 finance community can attest, re-gaining the public’s trust after it has been lost can be an extraordinarily difficult task.

So for every sharing economy start-up that fails to foster or reward the trust of their users, the entire industry suffers. One does wonder how the sharing economy as a whole suffers for every one of these Uber driver issues or bad Lending Club loans.

The behavioral research would suggest that the price will be high.

What does it all mean?

The sharing economy was born with an incredible amount of promise. It was going to leverage trust to help create a more cooperative and efficient world. But if it’s going to actually fulfill this promise, its leaders need to begin to acknowledge and design around the limits on trust and cooperation that behavioral economists have already been helping us understand.

It doesn’t mean we should declare the entire industry dead and move on to the “next big thing”. It just means we need to be more thoughtful about where it will work and what design mechanisms can give it the best chance for success.

  • Not every exchange is ripe for the sharing economy. For example, a platform that relies on a reciprocal action years after the initial action might be too disconnected to actually work. This is probably just a no-go.
  • Some platforms might not be as big as Uber. For some, the limitation on scope means the actual circle of trust is necessarily small. I might be willing to lend my lawnmower to 100 people around me but my car to only 25 people around me. This might be smaller that venture capitalists ideally want, but at the end of the day I’m sure they’d prefer a platform that works to one that doesn’t.
  • Commitment mechanisms are critical where time is a factor. For example Frank is a P2P lending platform that allows people to borrow money from friends and family in a safe way. In Frank the reciprocal action usually happens months after the initial action, but because the platform asks borrowers to set up the repayment schedule immediately it captures that sense of trust and reciprocity at its peak. (Full disclosure: the authors of this article helped design and create Frank.)
  • Repetition is important where trust can dissipate. Every interaction can help build and re-enforce trust. Taking an Uber everyday can help me trust the system. Or getting an email from Frank with every successful payment can help restore the feeling of trust and reciprocity.
  • Technology can make the world feel smaller. Online communities — whether a Reddit board, an AirBnb reviewer, or a Facebook group — can make people who were previously distant feel “proximate” and increase that trust factor.
  • Start-up failure rates are unacceptable for the social economy. The majority of start-ups end up failing, it’s just how that system works. And it’s fine if the platforms fail, but for every user that feels a breakdown of trust, the rest of the industry suffers. Everyone needs to be cognizant of that.

I believe in the sharing economy. I believe it has the power to create economic opportunities for a part of country that is often left behind. I believe it can make the world more efficient and reduce the power of middle-men.

But until that industry begins to understand the well documented behavioral and psychology constraints of it, it will fail to meet the lofty expectations that it sparked.

 

 

ASEAN Community: Economic Integration and Development of SMEs


August 21, 2016

S. Rajaratnam School of International Studies

ASEAN Community: Economic Integration and Development of SMEs

By Ong Keng Yong and Phidel Marion G. Vineles

Synopsis

The ASEAN Community is in business notwithstanding various challenges. The huge potential of ASEAN Small and Medium Enterprises must be tapped to strengthen the backbone of the regional economy.

Commentary

IMG_5030

Ambassador and former ASEAN Secretary-General  Ong Keng Yong with friends from The University of Cambodia, Phnom Penh

AS ASEAN celebrated its 49th anniversary on 8 August 2016, regional public opinion is sceptical that the ASEAN Community exists. The fact is each ASEAN Member State does not count for much in the global economy even though Indonesia, as the biggest economy in Southeast Asia, is seen as quite significant with a GDP of nearly US$900 billion. But that is only the size of the economy of Tokyo, the capital area of Japan. The combined GDP of ASEAN Member States is about US$2.6 trillion. This makes ASEAN the seventh largest economy in the world. In ten years’ time, ASEAN can overtake the United Kingdom and France to be No.5 – after the US, China, Japan and Germany!

ASEAN Community: New Operating Environment

ASEAN is very diverse – 10 different cultures, economic systems, history and political order. The ego of each nation in the grouping is typically self-centred. That creates troubles for the organisation from time to time. Yet, looking at the global picture, forming the ASEAN Community is a strategic imperative and economic necessity.

Collectively, the Southeast Asian countries as ASEAN will be competitive vis-a-vis other regions of the world and an attractive destination for investors. ASEAN needs foreign direct investment and jobs for its peoples. ASEAN will do well if the member states work together and navigate through the interests of powerful neighbours and the bewildering technological developments affecting the marketplace and society.

The ASEAN Community is now the operating environment for all of us. The ASEAN Community has three pillars – political/security, economic and socio-cultural. The ASEAN Economic Community or the AEC has achieved positive results even though there are persistent complaints that ASEAN businesses are still not fully aware of the benefits accruing from the AEC. Tariff reduction and removal of obstacles to facilitate trade and open markets are ongoing. ASEAN is amalgamating its five Free Trade Agreements (FTAs) with China, Korea, Japan, Australia/New Zealand and India into the Regional Comprehensive Economic Partnership (RCEP). Infrastructural development and connectivity are being improved. Overall, growth prospects for the AEC are good: more than 5% annually for the next five years.

ASEAN SMEs: Significant Growth Engine

To be sure, ASEAN could do better and it has prioritised the development of small and medium enterprises (SMEs) to achieve equitable, inclusive and sustainable growth, as they represent more than 95% of all enterprises in the region. This could also contribute to poverty reduction as well as improve the status of women in the region as almost half of the enterprises are women-owned.

ASEAN SMEs are the backbone of the ASEAN economies. According to the ASEAN Secretariat, they employ between 52% and 97% of all workers. In addition, their contribution to each ASEAN Member State’s GDP varies between 30% and 53%. However, their share of total exports remains small, between 10% and 30%. This means much remain to be done to strengthen the role of SMEs to help ASEAN economic integration.

The ASEAN Strategic Action Plan for SME Development laid out five key strategies: (1) promote productivity, technology and innovation; (2) increase access to finance; (3) enhance market access and “internationalisation”; (4) enhance policy and regulatory environment; and (5) promote entrepreneurship and human capital development.

SMEs Not Equipped for AEC and RCEP?

Several analysts claimed that most SMEs in the region are not fully equipped to deal with new business realities of the AEC and the RCEP. The AEC is an integrated market and production base of over 620 million people, which could expand to more than three billion through the RCEP. Both the AEC and the RCEP could bring many opportunities for the SMEs, realise economies of scale for them and increase their participation in the global value chains.

However, it is projected that SMEs will face intense competition from the entry of multinational corporations (MNCs) and cheap imports. Hence, ASEAN Member States should fine-tune their concrete action lines in relation to the specific needs and circumstances of their SMEs.

Productivity and technology improvements are key drivers of SMEs to integrate with the production networks of MNCs. These drivers could be further enhanced if SMEs are allied with other SMEs or with large enterprises. However, there are some challenges to boost productivity of ASEAN SMEs.

According to various studies, average labour productivity (GDP per person employed) in ASEAN was equivalent to only 31% of US labour productivity in 2015. There are notable variations on labour productivity among ASEAN Member States: Singapore’s average labour productivity equivalent to US’ labour productivity is 112%, Thailand (25%), Myanmar (8%), and Cambodia (5%).

There should be more training within ASEAN SMEs to help boost their labour productivity to levels needed to become qualified suppliers in global value chains. SMEs should also invest in specialised technical training for their workers.

Overcoming Impediments to SME Development

According to the Economic Research Institute for ASEAN and East Asia (ERIA), the lack of strategic approach to innovation policy for SMEs is one of the impediments of SME development in ASEAN. It is therefore necessary to find ways to promote technology and technology transfer for developing SMEs’ innovation capabilities. Protection and promotion of intellectual property rights, development of broadband infrastructure and industrial parks, and sufficient financial incentives in research and technology development are some policy measures which have to be instituted to boost the SMEs.

Access to finance is a key concern for ASEAN SMEs. According to ERIA, there is a big gap in the access to finance of the less developed ASEAN Member States when compared with Singapore, Malaysia, Thailand, Indonesia, and the Philippines. There are also cumbersome requirements. According to the World Bank, an average of 47 days is required for 13 procedures to start a business in Indonesia, while it requires 73 days for six procedures in Lao PDR. It would only take three days to complete three procedures in Singapore and online electronic applications are made to a single authority. The business registration process should be simplified.

Promoting human resource development and entrepreneurship is essential for SMEs to succeed. Entrepreneurship learning programmes help equip SMEs with improved management and business methods. Presently, the ASEAN Common Curriculum in Entrepreneurship, which is one of the initiatives of ASEAN Strategic Action Plan for SME Development, aims to establish a common curriculum for entrepreneurship in the region with the use of an entrepreneurship educational programme that is currently implemented in ASEAN universities.

In conclusion, it is essential to implement an effective SME development policy that will propel regional cooperation among ASEAN Member States. This will assist SMEs to expand internationally and integrate them into global supply chains.

About the Authors

Ambassador and Former ASEAN Secretary-General Ong Keng Yong is Executive Deputy Chairman of the S. Rajaratnam School of International Studies (RSIS) at NTU Singapore and former Secretary-General of ASEAN. Phidel Gonzales Vineles is a Senior Analyst at RSIS.

This Commentary is adapted from a speech on ASEAN SMEs delivered on 4 August 2016.

 

Malaysia’s Najib Razak demands Respect


August 4, 2016

Malaysia’s Najib Razak, Beset by Growing Scandal, Demands Respect

by Sara Schonhardt in Jakarta and  Yantoultra Ngui in Kuala Lumpur

http://www.wsj.com

The  Malaysian Prime Minister addresses World Islamic Economic Forum in Jakarta

JAKARTA, Indonesia—Malaysian Prime Minister Najib Razak, facing a loss of international standing as he wrestles with global investigations into alleged domestic corruption, on Tuesdayurged countries not to meddle in the affairs of his Southeast Asian nation.

“I have always been a proponent of openness to the world and collaboration, but we must insist on respect for our own sovereignty, our own laws, and our own democratically elected governments,” Mr. Najib said at the opening of a summit on Islamic finance held in neighboring Indonesia.

Mr. Najib has struggled for more than a year in a scandal centered on the state investment fund 1Malaysia Development Bhd. He used a keynote address to the World Islamic Economic Forum to restate his country’s importance in Asian trade and security arrangements and as a counterbalance to Islamic extremism.

The remarks amounted to a pointed statement of Malaysia’s traditional role as an investment-friendly, moderate Muslim mainstay. That role has been overshadowed in the past year by a steady stream of bad news around 1MDB, which Mr. Najib founded in 2009 to promote economic growth.

The three-day forum is the first big international event Mr. Najib has attended since the U.S. Justice Department filed a civil lawsuit July 20 seeking to seize assets that it said were bought with $3.5 billion misappropriated from 1MDB.

The lawsuit doesn’t name Mr. Najib, but there are 32 references to “Malaysian Official 1,” who allegedly received hundreds of millions of dollars in funds siphoned from 1MDB. People close to the investigation have said Malaysian official 1 is Mr. Najib.

“Without a doubt, the ongoing 1MDB investigation by half a dozen countries, including the U.S. and Singapore, is starting to take its toll on Najib’s credibility,” said Murray Hiebert, Deputy Director of the Southeast Asia program at the Center for Strategic and International Studies in Washington, D.C.

“But much of this toll is focused on Najib,” Mr. Hiebert said. “Malaysia itself is still largely viewed as one of the most economically successful Muslim majority countries.”

Mr. Hiebert was jailed briefly in the late 1990s for contempt of court after losing an appeal against a 1997 conviction for writing about a case brought by the wife of a court of appeal’s judge on behalf of her teenage son. Mr. Hiebert was working at the time as a journalist for the Far Eastern Economic Review, then owned by Dow Jones. Mr. Najib wasn’t the prime minister at the time.

On the international stage, Malaysia remains an important member of the 12-nation Trans-Pacific Partnership trade agreement the U.S. is pushing, and an increasingly important security partner for Washington amid tensions in the South China Sea, Mr. Hiebert said.

“Najib is still the Prime Minister and therefore he still must be given all the courtesies for a sitting head of government,’’ said Wan Saiful Wan Jan, Chief Executive of Kuala Lumpur-based think tank Institute for Democracy and Economic Affairs. “So in reality, it does not matter what people think. He is still in charge.”

Mr. Najib has been embroiled in scandal since The Wall Street Journal reported more than a year ago that hundreds of millions of dollars that originated with 1MDB flowed into his personal bank account. Several countries have since launched investigations.

Mr. Najib has said he did nothing wrong and is the target of political smears. The Malaysian Attorney-General has cleared him of wrongdoing, saying the funds that went into Mr. Najib’s account were a legal political donation from Saudi Arabia and that most of the money was returned. 1MDB has also denied wrongdoing.

Mr. Najib is still regarded as a moderate voice in the Muslim world and Malaysia sees itself as a model for developing countries, said Norshahril Saat, a fellow at the ISEAS Yusof Ishak Institute. His approach to terrorism has also earned him kudos among neighbors battling with Islamic extremism while earning rebuke from human-rights groups.

A special security law that took effect Monday widens Mr. Najib’s powers to fight Islamic terrorism but critics say it is broad and overly vague and could be used to silence critics. New York-based Human Rights Watch called for the law to be repealed.

Countries facing similar problems, including corruption, are less likely to pass judgment. But the allegations themselves continue to dog Mr. Najib and perceptions of Malaysia.

Political analyst Wan Saiful Wan Jan says the Sungai Besar and Kuala Kangsar by-elections will better show if Pakatan Harapan can unite as a viable pact or will continue to squabble over seat allocations. ― Picture by Yusof Mat Isa

“I think Malaysia is suffering in terms of international reputation,” said Wan Saiful Wan Jan (pic above). “Everywhere I go these days the question I have to answer is always about Najib and the allegations surrounding him. It is quite embarrassing and it is a distraction to the many good things we can talk about the country.”

The forum was founded in Malaysia in 2005, bringing together business leaders and government officials in the Islamic world to promote trade and investment opportunities. Malaysia is a global leader in the Islamic finance market and has more than tripled Islamic capital markets to $1.7 trillion over the past decade, Mr. Najib said.

An Islamic finance market is based on Islamic law. For instance, the system avoids investment in prohibited industries such as gambling and alcohol.

—Celine Fernandez contributed to this article.

Appoint brave men with entrepreneurial spirit as to captain our universities–Former UM VC Ghauth Jasmon


New York

June 21, 2016

COMMENT: When it comes to university administration, no one in Malaysia today is better qualified than Tan Sri Ghauth Jasmon, former Vice Chancellor of my alma mater, The University of Malaya (now Universiti Malaya). I welcome his appointment when it announced some years ago as great hope for the university, only to be disappointed that his insecure political masters decided to remove him.

Why? Tan Sri Jasmon had an independent and entrepreneurial streak and the guts to institute drastic changes in the way our oldest university would operate. He sought to improve academic standards, improve ranking of Universiti Malaya, and adopt a “publish or perish”culture among the academic staff. He also changed the business culture of the university Universiti Malaya to make less dependent on the government for funding. These objectives are noble ones but threatening to vested interests with a different agenda.

Bringing about change is a risky business. You need guts and vision with a strong heart. Italian  Niccolo Machiavelli was among the first political philosophers to have made this observation. In our country, men like Tan Sri Jasmon are not welcome because they upset the status quo. “Business as usual is good for those seek  to benefit, usually of personal nature, from it.

Yes, we need strong and committed  individuals, men (and women) who pursue excellence by example, to lead our universities if we are to change the standard of our institutions  of higher education. I wonder who will heed his call for moral courage, and entrepreneurship.–Din Merican

Appoint brave men with entrepreneurial spirit as to captain our universities–Former UM VC Ghauth Jasmon

by Minderjeet Kaur

This, says former Universiti Malaya Vice-Chancellor Ghauth Jasmon, is the formula to improve education standards in public universities.

Tan Sri Dr. Ghauth Jasmon, Vice-Chancellor of the University of Malaya was conferred the award of Honorary Degree of the Doctor of Science (DSc) by the University of Wales, Cardiff at a convocation ceremony at the Wales Millennium Centre, Cardiff on Friday, 4th May 2012. Tan Sri Jasmon is now Vice Chancellor, Sunway University

The way to improve standards at Malaysian universities is to employ vice-chancellors who are brave enough to make changes and think like entrepreneurs.

This is the view of former Universiti Malaya Vice-Chancellor Prof Ghauth Jasmon.

He said today that Malaysian public universities had failed to produce world class universities because they had become heavily reliant on the Government. This, he said, had made vice-chancellors complacent.

“In Malaysia, the Government gives students to varsities. Money is given. There are no challenges. The VC does not have any idea how to raise funds. They are too afraid to make any change because their neck is always on the chopping block from pressure groups and the Government,” he said.

He was speaking to about 100 people, mostly from the education sector, at a forum on expanding private higher education organised by the Jeffrey Cheah Institute on Southeast Asia.

Ghauth, who is well respected in education circles, said the Malaysian Government gave 80 per cent of the operating cost to each public university whereas the governments of Thailand and Indonesia only gave 20 per cent of the operating cost.

“The VCs in these two countries have no choice but to operate like private colleges. They offer courses relevant to the market needs. Their syllabuses are current, unlike ours. Some of our syllabuses have not changed for the past 20 years.”

He said the Thai and Indonesian university heads were entrepreneurs and go-getters. “Public universities in Thailand and Indonesia run their own businesses. Chulalongkorn University has 7 huge supermarkets, 1,400 commercial buildings. Indonesian public universities are successful too. Both countries started venturing out 30 years ago.”

The vice-chancellors in these two nations had to be on their toes to attract students without sacrificing the quality of education, as a drop in their standards or grades would not attract other students to register with them, said Ghauth.

In contrast, he said, most of the vice-chancellors in Malaysia were at a loss, especially since the Government announced budget cuts in operational costs for every public university.

The Government, in Budget 2016, had slashed university budgets by RM2.4 billion, from RM15.78 billion in 2015 to RM13.37 billion for the year 2016. Universiti Malaya had the most severe cut of 27.30 per cent, he said.

“The immediate reaction of public universities, especially the board members in UM, is to cut costs rather than expand business.”

Ghauth said some of the universities would, in such a situation, unsubscribe to online journals, charge for usage of sporting facilities and remind their staff to switch off lights, and repair leaking pipes.

Some administrators have suggested commercialising International Property rights and research papers.

“The truth is, there is not much money to be made from commercialising IP rights or selling research papers unless you are a Stanford or Harvard,” Ghauth said.

Saying the way to improve standards was to change the vice-chancellors, he pointed out that during interviews for the post of Vice-Chancellor, no one asked how the person would make money for the institution. “We need to change this,” he said.

During his time at UM, from 2008 to 2013, he had approached the University of Wales to have a joint venture with UM to open a private university – University of Malaya Wales. It started three years ago and operates out of UM. The money generated from the private university goes to UM.

“This is one way to be independent. The less we depend on money from the Government, the more UM can start standing on its feet. It can start making its own decisions to make UM world class.”

Ghauth said brave vice-chancellors were needed to make changes to Malaysian higher education. “Otherwise, it is just going to be worse from now on as the Government will continue to cut budgets due to the drop in oil prices.”

UM went up five spots to sit in 146th place in the Quacquarelli Symonds (QS) World University Rankings for 2015/ 2016. There are 20 over public universities in Malaysia.

Number of unemployed public university graduates to soar

 by Minderjeet Kuar

The number of unemployed people who graduate from local public universities is set to rise further, an academician warned today.

Not only would the unemployed figure from this group rise higher than the present 400,000, about 80 per cent of the jobless would be Bumiputera, according to Prof Ghauth Jasmon.

https://i1.wp.com/www.freemalaysiatoday.com/wp-content/uploads/2016/06/Ghauth-Jasmon_jobless_6001.jpg

He estimated the figure at 600,000 in the next few years, if nothing was done to improve university education.

The former Universiti Malaya vice-chancellor said the reality was that the private sector preferred hiring graduates from private universities and colleges.

“The private sector needs graduates who speak and write English. Many public university graduates are hired by the Government and join the civil service. But the Government cannot hire everyone,” he said.

Every year about 200,000 graduate from institutions of higher learning in the country.

He said despite the Government spending billions of ringgit on public universities, the demand for graduates from these universities remained low.

“It is a sad thing that this is happening. One way of overcoming the problem is for vice-chancellors to implement measures that will benefit the nation.Vice-chancellors need to be bold. They need to do what is good for the students and for the country so no funds are wasted.”

Ghauth, who was UM vice-chancellor from 2008 to 2013, said he had faced a lot of resistance from lecturers and students when he wanted to improve students’ soft skills, such as having extra English classes.

“The backlash to that was bad. There were demonstrations, encouraged by lecturers. They accused me of making Malay language as the second language. For the next one year, I had to continuously write to newspapers on the reasons for my move.”

Another move he made was to ask lecturers to submit their research and paperwork to International Scientific Indexing (ISI) journals. “The professors petitioned against me. They wanted to remove me. ISI journals have to be in English. They felt I was not in support of the Malay language.”

He then decided to reduce the salaries of UM professors studying PhD in Australia, United Kingdom and Canada who took three to four years longer than the deadline.

“I told them if you do not finish your courses by a certain time, the UM will cut your salary by RM200 to RM600 a month depending on the length of delay.”

Even though, there were objections, he said, the policy remained till today. He noted that almost 90 per cent of professors were now finishing their PhD on time.

He said vice-chancellors should not give in to pressure as they knew their measures were for the betterment of the country. It was not about being in the good books of everyone, he said.