Najib: Mismanagement of Funds will not be tolerated


April 10, 2015

COMMENT: I did not watch his interview last night. It would have been a waste of time for me toDin Merican-2015 listen to a leader who does not mean what he says. He can no longer be trusted to do the right thing. For more than 6 years, he spent millions of ringgit producing all sorts of glossy reports, mainly prepared by foreign consultants, which are not being implemented. Prime Minister Najib lacks the political will and the moral courage to lead.

Today, he has a serious credibility problem. His assurances have become meaningless. He says he welcomes criticisms, yet his Minister of Home Affairs is rushing ahead to introduce amendments to the Sedition Act  to suppress freedom of expression in our country, which is guaranteed by our Constitution. Read: http://en.wikipedia.org/wiki/Article_10_of_the_Constitution_of_Malaysia

Running our country is not playing politics. It is a serious undertaking, requiring the services of a competent, dedicated,  honest, and decisive leader with an ability to unite, not divide us. The Prime Minister has been given enough time to do what is right. The word is DO (meaning taking action), not TALK. His talk is cheap and today his talk has become the butt of jokes among Malaysians who can think. Own up to reality, Mr. Prime Minister, while you have the chance to govern. But if you cannot take the heat, please get out of the kitchen.

To Auditor-General, Tan Sri Ambrin Buang and to the PAC Chairman, Nur Jazlan, please do your work diligently and show us that you have guts to reveal the facts relating the financial affairs of 1MDB so that those who have betrayed public trust can face the full brunt of the law. In case both of you have forgotten, I take this opportunity to ask you what happened to the National Feedlot Corporation scandal. That is just one example of what is happening here. No further action? The government thinks we Malaysians forget easily. Maybe some do, but I don’t.–Din Merican

Najib: Mismanagement of funds will not be tolerated

April 10, 2015

PM wants PAC and Auditor-General to expedite investigations into any alleged wrongdoings at 1MDB.

 Nur-Jazlan-Mohamed_Ambrin-Buang_1mdb_600Prime Minister Najib Razak said he would not condone any abuse in the financial management of 1Malaysia Development Bhd (1MDB) or defend anyone caught doing it.

Najib said he wanted the Public Accounts Committee (PAC) and the Auditor-General to expedite investigations into any alleged wrongdoings in the investment company.

“We did not give them any deadline to complete the task but they need to complete it as fast as possible. Investigate as fast as possible because I want the rakyat to know.This is because I have given an assurance that if there is any mismanagement, we would not defend anyone,” he said.

Najib, who is also Finance Minister, said this in a special edition of TV3′s ‘Soal Jawab’ programme last night that was moderated by Hamdan Ahmir. He said that even though 1MDB’s accounts were audited by Deloitte, he was still not satisfied.

“I have proposed to the Cabinet that the Auditor-General look into the accounts and after that, the PAC as well,” he said.

According to Najib, the PAC, which also had representatives from Opposition parties, could discuss the Auditor-General’s Report. Najib said 1MDB started off as an investment company with only RM1 million capital compared with Permodalan Nasional Bhd, Khazanah Nasional Bhd and other bodies, which had various capital injections.

“Thus, 1MDB needs borrowings to grow its business. Also, its assets are now more than its liabilities,” he said. He added that 1MDB needed time to grow or to liquidate its assets in order to pay off its debts.

BERNAMA

Najib’s Slow Death


April 4, 2015

Najib’s Slow Death

by Roger Mitton@http://www.mmtimes.com/

Living under the tawdry and sinking regime of Prime Minister Najib Razak must seem to Malaysians like death by treacle.

Rosmah and Najib 1mdbThey are drowning in a gluey black sea of venality the likes of which has not been seen in this region since the days of President Ferdinand Marcos in the Philippines.

The mounting litany of shameful episodes that have riven that nation all appear to be traceable to the hapless Prime Minister, who is also the head of the dominant political party, the United Malays National Organisation (UMNO).

Things are so bad that last week the UMNO-owned newspaper, Utusan Malaysia, carried an outrageous editorial that tried to exonerate Najib and shift the blame elsewhere.It failed, of course, because it was arguing against facts that indicate to all Malaysians that Najib is steadily sinking into the treacly pit of corruption and maladministration into which he has plunged his country.

If you think this is over the top, just consider a few of the more damning indictments against the Prime Minister and his band of gangsters, cheats and philanderers. First, there are the missing billions of taxpayers’ money. It is hard to truly comprehend the full magnitude of this gigantic, nepotistic malfeasance, and even the illustrious New York Times took three pages to try to do it.

Riza and Jho LowSuffice to say that Najib’s stepson, Riza Aziz, the offspring of the PM’s second wife Rosmah, is the man apparently responsible for most of the woes brought about by this debacle – otherwise known as 1MDB.

The initials stand for 1Malaysia Development Berhad, a sovereign wealth fund that has lost billions due to corruption and mismanagement, and is still weighed down by massive nonperforming loans. The fund appears to be almost entirely controlled by Najib, Aziz and a flamboyant Penang conman called Jho Low – no relation to Jennifer Lopez, though he mixes with Paris Hilton and other Hollywood starlets.

Why and how? There is no clear answer, except to recall that Najib is under the sway of Rosmah, a shopaholic wrecking ball, who shrugs off ridicule and ignores how her actions thwart her husband’s premiership. In truth, the personal damage to Najib is piffling compared to the disastrous effect the huge 1MDB losses are having on the already fragile Malaysian economy.

An opposition MP has called the fund fiasco “the mother of the mother of the mother of all scandals in the history of Malaysia”. He may be right. Certainly, there are already worries that if and when 1MDB collapses, the nation’s financial system may take a hit that will dwarf the effect of the Asian Financial Crisis in 1997.

And bear in mind that Malaysia’s resource-dependent economy is already in trouble due to the depressed price of its key exports, petroleum oil and palm oil. Last month (January), Najib announced US$1.5 billion in spending cuts and said Malaysia’s economic growth would fall from 6 percent to between 4.5pc and 5.5pc this year. The economic woes have been compounded by diminishing political support at home.

In the last general election two years ago, Najib vowed to reverse the drop in votes that his UMNO-led coalition had witnessed under his predecessor, PM Abdullah Badawi.It did not happen. His government ceded even more seats and lost four state assemblies and the overall popular vote to the opposition People’s Alliance, led by Anwar Ibrahim.

Since that chastening experience, Najib has clung onto the UMNO leadership by appeasing his key support base, the nation’s Malay-Muslim majority, and marginalising the minority Chinese and Indian communities.

This shocking move was his only option, or else he would have faced the same fate as Abdullah, who was elbowed out after his election failure by UMNO party men.Concurrently, Najib has reversed his promise to dump the colonial-era Sedition Act, and instead applied it with increasing frequency against oppositionists, lawyers, journalists and academics.

Most recently, Anwar has been jailed for five years after a dubious sodomy conviction, while one of the nation’s popular cartoonists has been detained for drawing caricatures that lampoon the farcical Anwar trial.

Not only do these actions signal a premier running scared – as would be expected after the 1MDB catastrophe and his election setback – but they are grotesquely hypocritical.

1MDB-The ScandalTarring Anwar with sodomy conveniently distracts attention from the fact that Najib, a notorious philanderer in his early days like most UMNO leaders, may be complicit in the murder of a Mongolian model. The demise of this woman, the lover of the PM’s closest adviser and many Malaysians suspect also Najib’s mistress, is under investigation due to a $155 million kickback in an intertwined submarine deal negotiated when Najib was Defence Minister.

All of this led Utusan to issue its absurd editorial that – wait for it – blamed America for the country’s woes. It even accused Washington, which has criticised Anwar’s jailing, of copying the opposition leader’s behaviour.

According to Utusan, “The US wants to ‘sodomise’ our legal and judicial system, even though the majority of Malaysians agree with the court’s decision.” Well, that is a moot point. Certainly the voting pattern suggests most Malaysians would happily accept Anwar as their next PM.

daim-mahathirIn any case, Najib’s survival may depend more on UMNO elders like former PM Mahathir Mohamad, and former Finance Ministers Daim Zainuddin and  Tengku Razaleigh Hamzah. Since they have all turned against him, though, the omens are not good.

The Curse of The Obsession With Single-Issue Politics by M. Bakri Musa


March 23, 2015

The Curse of The Obsession With Single-Issue Politics

by Dr.M.Bakri Musa, Morgan-Hill, California (received via e-mail)

bakri-musaWe Malays are obsessed – and cursed – with the single-issue politics of bangsa, agama dan negara (race, religion and nation). We have paid, and continue to pay, a severe price for this. Our fixation with those three issues detracts us from pursuing other legitimate endeavors, in particular, our social, economic and educational development. Perversely and far more consequential, our collective addiction to bangsa, agama dan negara only polarizes us.

We, leaders and followers alike, have yet to acknowledge much less address this monumental and unnecessary obstacle we impose upon ourselves. The current angst over hudud (religious laws) reflects this far-from-blissful ignorance. With Malays over represented in the various dysfunctional categories (drug abusers, abandoned babies, and broken families), and with our graduates overwhelmingly unemployable, our leaders are consumed with cutting off hands and stoning to death as punishments for thievery and adultery. Meanwhile pervasive corruption and endemic incompetence destroy our society and institutions. Those are the terrible consequences of our misplaced obsession with agama.

If we focus more on earthly issues such as reducing corruption, enhancing our schools and universities, and on improving economic opportunities, then we are more likely to produce a just and equitable society. That would mertabatkan (enhance the status of) our agama, bangsa dan negara on a far more impressive scale.

Make no mistake, if we remain marginalized or if we fail to contribute our share, then it matters little whether Malaysia is an Islamic State or had achieved “developed” status, our agama, bangsa dan negara will be relegated to the cellar of humanity. Our hollering of Ketuanan Melayu (Malay Supremacy) would then be but a desperate and pathetic manifestation of Kebangsatan Melayu (Malay Poverty).

A Historical Perspective

For the first half of the last century, our fixation was, as to be expected, on nationalism. Our forefathers were consumed with the struggle to be free from the clutches of colonialism, and the right to be independent. With merdeka a reality in 1957, the obsession then shifted from negara to bangsa, from merdeka to bahasa (language). Today with Malay language specifically and customs generally accepted as the national norms, our mania has now shifted to agama.

While our passion for negara and bangsa had a definite and definable endpoint (independence and Malay as the national language respectively), what is the goal with our obsession on agama? ISIS Malaysia? And as for entry into heaven, only Allah knows that.

We have forgotten, or are unaware in the first place, the price we paid for our earlier obsessions. Consider our nationalistic fervor of yore. While we Malays were consumed with treating the colonialists as white devils and fighting them, non-Malays seized every opportunity to work with and learn from them. In our smugness and misplaced sense of superiority we asserted that we had nothing to learn from those colonials and outsiders, blithely ignoring the obvious evidences to the contrary, just like the Japanese before the Meiji Restoration.

What has umno achieved Bakri M

As a result when independence came, non-Malays were much more equipped to take full advantage of that fact while we Malays were still consumed with endlessly shouting merdeka and rehashing an established reality. A decade later we found ourselves marginalized while the non-natives were busy taking over opportunities left behind by the British. Then like a wild boar caught in a trap of its own making, we lashed out at everyone and everything, with ugly consequences for all.

It took the brilliance and foresightedness of the late Tun Razak to first of all recognize the underlying pathology and then craft an imaginative and effective remedy.

As for our struggle for independence, let me inject a not-so-obvious observation. Our merdeka came less from the battles of our jingoistic warriors, more from British realization that colonialism was no longer chic. Indeed it became an affront to their sensibilities. I would be less certain of that conviction had our colonizers been the Chinese or Russians. The Tibetans and Chechens will attest to that.

We owe a huge debt of gratitude to the British for another reason. They cultivated sensible leaders amongst us and dealt harshly with the radicals. Consequently we were blessed with post-independent figures like Tunku Abdul Rahman and Tun Razak while spared the likes of Sukarno and Ho Chi Minh.

Had we been less arrogant culturally and instead learned from the British, we would have been able to give full meaning to our merdeka. There was much that we could have learned from a nation that ushered in the Industrial Revolution and the Scientific Age.

Folly of The National Language Obsession

The May 1969 race riot should have taught us the obvious and very necessary lesson that we must prepare our people well so they could make their rightful contributions and not be left behind. It did not. Instead we shifted our obsession, this time to language. Bahasa jiwa banga (Language the soul of a race), we deluded ourselves.

With that we sacrificed generations of precious and scarce Malay minds to the altar of the supremacy of Bahasa. We also squandered what precious little legacy the British had left us, specifically our facility with English. Imagine had we built on that!

Yes, Malay is now the national language, a fact affirmed by all. Less noticed or acknowledged is that while non-Malays are facile with that language they are also well versed in others, in particular English. Not so Malays, with our leaders eagerly egging on our fantasy that knowing only Malay was sufficient.

DPM MalaysiaWith English now the de facto language of science, commerce and international dealings, not to mention the language of global consumers especially affluent ones, our Malay-only fluency is a severe handicap. We are lost or ignored abroad, or even in Malaysia within the private sector. Again we are being left out because of our misplaced obsession.

The sad part is that we are only now just recognizing this tragic reality. Deputy Prime Minister Muhyyddin (who is also in charge of education) was stunned to learn that our students fared poorly in international comparisons. He is still stunned for he has yet to come up with a coherent solution.

Our Current Delusion with Religion

Judging from the current obsession with hudud, we have learned nothing from our earlier follies with bangsa dan negara.

Faith is a personal matter. This is especially so with Islam. Our Holy Book says that on the Day of Judgment we would be judged solely by our deeds. We cannot excuse them based on our following the dictates of this great leader or the teachings of that mesmerizing ulama. Islam is also unique in being devoid of a clergy class. There is no pope or priest to mediate between us and Allah, or a prophet who died in order to expiate our sins.

The now vociferous and overbearing ulama class imposing itself upon us is a recent innovation (bida’a) in our faith.  As is evident, this obsession with hudud does not bring Muslims together. Far from it! Hudud also creates an unnecessary chasm between Muslims and non-Muslims. Islam should bring us together.

To Muslims the Koran is the word of Allah, its message for all mankind and till the end of time. That is a matter of faith. While hudud is based on the Koran it is not the Koran. The present understanding of hudud is but the version interpreted by the ancient Bedouins. It is the handiwork of mortals, with all its imperfections. We should not be bound by it but be open to more enlightened readings of the holy book.

We paid dearly for our earlier obsessions with race and nationalism. What would be the price this time for our fixation with religion? Look at the Middle East today. Ponder Nigeria with its Boko Haram. Contemplate being under the brutal ISIS, the messianic Talibans, or the puritanical Saudis.

We have yet to recover from our earlier follies with nationalism and Bahasa, yet we blithely continue making new ones with our current obsession on religion. The mistakes we make this time could well prove irreversible.

Dispense with this public fixation with religion. Instead focus on adil and amanah (justice and integrity), the tenets of our faith. We cannot be Islamic if we are devoid of both. This should be our pursuit, from eminent Malays to not-so-eminent ones, from Muslims and non-Muslims alike.

If our leaders do not lead us there, then dispense with them and pursue our own path forward. Unlike the earlier colonial era, this time there is no superior power except for Allah to guide us find and groom enlightened leaders. We are on our own. As per the wisdom of our Koran, Allah will not change our condition unless we do it ourselves.

Dr. M.Bakri Musa’s latest book, Malaysia’s Wasted Decade 2004-2014. The Toxic Triad of Abdullah, Najib, and UMNO Leadership, has just been released. It will be available soon at major online outlets like Amazon.com.

1MDB is in financial distress–A.H.Manaf


March 17, 2015

1MDB is in financial distress: The Evidence is Clear for All to see, only Some don’t

by A H Manaf@www.themalaysianinsider.com

1MDB-The Scandal

In November 2014, I penned an article calling for the Auditor-General to conduct a public audit of 1MDB, highlighting the warning signs and “alarm bells” which alert us to the case for investigation.

Since then, events have unfolded rapidly and I wish to update my opinion based on subsequent reports that have come to light.

1. 1MDB took up a US$1 billion loan in October 2014 (reported in Reuters IFR). This was reportedly a one-year bullet loan with repayment due in full in September 2015 – we do not know the use of proceeds, assuming they were not utilised to reduce existing debt, the company has now incurred a substantial addition of RM3.7 billion in short-term liabilities (in this case due in six months) to its previous debt picture of RM42 billion as at March 2014.

Ananda KrishnanAnanda Krishnan

2. Repayment of an existing RM2 billion bridging loan was postponed from November to December and finally January 2015 culminating in reports that the loan was settled by businessman T. Ananda Krishnan.

Confusing statements have been issued as to the source of the loan repayment. However, there are strong indications in the FY14 accounts as to how management planned to repay this loan.

As explained in the notes to the accounts (pg 170), the RM2 billion bridging loan is to be repaid with either proceeds from a proposed IPO or from an equity commitment by Tanjung. The latter is described as “a Subscription Agreement with Tanjung under which Tanjung agreed to subscribe for equity in PIH of up to RM2.0 billion on the occurrence of certain events… which proceeds shall be used solely for the repayment or prepayment by PIH for any amount owing under the RM5.5 billion loan facility”. As we know, the IPO slated for calendar year 2014 never materialised.

3. Confirmed reports that the government provided a “standby credit” of RM950 million of which more than two-thirds have been drawn in the short duration of two weeks following the granting of this credit.

I do not distinguish between “standby credit” and “loan” when a substantial proportion has been immediately taken up. In view of the haste with which the credit was approved and subsequently disbursed it would be more appropriately defined as an “emergency state-funded loan”.

4. Surprisingly candid statements by Finance Ministry officials which Ahmad-Husni-Hanadzlahconstitute a public admission of 1MDB’s precarious financial position: Second Finance Minister Datuk Seri Ahmad Husni Hanadzlah described the company’s finances and “gearing ratio” as “unsustainable” necessitating “an exercise to rationalise and consolidate its assets”. In other words, 1MDB’s excessive debt levels compel the sale of assets to service and repay these debts.

5. Reports that 1MDB is unable to proceed with the 3B power project. More recently, the MOF refers to the company’s intentions to “transfer the project” and other reports indicate TNB will step in as a partner.

6. The sudden resignation of 1MDBs CEO whose replacement, Arul Kanda, announced stark changes in business direction under the guise of “strategic financial review” involving the sale of assets, including “land assets which may be sold outright or partly sold through joint ventures”.

Riza and Jho LowWhat is their role in 1MDB?

In simple terms, 1MDB’s proposal to “monetise” assets means it is embarking on the sale and liquidation of company assets, Husni’s subsequent announcement that they expect RM26bn of debt to be settled through “monetising” land banks and future property earnings indicates the asset sale will be extensive.

All of the above point to a clear picture – what we are witnessing here is a company in acute “financial distress” suffering from unsustainable levels of “corporate debt overhang”.

Financial distress is implicated by the company’s inability to meets its financial obligation in a timely manner, in the case of 1MDB a sovereign entity it appears to only meet its minimum obligations with assistance from i. government-funded emergency loans ii. funds extended by a third-party whose legal obligations are referred to in the notes to the accounts.

The reported problems with the 3B project are classic symptoms of a company in financial distress – it is in the unenviable position of having to reject lucrative investment proposals because i. its extensive debt levels render it unable to raise additional funding ii. a substantial proportion of its current revenues and cash flow goes to servicing existing debt.

As reported, 1MDB has had to call off a RM8.4 billion sukuk financing earmarked for the 3B project (Reuters).

“Corporate debt overhang” often leads to a vicious downward spiral. In 1MDB’s particular case, the loss of 3B has serious repercussions on its short-term financial position, too, because its debt reduction proposal is based on the IPO of its energy subsidiary Edra (claimed by the MOF to be slated for June or July 2015) which presumably would be significantly enhanced by the inclusion of a lucrative new power project.

Other symptoms of “corporate debt overhang” include excessive cost of borrowings when a company struggles to raise further financing to fill its operating gaps.

The notes to 1MDB’s FY14 accounts detailing interest on borrowings (pg 122) show this to be the case: for example a RM1 billion “junior Islamic debt” drawn down in 2014 incurred a whopping annual interest rate of 18.1%.

Therefore, I must disagree with the Second Finance Minister’s contention that the recent emergency government loan to 1MDB “does not in any way constitute a bailout” because bailouts are only extended to “a failed organisation”.

He added that “the company was facing cash flow problems not due to management problems”. Successful companies plan their business operations, funding requirements and timescales responsibly, regardless of any possible returns that lie in the future, a company’s failure to plan to meet its short-term obligations invariably leads to bankruptcy.

This brings us to my next point about “going concern”, the fundamental principle upon which financial statements are prepared.

With the next financial year end March 2015 only two weeks away, I fail to see how 1MDB’s external auditors Deloitte can continue to rely on the appropriateness of this assumption without an explicit guarantee by the company’s shareholders, the MOF, that it will meet the company’s financial obligations.

In short, 1MDB can no longer be considered a “going concern” (an entity ordinarily viewed as continuing in business for the foreseeable future) without financial support from the Ministry of Finance i.e. the government.

I highlight this point of interest in view of widespread public concerns about possible “government bailouts” of 1MDB. Indeed in order to sign off the accounts of the company on a going concern basis, the external auditors would expect a letter from the shareholders, MOF, stating its explicit commitment to provide the necessary financial support to 1MDB.

The alternative would be for the financial statements to be prepared on a non-going concern or “break-up” basis.

Parallel to these developments is the startling revelation in blog and press reports claiming 1MDBs links with fraudulent and criminal activities (The Sarawak Report, The Sunday Times UK. The latter claims to have “seen” relevant email evidence).

In my previous article, I analysed publicly available information which signals “alarm bells” or “red flags” suggesting the possibility of irregular or fraudulent activities indicated by 1MDB’s frequent changes in external auditors, multiple and inexplicable late filings, unusual revaluation policy which served to mask its balance sheet insolvency, as well as the mysterious circumstances of the origins of the notorious US$2.3 billion Caymans funds.

ambrin-buangThe AG: His findings on 1MDB eagerly awaited

Significantly, the revelations in these blog and press reports have culminated in an instruction to the Auditor-General (AG) to conduct a public audit of 1MDB, an engagement I had called for more than four months ago.

Notwithstanding the possible conflict of interest arising from the instruction given by the Prime Minister who is also the Finance Minister and Chairman of 1MDB’s advisory board, I welcome this move of a public audit and hope the AG will undertake his heavy responsibilities with independence and credibility.

Critically the task requires a forensic audit (a specialised branch of audit which plays a crucial role in investigating suspected financial fraud and misappropriation of assets) with assistance from external specialist forensics if necessary.

For a methodical approach demonstrating credibility to the public, deadlines and time frames should be established, as well as clear terms of reference for the audit which should be made publicly available. These are crucial to allay public fears about the efficacy and intent of the public audit. The terms of reference should include but not be confined to the following:

  • determine adherence to principles of corporate governance by 1MDB’s board and management;
  • assess all evidence to determine any incidences of corporate malfeasance;
  • determine the authenticity and validity of a number of 1MDB’s controversial transactions and the extent of potential prejudice the company may have suffered through such transactions .This includes the joint venture with Petrosaudi; portfolio investment in offshore Caymans funds; the bond issue via Goldman Sachs; the option agreement with Aabar and compensation thereof relating to the proposed IPO; the joint venture with Aabar undertaken by 1MDBs former subsidiary SRC involving RM4 billion EPF funds, including investigating the reasons for and circumstances surrounding the transfer of the company’s ownership to the MOF; and,
  • quantify the magnitude and timing of 1MDBs current obligations and likely restructuring and financing cost.

All of the above will necessitate extensive work to (i) trace the flow of funds and other assets. (ii). construct a detailed chronology in order to understand and trace complex sequence of events of the company’s various transactions iii. identify relevant persons to interview, and conduct and document the interviews without fear or favour.

The interviewees should include current and previous management, current and previous members of the board of directors and advisory board, current and previous external auditors, any other persons including external advisors and associates who may be directly involved in the company’s transactions under investigation and any other persons who may be directly implicated by corporate malfeasance and fraudulent activities.

In view of the international nature of the company’s transactions and flow of funds and assets, the AG needs to assess the possibility of early referrals to criminal authorities to facilitate cross-borders investigations.

Assistance from and cooperation with PDRM, its overseas counterparts, Bank Negara and other relevant authorities will be essential.

In other words Tan Sri Ambrin Buang, good luck! The nation is depending on you to conduct this complex and critical undertaking with courage, integrity and professionalism.

* A.H. Manaf reads The Malaysian Insider.

* This is the personal opinion of the writer or publication and does not necessarily represent the views of The Malaysian Insider.

http://www.themalaysianinsider.com/sideviews/article/1mdb-in-financial-distress-a.h.-manaf#sthash.J8pQ5yBo.dpuf

 

PKFZ eclipsed by the IMDB Scandal


March 16, 2015

PKFZ eclipsed by  the IMDB Scandal: Its former directors must be made accountable

by R. Nadeswaran @www.thesundaily.com.my

http://www.thesundaily.my/node/300159

citizen-nadesSOMETIMES, politicians make incredible statements as if we are primary school kids. We are supposed to swallow them hook, line and sinker without questioning the truthfulness, accuracy and reliability.

If we do, then they would seek solace with their next line: “You sound like the opposition.” “Opposition” has become the keyword when they make boo-boos; it is the all-conquering word to draw attention away from facts and figures.

Last week, Second Finance Minister Datuk Seri Ahmad Husni Hanadzlah said that 1MDB is facing a similar situation as Port Klang – which he said was subjected to harsh criticism when it was first developed.

“Like Port Klang last time, I was here (in Parliament). There are those who insult Port Klang, but now OK,” he told Parliament.

“No need to laugh. We will see in the future.” Mr Minister, Sir, Port Klang is NOT okay! And neither is the Port Klang Authority (PKA) nor the Port Klang Free Zone (PKFZ).

PKFZPKFZ Issue eclipsed by 1MDB Scandal

This is NOT a figment of anyone’s imagination nor have figures been plucked from thin air. They come from the Auditor-General’s Report.The report noted that the PKA has accumulated losses of RM674 million since 2010.

PKA is not even a port operator. It is just a regulatory authority which collects dues and is far into the red. Its liabilities have gone up too. The annual interest payments for the massive loans taken to develop the Port Klang Free Zone have risen from RM3.5 billion in 2010 to RM4.24 billion in 2013.

PKFZ has not been able to generate sufficient revenue to cover even interest payments. For the record, PKFZ’s revenue for Financial Year 2013 was just RM10.1 million and its profit were meagre – RM209,615 – just a fraction of the interest.

PKFZ was supposed to have cost RM2.1 billion but this grew to RM4.6 billion in 2007, before an audit by PricewaterhouseCoopers (PwC) commissioned by then Transport Minister Datuk Ong Tee Keat in 2008 showed that the total cost including interest payments was projected to hit RM12.5 billion.

But amid the rosy picture painted by Ahmad Husni, Deputy Prime Minister Tan Sri Muhyiddin Yassin brought a temporary relief to humour generated by the former.In relation to the financial woes of 1MDB, the DPM said that public funds will not be used to bail out 1MDB, and its directors should be prepared to bear joint responsibility if there is any negligence or misappropriation.

The Deputy Prime Minister said the Auditor-General should not take too long to complete his audit of the accounts.

“I believe a transparent, independent and comprehensive audit will clear the name of the government-owned fund of any misappropriation or wrongdoings,” he was quoted as saying.

But Sir, the PwC report on PKA and PKFZ pointed out several lapses in the way the boards of both entities carried out their duties. In short 26 people, who were directors at the various stages of development of the PKFZ, were fingered in that report for negligence and failure in their duties and responsibilities.

The fiduciary duties of a director are to act bona fide in the interest of a company. Acting bona fide in the interest of a company is to act with good faith for the benefit of the company. The law dictates that a director is under a duty to ensure that any act he undertakes is with a view to enhancing the interest of the company either by enhancing profits, reducing costs or even positive publicity of the company.

Further, a director must ensure the observance and compliance with all laws, regulations and codes of conduct and best practices. The PwC report was a catalogue of abuses and negligence by the directors. It pointed out lapses in their judgment and negligence.

In 2009, former PKA General Manager Datuk Mylvaganam Rajasingam, who was nominated to the board, moved a resolution to initiate legal action against former directors for dereliction of its duties. Then board chairman Datuk Lee Hwa Beng tabled it for discussion but both were outvoted.

Now, with the DPM wanting the directors of 1MDB held liable for its shortcomings, shouldn’t there be a revisit and a re-examination of the roles played by the directors whose action or lack of it caused taxpayers RM12 billion?After all, what is good for the goose is good for the gander!

R. Nadeswaran agrees that directors have to be made accountable, more so if public funds are involved. Comments: citizen-nades@thesundaily.com

 

1MDB: A Case of Bad Governance, Muzzled Mainstream Media and Over-Concentration of Power


March 15, 2015

1MDB: A Case of Bad Governance, Muzzled Mainstream Media and Over-Concentration of Power

By Anisah Shukry@www.themalaysiainsider.com

Brown of Sarawak Report

Over-concentration of power in Malaysia, weak public institutions, the muzzled mainstream media and lack of transparency had allowed businessman Low Taek Jho to allegedly siphon billions of ringgit from 1Malaysia Development Berhad (1MDB), Clare Rewcastle Brown said today.

The editor of whistleblower site, Sarawak Report, told a forum today that all these factors had prevented anyone from revealing more info on Jho Low, as he is better known, and his 1MDB dealings earlier on, despite the fact that he was just a “30-something businessman”.

“In a more open, strong, check-and-balance set up, he would have been flushed out, sorted and put in his place a long time previously,” said Rewcastle Brown, as she addressed the 1,000-plus audience at the Crystal Crown Hotel, in Petaling Jaya today, via an online video conference on Skype.

But in Malaysia, power was too concentrated, she said, pointing to the fact that Najib controlled two of the most important portfolios in the government.

“The checks and balances are eroded to the extent that the prime minister is the finance minister.I mean, why do you think there are two positions? Why is it a good idea that the same person should occupy both?” said Rewcastle Brown at the forum titled “1MDB: The Ultimate LOW Down”.

She added that there was also a lack of robustness in Malaysia’s institutions, despite the huge pool of talent and manpower the country has.

Brown and MahathirTun Dr. Mahathir and Ms. Brown

“The other thing that struck me is the lack of transparency. Politicians like Tony Pua, Rafizi Ramli and UMNO’s Tun Dr Mahathir Mohamad have asked valid questions and those answers should be available in public paperwork.”

Instead, she said, the questions remained unanswered and anyone who digs deeper were treated as traitors.

Referring to the mainstream media in Malaysia, she said that the “muzzled media” was overly obedient and Malaysians could only rely on blogs and online news portals to objectively discuss politicians’ actions, added Rewcastle Brown.

“There seems to be an attitude that a strong government is a good thing, and that’s why you have over-concentration of power and weak institutions. But I think it’s a recipe for disaster. And that’s what 1MDB is, a very big disaster for Malaysia,” said Rewcastle Brown.

She said it would take just a “half-decent investigation” by authorities to discover 1MDB’s financial irregularities and Low’s role in it, adding that she had her eye on the company since 2010.

“I picked up the story by asking a lot of questions and I obtained a lot of sources that allowed me to shed more light on what had happened,” she said.

Rewcastle Brown’s Sarawak Report released a series of hard-hitting exposés in recent weeks on 1MDB, including its 2009 joint venture with PetroSaudi International and its alleged links to Low.

Petro Saudi and 1MDB

Sarawak Report claimed that Low had used PetroSaudi as a front to siphon off US$700 million from 1MDB.It also alleged that Low had engineered the joint-venture between both companies, which resulted in 1MDB repaying a loan to PetroSaudi. But the funds allegedly went to a company controlled by Low, called Good Star Limited.

Low, PetroSaudi and 1MDB have since publically denied they had committed any wrongdoing, while the Cabinet on March 4 cleared 1MDB, saying the allegations only concerned external parties and not the government’s strategic investment vehicle.

However, after much pressure, Prime Minister Datuk Seri Najib Razak said that the Auditor-General will be directed to conduct an independent audit of 1MDB’s accounts. The report will then be passed to the parliamentary Public Accounts Committee, the police and the Malaysian Anti-Corruption Commission for any further action.

Najib has vowed action against any wrongdoing if found.

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