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.

http://www.themalaysianinsider.com/malaysia/article/centralised-power-weak-institutions-allowed-1mdb-to-happen-says-sarawak-rep#sthash.Bl7F0DCm.dpuf

 

1MDB : Mr Prime Minister, where is Your Moral Compass?


March 9, 2015

1MDB : Mr Prime Minister, where is Your Moral Compass?

by By R B Bhattacharjee / The Edge Malaysia

To give life to the Malaysian Dream, therefore, we first need to find our moral compass.

THE situation is as absurd as it can get. Last Wednesday, the Prime Minister’s Office issued a statement that the “Cabinet expressed confidence that no wrongdoing has been committed within 1MDB” after a two-hour briefing by the Finance Ministry-owned investment company 1Malaysia Development Bhd (1MDB) and its auditor Deloitte concerning recent developments involving the fund.

That statement has zero value, to put it mildly, because it merely confirms that the internal checks and balances function that the Cabinet should play in overseeing government affairs is conspicuously absent at this point in time.

najib-tun-razak-565x375Still clinging shamelessly to his job

Without going into the details of the 1MDB fiasco, it is evident that the troubles at the investment fund have become the subject of international financial and media attention. Therefore, any official scrutiny of the debt-laden government company must meet the minimum standards of accountability and transparency for it to carry weight, and especially to avoid any imputations that problems that should concern the public may be whitewashed by such an enquiry.

Specifically, the investigation must be independent and free of possible conflict of interests in order that the credibility of the probe would not be diminished by questions about vested interests, bias and such flaws.

In a word, the Cabinet should disqualify itself from clearing 1MDB’s affairs simply because its members are beholden to the Prime Minister for their tenure in his administration, and also because, as the Finance Minister, he is concurrently the chairman of the 1MDB advisory committee. There is a potential conflict of interests.

So, what the PMO statement has “achieved” is to put the credibility of the Cabinet — as a meaningful forum for government leaders to represent the people’s interests in steering the country’s administration — at stake.

It is important to recognise that the failure of the Cabinet to exercise its public duty by recommending, for example, that an independent enquiry be launched into the full operations of 1MDB stems from a paralysis of ethical thinking.

Paul LowMr Low is gone missing

It is equally vital to acknowledge that by all accounts, virtually the entire national environment is suffering because of our collective failure as a society, in our personal capacities, and also in the public and private positions of responsibility that many of us may hold, to do what is right in the face of violations of justice, human dignity and fair play that are taking place in our midst. Today, it is evident that at one level, in almost all the gravest problems facing the country, we have failed to find our moral bearings as a society.

In the case of the Cabinet’s decision on 1MDB, it allowed the members of Datuk Seri Najib Razak’s Administration to turn a blind eye to the host of irregularities that have been reported concerning the fund, since long, long before the investigative news site Sarawak Report dumped on the unsuspecting public its hoard of amazing communications among the principal actors in the fund’s dealings.

The questions that rise to the surface about 1MDB are really quite basic: Who is responsible for ensuring that the fund’s operations are in line with its stated objectives? Why was the fund allowed to become so highly leveraged that it has suffered a cash flow crisis? Has the fund become a liability to the country’s economy? It is possible to carry on in this vein for quite a while.

What should happen next in a venture like 1MDB that utilises public funds is that a circuit breaker must be activated to prevent possible collateral damage to not just the economy but also governing institutions that may prove to be ineffective against such runaway vehicles that receive official protection. Moreover, when the costs of such publicly funded misadventures are tallied, often the price includes cuts made to social safety net programmes to make up for gaping holes in the exchequer.

What Malaysia needs today to awaken to the possibilities of a new dawn in the country’s democratic development is firstly a capacity for critical self-examination. We sorely need this quality to discover the failings in our own responses to the challenges and shortcomings of the Malaysian development story.

This no doubt requires much courage because we must be able to bear the critical public scrutiny of our fellow citizens when we lay bare our own weaknesses and failures in our search for a better tomorrow.

Such courage comes from a deep conviction about the importance of building our lives and our society on the foundations of truthfulness, justice, equality and similar noble values that form the core of all universal value systems.

 Once we are convinced about these values, it tends to become transformed into a desire to act in ways that allow such attributes to be manifested in our everyday lives.

Given this foundation, there is little room for doubt about what stand to take on issues that come to our attention at any given time — whether in a Cabinet meeting or when confronted with the paradoxes of life in our multicultural society.To give life to the Malaysian Dream, therefore, we first need to find our moral compass.

R B Bhattacharjee is associate editor at The Edge

This article first appeared in Forum, The Edge Malaysia Weekly, on March 9 – 15, 2015.

1MDB–Need for an Independent Forensic Audit


March 9, 2015

COMMENT: The 1MDB plot thickens and the Malaysian public is being given both fact and fiction. I  am for one  confused. At the end of the day, as it has been in the past, we are exhausted and become frustrated with promises from the Prime Minister that he would leave no stones unturned. He has since ordered the Auditor-General to take action.

auditor-general-malaysia.682997529It may be recalled that the Auditor-General, who claims the late Tan Sri Ahmad Nordin as his role model, had has previously said that there was no need for his department to audit 1MDB since the financial statements and activities have been audited by an  international firm of accountants.

Read this by AH Manaf: 

http://www.themalaysianinsider.com/sideviews/article/why-skip-1mdb-a-letter-to-the-auditor-general-ah-manaf.

With this frame of mind, will the Auditor-General be able to do so without political interference?

I would like to quote here what Frankly Speaking in Edge Malaysia wrote in the March 9–March 15 issue:

Last week, Prime Minister Datuk Seri Najib Razak issues at a statement saying has instructed the Auditor-General (AG) to “independently verify (1Malaysia Development Berhad (1MDB)’s accounts.” When completed, the AG’s report will be passed to the Public Accounts Committee for transparent inspection…

To do this once and for all, the AG should conduct a forensic audit on 1MDB accounts. Also, the outcome of the audit should be released for public viewing.

The forensic audit should go back to 1MDB’s first business venture in 2009- a joint venture (JV) with PetroSaudi Holdings (Cayman) Ltd. 1MDB pumped US1 billion into the JV, of which US700 million was immediately used to settle a debt owed by the newly formed JV.

…The forensic audit must address the following: What happened to the JV with PetroSaudi? Why couldn’t 1MDB repay the RM2 billion loan on time? Has it overpaid for its power assets? How else to explain the mismatch between its cash flow and debts?. Is 1MDB fit to remain fit to remain an ongoing entity?

I endorse the views expressed above. 1MDB has become a national problem and requires urgent action. All available financial expertise should be utilized to get to the bottom of it. More importantly, we should learn from 1MDB about how not to do business and ensure that investment and financing decisions are made with due diligence.

Money invested must produce returns with commensurate risk. It must be clear to all managers that they cannot mix politics with business and must always protect direct and indirect stakeholders in their dealings. There is a message to bankers too. They should know that they are lending depositors’ money, not their own. It is, therefore, important that they exercise prudence and be guided  by established guidelines from Bank Negara when they on lend the money to finance “development”. 

Najib as 1MDB advisorAs the Prime Minister has eloquently said with regard to 1MDB audit, “if any wrongdoing is proved, the law will be enforced without exception”. So can we expect some heads will roll on grounds of accountability? – Din Merican

Jho Low Claimed The “PM/ FM” Gave Approval To Keep Bank Negara In The Dark On 1MDB Loan

http://www.sarawakreport.org/2015/03/jho-low-claimed-the-pm-fm-gave-authority-to-keep-bank-negara-in-the-dark-on-1mdb-loan/

The lawyers for Jho Low, the London firm Schillings have now finally issued a statement on behalf of the tycoon, in response to questions from the news agency AFP.

The widely reported response acknowledges that Low was “consulted” on the PetroSaudi joint venture deal with Malaysia’s 1MDB development fund, “but has never been involved in criminal acts with respect to this transaction”.

This latest statement contrasts with earlier claims by Jho Low’s spokespeople Edlemen in New York, who announced last year on his behalf:

“Mr. Low has never held any position in 1MDB or in the Malaysian government. Mr. Low was appointed as one of the many advisors invited by the stakeholders of Terengganu Investment Authority (TIA) to provide advice from Jan 2009 to mid-May 2009 given his market-based knowledge. Mr. Low has not been involved in TIA since mid-May 2009.[Statement by Low’s PR company Edleman in May]

The PetroSaudi joint venture deal took place between September 8th and September 29th of 2009.

Patrick Mahony - sought "letters of comfort"

Crucially, Low repeatedly informed PetroSaudi Director Patrick Mahony, who was anxious for confirmation that the Central Bank had indeed authorised the loan, that this was not needed because only:

” Mof approval is required for the loan which we have signed by pm who is also FM”

No need to tell the bank we have Ministry of Finance Approval and FM (also PM) has signed...

It also appears to confirm that Jho Low was acting as the interface between the Prime Minister/ Finance Minister on such matters with PetroSaudi.

Of even more concern is an apparent decision by Jho Low together with the “FM who is also PM” to leave the Bank Negara in the dark about the loan.  This was despite the anxious and repeated requests by PetroSaudi’s own lawyers for a “letter of comfort” to confirm that the bank had given its approval, which they insisted was legally required.

As PetroSaudi boss Patrick Mahony put it to Low in the course of the correspondence:

“I know you know my guys are freaking out”

Yet, Low continued to insist that because the loan was “off-shore to off-shore” there was no need to declare the transaction to the bank and the legal advisors could be ignored.  As he put it “Bank Negara consent not required”:

JL: Bank Negara consent not required.
JL: As its foreign borrowings.
JL: So we arw sending offshore to offshore.
JL: Or else we’ll have unnecessary delays.
Patrick: According to your lawyers it is.
JL: Take it out pls.
Patrick: We had it last time.
Patrick: We need comfort we are getting this money in an approved manner.
JL: Last time local borrowings.
JL: This is foreign.
JL: Just don’t want bnm [Bank Negara Malaysia] to delay it.

Experts linked to Bank Negara have confirmed to Sarawak Report that this is not the case and that because a loan was involved, which 1MDB a public body was ultimately responsible for, the bank should have been informed.

Jho Low was wrong.

How half a billion dollar loan was fixed via BBM 

These revealing exchanges between Mahony and Jho Low took place through Blackberry messenger between Wednesday 21st July and Tuesday 27th July 2010, according to Mahony.

Kept in the loop, PetroSaudi's Tarek Obaid - but how about 1MDB's own chiefs?

He then sent the entire transcript by email to his fellow Director Tarek Obaid to put him in the picture about the situation.It places the conversations in the days running up to a planned loan deal to PetroSaudi of USD$500 million dated 26th July 2010.

Mahony refers to “Monday” as the date decided, which was indeed the 26th and corresponds to papers acquired by Sarawak Report, which relate to a USD$500 million Murabaha loan agreement between 1MDB and PetroSaudi, dated on that day.

From: Patrick Mahony
To: Tarek Obaid
Date: Tue, 27 Jul 2010 14:11:33 +0200
Subject: Bbm transcript

This is my conversation with jho – it is between last wednesday and today…

Participants:

Patrick, JL

Messages:

———

Show email

Another key aspect of this significant exchange is the casual acknowledgement by Jho Low that responsibility and liability for the loan would lie with 1MDB:

JL: Just insert “any required regulatory approvals” so its
mdb’s [1MDB’s] liability n responsibility
JL: That covers all rather than specific bnm [Bank Negara Malaysia]

But, yet again 1MDB appears barely to be engaged in this negotiation.

Nik Faisal Ariff Kamil, UBG's man in 1MDB As with the previous joint venture loan agreement the preceding year, the executives of 1MDB seem to be virtual by-standers in the affair, with the UBG bank place-man, Nik Faisal receiving documents from PetroSaudi as agreed with Jho Low.

In the event, it appears that because of Mahony’s protests the original loan plan may have indeed eventually have been reported to the Bank Negara, an outcome which was described by Jho Low as “worst case”.

Low confirms that he had already got Ministry of Finance and 1MDB Board approval for the loan, but because Mahony had flagged up the issue over getting Bank Negara approval as well he might have to fly to KL to sit down with the lawyers and work things out, a worst case scenario.

It begs the question as to why the Minister of Finance and Board had signed without checking the matter with the Central Bank, since this was required?

The entire exchange once again destroys any suggestions that Jho Low was merely engaged in a distant consultative role when it came to the negotiations between PetroSaudi and 1MDB.

USD$160 million went to Jho Low’s company

Jho Low’s interest in the loan deal was plain to see from the documents that eventually covered the distribution of the money.

As Sarawak Report has previously demonstrated $160 million out of the $500 million loan was sent to the RBS Coutts Zurich account of the company Good Star, which was controlled by the tycoon.

The remaining $340 million went to the PetroSaudi operating account held by JP Morgan in Geneva.

Whether there were two identical loans that went through on July 23rd and then September 8th, or whether the Central Bank was indeed informed, resulting in the “worst case scenario” envisaged by Low – a delay till September – is something that merits further research by the official Audit Office investigators, who are now being tasked with examining what happened at 1MDB.

Given the close links to the UBG bank buy out by many of the players in these 1MDB loan negotiations, it is worth noting that PetroSaudi’s offer for UBG was announced in January 2010, but that the buy out was not completed until September 29th.

Meanwhile, a USD$500 million transfer was made to PetroSaudi from 1MDB on September 8th. Then, on September 16th, Tarek Obaid, as Director of PetroSaudi International (Seychelles), paid USD$260 million into its subsidiary Jarvace Sdn Bhd, which bought UBG.

Capital transfer to Jarvace Sdn Bhd just days before

Yachts in the South of France

The revelations about Jho Low’s role in these dealings, while actively a Director on the UBG board, throws inevitable scrutiny onto his personal relationship with the Prime Minister/Finance Minister/ Chairman of the Board of Advisors of 1MDB.

Jho Low, far from acting as a mere advisor, was clearly heavily involved in the deal and in directing it with the avowed support of the Malaysian Prime Minister.

Altogether, Rosmah, Taib, Raziah & Robert Geneid at Monaco, after enjoying a stint on the PetroSaudi hired Tatoosh Summer 2010

His close relations with the PM and his family can not be in doubt over this entire period and this socialising also connected closely with the Taib family, the majority owners of UBG.

Two weeks beforehand Jho Low was living it up in St Tropez with Paris Hilton. Newspapers in New York had registered Jho Low when he first started splashing money in October 2009 straight after the PSI joint venture was signed.

In the August of 2010, in the middle of these transactions, the Prime Minister and his wife were the honoured guests in Monaco of Prince Albert.Here Rosmah played sponsor to the first of a series of Islamic Fashion Shows, designed to raise money for the Prince’s Environment Foundation.

The Taibs, the Geneids, the Hii family and Rosmah and Najib joined Prince Albert’s entourage at the extravagant fashion event after having reportedly spent time on Jho Low’s hired yacht off the South of France.

The Tatoosh was rented just before the event by PetroSaudi to entertain Malaysian friend in the South of France

Rosmah then presented a $100,000 cheque to Prince Albert’s Foundation, which Sarawak Report has already reported was in fact funded by the Sarawak timber tycoons, the Hii family, who are cronies of the one of the world’s worst destroyers of the environment, Taib Mahmud.

Low is believed to have told his guests that the yacht (which rents out at around half a million dollars a week) belonged to the owner of PetroSauid, Prince Turki bin Abdullah, the son of the King of Saudi Arabia.

Earlier, in late 2009, there had clearly been another such gathering in the South of France. According to the correspondence,  Jho Low contacted the PM’s office for photographs:

From: Low Jho
To: wanshihab@gmail.com, Tarek Al-Obaid
Date: Sun, 27 Dec 2009 03:29:32 +0000
Subject: Re: Pictures from South of France (PM Najib & HRH Prince Turki)

Thanks so much Wan!

——Original Message——

From: wanshihab@gmail.com
To: jho.low@gmail.com
To: Tarek Al-Obaid
ReplyTo: wanshihab@gmail.com
Subject: Re: Pictures from South of France (PM Najib & HRH Prince Turki)
Sent: Dec 26, 2009 11:25 PM

Dear Jho and Mr. Tarek Al Obeid,

It would be a pleasure to email you  the photos of HRH. Unfortunately I am away with the Prime Minister at the moment whereas the photos are back in Malaysia and is not immediately accessible. I will send it through as soon as I return. Hope that’s alright.

May I take this opportunity to extend to you the season’s greetings and wish you a Happy New Year.

Warmest regards,

Wan

——Original Message——

From: Low, Jho
To: wanshihab@gmail.com
Cc: Tarek Al-Obaid
ReplyTo: jho.low@gmail.com
Subject: Pictures from South of France (PM Najib & HRH Prince Turki)
Sent: Dec 27, 2009 9:08 AM

Dear Mr. Wan Shihab,

Would you pls kindly email the pictures you have of The Hon PM Mohd Najib Razak with HRH Prince Turki Al-Saud and Sheikh Tarek Obaid asap? They wld like it strictly for their private records. I have cced Tarek on this email so you can email him and cc me asap.

Thanks.

This may have been a private meeting, but it appears to have related to matters of public interest.