Follow the Money


March 24, 2015

Follow the Money

by Tricia Yeoh@www.thesundaily.com

DG of Bank NegaraAT its annual report launch, Bank Negara Deputy Governor gave a relatively healthy assessment of the country’s economy. So glowing was the report, however, that several members of the audience felt compelled to ask his opinion of 1MDB, the proverbial elephant in the room.

He essentially responded by saying that “sovereigns” (meaning government-backed entities) are not monitored as closely as are “corporates” (meaning the private sector) in their respective issuance of bonds and similar financial instruments. This is presumably because a bond or debt obligation issued by a government authority is usually assumed as low-risk, given that they are backed by the taxing power of the said government.

What Bank Negara said was essentially correct, since its responsibility is limited to ensuring the stability of the Banking Sector. As long as 1MDB – which is a government entity, given it is wholly owned by the Finance Ministry – is able to pay back loans owed to local banks (like Maybank and RHB), then the Banking Sector is safe. But ay, there’s the rub.

As at March 2014, 1MDB’s accounts showed a whopping debt of RM41.9 billion. (Which is, by the way, just short of the entire 2015 budgetary allocation to the country’s development, totaling RM50.5 billion. It is also eight times more than what is allocated to safety and security in 2015, totalling RM4.9 billion).

Ultimately, if it is unable to pay off its multiple loans owed both locally and abroad, does it not mean that the government would have to cough up the sum? And this is already happening as events continue to unfold on a daily basis.

Most recently, Putrajaya confirmed RM950 million was given as a standby credit for 1MDB, which is basically when a fixed amount of credit is made available to the borrower as and when required for a given period of time. These are monies that could have been put to better use, surely.

Tengku Razaleigh HamzahWorse, frustration with the powers that be will surely grow if the additional RM5.6 billion revenues collected from the Goods and Services Tax (GST) that is about to be implemented are shown to be used for such unpalatable purposes. Just this week, former Finance Minister Tengku Razaleigh Hamzah said in Parliament that the people had the right to know if GST “benefited the country or (would be) used only to pay the interest to debtors and bondholders”.

In one of the many conversations I had recently on the “1MDB losses”, a friend reminded me of a joke that is hauntingly relevant. A woman invested RM100 into the bank, expecting her funds to be safe and secure. Upon finding out the money was gone, she screamed hysterically to the bank officer, “You’ve lost my money!” to which he politely replied, “Your money is not lost, ma’am. It’s just somewhere else.” Likewise, the question we ought to be asking ourselves is: Where did the money go?

That is something the Auditor-General’s office will have to answer as they dutifully scrutinise the accounts of the much talked-about entity over the next few weeks.

Even if some of these funds can be restored, the concern still remains: How should government finances remain sustainable over a long-term period? IDEAS, in a policy paper released this week makes some suggestions, pertaining to an existing but very little-heard of national trust fund called the Kumpulan Wang Amanah Negara (or KWAN).

The KWAN was set up in 1988 with the original intention of saving for the future, especially from our depleting national resources. However, its total wealth for all of its 26 years of existence comes up to only RM9 billion. This is a relatively meagre amount when compared with the Norwegian Global Pension Fund, which has more than double that amount despite having started later than the Malaysian KWAN. In fact, it only represents 1.5% of the total petroleum revenue accumulated over the last 26 years.

Although our dependence on the oil and gas sector has fallen slightly over the last few years, its revenues still contribute some one-third to our overall national income. Credit is due to the non-resource sectors (manufacturing and services), given their continual growth as a proportion of total GDP, which is encouraging.

But given the spendthrift tendencies of our government of late (our operational expenditure expanded on average 11% annually from 1971 to present, and more alarmingly by more than 20% in 2011), it is important to strengthen existing infrastructure.

For instance, we propose that the KWAN governance mechanism needs to be made much more robust in the way the fund is managed, how deposits and withdrawals are regulated, and finally, how it is accountable to taxpayers.

Some of the key disciplines of a well-governed fund (as outlined by the Natural Resource Governance Institute and the Columbia Centre on Sustainable Interest) are that it should have clear and well-enforced objectives, fiscal rules, investment rules, division between the authority and various managers, and finally have regular and extensive disclosure to the public whilst ensuring independent oversight bodies exist.

Many of these governance mechanisms do not exist for the KWAN. For instance, the deposit and withdrawal rules are too general and need to be more quantifiably specific. Other oversight agencies ought to be brought in; currently only the Finance Ministry and Bank Negara are involved – parliamentary committees should also be included as an additional measure.

Finally, its reports should be publicly downloadable online and a website should be dedicated to publish all relevant details of the fund.

It is not just 1MDB or Pembinaan PFI or KWAN that must be examined closely; all other state-owned enterprises and funds (and there are many) ought to be monitored with a fine-tooth comb. The adage is true: it really is your and my money. As taxpayers, we should demand nothing less.

Tricia Yeoh is the Chief Operating Officer of a local, independent think-tank. Comments: letters@thesundaily.com

IMF fears emerging markets instability


March 18, 2015

IMF fears emerging markets instability

Largade

The Head of the International Monetary Fund (above) warned on Tuesday that emerging markets are set to face a renewed period of economic instability when US interest rates rise this year, forecasting a repeat of 2013’s damaging “taper tantrum” episode of capital flight and rapid currency depreciation.

The remarks by Christine Lagarde, given during a speech in India, come one day before Federal Reserve chairwoman Janet Yellen is expected to signal an end to the Fed’s policy of low-rates guidance on Wednesday, with global investors bracing for an initial rise in US rates as early as June.

The IMF chief said she feared that negative “spillover” effects from these increases would lead to a re-run of the crisis that hit developing economies such as India and Turkey nearly two years ago, following hints from then Fed chair Ben Bernanke about an early end to the institution’s bond purchasing programme known as quantitative easing.

“I am afraid this may not be a one-off episode,” Ms Lagarde said. “The timing of interest rate lift-off and the pace of subsequent rate increases can still surprise markets.”

Ms Lagarde spoke at an event in Mumbai alongside Reserve Bank of India governor Raghuram Rajan, who has warned repeatedly about the dangers to developing economies of ending loose monetary policy in America, Japan and other industrialised economies.

Developing economies have seen a surge in capital from the industrialised world over recent years, receiving $4.5tn of gross capital inflows between 2009 and 2012, according to IMF data, or half of all global capital flows during that period.

Ms Lagarde also warned that emerging economies faced a second risk from the recent strength of the US currency, with indebted companies that took advantage of low rates to borrow in dollars facing sudden and steep jumps in debt servicing costs.

India’s corporate sector, which is already dealing with concerns over corporate indebtedness and weak bank capitalisation, was “not immune to this vulnerability”, she said, noting that dollar denominated corporate debt had risen “very rapidly, nearly doubling in the last 5 years” to $120bn.

“The appreciation of the US dollar is also putting pressure on balance sheets of banks, firms, and households that borrow in dollars but have assets or earnings in other currencies,” she added.

Facing these twin threats, Ms Lagarde urged emerging market governments to enact economic reforms to raise growth, improve their current account positions and gradually liberalise financial markets.

The IMF head also called on emerging market central bank governors to prepare emergency measures to support under-pressure currencies and companies struggling with debt repayments.

“Temporary — though aggressive — domestic liquidity support to certain sectors or markets may be necessary, along with targeted foreign exchange interventions,” she said.

In December the Bank for International Settlements warned there was a risk of a potential repeat of the late-1990s emerging market crises because international banks had since 2008 increased cross-border lending into emerging economies.

By the middle of last year, according to the BIS, lending into emerging economies had risen to $3.1tn, most of it denominated in dollars.

http://www.ft.com/intl/cms/s/0/e14253ba-cc9d-11e4-b94f-00144feab7de.html?siteedition=intl#ixzz3UeZMKakI

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

 

PM Najib has too much power


March 16, 2015

PM Najib has too much power, says Kuala Terengganu Member of Parliament

by James Sivalingam@www.freemalaysiatoday.com

Kuala Terengganu MP Raja Kamarul Bahrin Shah Raja Ahmad has stressed that too much centralized authority of the executive branch under Prime Minister Najib Abdul Razak’s administration is the main reason for some of the problems faced by Malaysia today.

Raja Kamarul Bahnrin

At a press conference outside Dewan Rakyat, Raja Bahrin said, “In 2014, I called for Najib to relinquish his post as the Finance Minister as a lot of centralized authority was vested in him.

The Kuala Terengganu MP went on to point out that 1Malaysia Development Berhad (1MDB), the government-owned strategic investment company, and Penang businessman Jho Low did not even seek the approval of Bank Negara to transfer billions of ringgit out of the country to the Cayman Islands, as discovered by the Sarawak Report.

“It’s not healthy. It (the transaction) just got the approval from the ‘higher ups’, which usually means the Finance Ministry or the Prime Minister,” he said. “Malaysia ranks among the highest in illegal cash flow out of the country after China – RM 1 trillion in ten years. It’s a chronic disease of the nation that has to be rectified, not perpetuated.”

The recent cabinet’s hesitation to approve a RM3 billion cash injection for 1MDB, Raja Bahrin feels is an indication that other ministers are also worried about 1MDB. “That was an unofficial vote of no-confidence of the Prime Minister by the cabinet ministers.”

Raja Bahrin also highlighted the openly lavish lifestyle of the first family, while the people have to deal with rising cost of living, oil, food and housing. “The Prime Minister himself, his wife and his step son seemed so closely associated with the production of big budget Hollywood films that cost USD 100 million each, buying luxury homes in the United States as well as having a stand out social profile abroad.”

Raja Bahrin, lamented that on the contrary, local fisherman are the worst hit with poverty as there is no political will to look after their welfare.

He said, “The fishermen in Kuala Kemaman, the oil and gas center of Malaysia only had RM 14 increase in wage in ten years – from RM 400 to RM 414. “Their catch is dwindling, and hence their income. Ministers promised to cancel licences to foreign boats a while back but have to still act on it.”

Back in 1997 the same ministry cancelled hundreds of licenses only to award them to a company owned by a prominent corporate figure, that further affected the income of the fishermen as it created a monopoly. “It’s obvious that cancellation of licenses can be done. It has been done before, why not now? “Where is the political will?” asked Raja Bahrin.

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