NY Times Book Review: Looking Back@Crash of 2008


August 11, 2018

CRASHED

By Dr. Fareed Zakaria

How a Decade of Financial Crises Changed the World
By Adam Tooze
706 pp. Viking. $35.

Steve Bannon can date the start of the Trump “revolution.” When I interviewed him for CNN in May, in Rome, he explained that the origins of Trump’s victory could be found 10 years ago, in the financial crisis of 2008.

“The implosion of those world capital markets has never really been sorted out,” he told me. “The fuse that was lit then that eventually brought the Trump revolution is the same thing that’s happened here in Italy.” (Italy had just held elections in which populist forces had won 50 percent of the vote.)

Adam Tooze would likely agree. An economic historian at Columbia University, he has written a detailed account of the financial shocks and their aftereffects, which, his subtitle asserts, “changed the world.”

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If journalism is the first rough draft of history, Tooze’s book is the second draft. A distinguished scholar with a deep grasp of financial markets, Tooze knows that it is a challenge to gain perspective on events when they have not yet played out. He points out that a 10-year-old history of the crash of 1929 would have been written in 1939, when most of its consequences were ongoing and unresolved. But still he has persisted and produced an intelligent explanation of the mechanisms that produced the crisis and the response to it. We continue to live with the consequences of both today.

CreditTyler Comrie; Photograph courtesy of GSO/Getty Images

As is often the case with financial crashes, markets and experts alike turned out to have been focused on the wrong things, blind to the true problem that was metastasizing. By 2007, many were warning about a dangerous fragility in the system. But they worried about America’s gargantuan government deficits and debt — which had exploded as a result of the Bush administration’s tax cuts and increased spending after 9/11. It was an understandable focus. The previous decade had been littered with collapses when a country borrowed too much and its creditors finally lost faith in it — from Mexico in 1994 to Thailand, Malaysia and South Korea in 1997 to Russia in 1998. In particular, many fretted about the identity of America’s chief foreign creditor — the government of China.

Yet it was not a Chinese sell-off of American debt that triggered the crash, but rather, as Tooze writes, a problem “fully native to Western capitalism — a meltdown on Wall Street driven by toxic securitized subprime mortgages.”Tooze calls it a problem in “Western capitalism” intentionally. It was not just an American problem. When it began, many saw it as such and dumped the blame on Washington.

In September 2008, as Wall Street burned, the German Finance Minister Peer Steinbruck explained that the collapse was centered in the United States because of America’s “simplistic” and “dangerous” laissez-faire approach. Italy’s finance minister assured the world that its banking system was stable because “it did not speak English.”

 

In fact this was nonsense. One of the great strengths of Tooze’s book is to demonstrate the deeply intertwined nature of the European and American financial systems. In 2006, European banks generated a third of America’s riskiest privately issued mortgage-backed securities. By 2007, two-thirds of commercial paper issued was sponsored by a European financial entity.

The enormous expansion of the global financial system had largely been a trans-Atlantic project, with European banks jumping in as eagerly and greedily to find new sources of profit as American banks. European regulators were as blind to the mounting problems as their American counterparts, which led to problems on a similar scale. “Between 2001 and 2006,” Tooze writes, “Greece, Finland, Sweden, Belgium, Denmark, the U.K., France, Ireland and Spain all experienced real estate booms more severe than those that energized the United States.”

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Credit Sonny Figueroa/The New York Times

 

But while the crisis may have been caused in both America and Europe, it was solved largely by Washington. Partly, this reflected the post-Cold War financial system, in which the dollar had become the hyper-dominant global currency and, as a result, the Federal Reserve had truly become the world’s central bank. But Tooze also convincingly shows that the European Central Bank mismanaged things from the start.

The Fed acted aggressively and also in highly ingenious ways, becoming a guarantor of last resort to the battered balance sheets of American but also European banks. About half the liquidity support the Fed provided during the crisis went to European banks, Tooze observes.

Before the rescue and even in its early stages, the global economy was falling into a bottomless abyss. In the first months after the panic on Wall Street, world trade and industrial production fell at least as fast as they did during the first months of the Great Depression. Global capital flows declined by a staggering 90 percent. The Federal Reserve, with some assistance from other central banks, arrested this decline. The Obama fiscal stimulus also helped to break the fall.

 

Tooze points out that almost all serious analyses of the stimulus conclude that it played a significant positive role. In fact, most experts believe it ended much too soon. He also points out that large parts of the so-called Obama stimulus were the result of automatic government spending, like unemployment insurance, that would have happened no matter who was president. And finally, he notes that China, with its own gigantic stimulus, created an oasis of growth in an otherwise stagnant global economy.

The rescue worked better than almost anyone imagined. It is worth recalling that none of the dangers confidently prophesied by legions of critics took place. There was no run on the dollar or American treasuries, no hyperinflation, no double-dip recession, no China crash.

American banks stabilized and in fact prospered, households began saving again, growth returned slowly but surely. The governing elite did not anticipate the crisis — as few elites have over hundreds of years of capitalism. But once it happened, many of them — particularly in America — acted quickly and intelligently, and as a result another Great Depression was averted. The system worked, as Daniel Drezner notes in his own book of that title.

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A trader on the floor of the New York Stock Exchange in February 2009. CreditJames Estrin/The New York Times

 

But therein lies the unique feature of the crash of 2008. Unlike that of 1929, it was not followed by a Great Depression. It was not so much the crisis as the rescue and its economic, political and social consequences that mattered most. On the left, the entire episode discredited the market-friendly policies of Tony Blair, Bill Clinton and Gerhard Schroeder, disheartening the center-left and emboldening those who want more government intervention in the economy in all kinds of ways. On the right, it became a rallying cry against bailouts and the Fed, buoying an imaginary free-market alternative to government intervention.

Unlike in the 1930s, when the libertarian strategy was tried and only deepened the Depression, in the last 10 years it has been possible for the right to argue against the bailouts, secure in the knowledge that their proposed policies will never actually be implemented.

Bannon is right. The crash brought together many forces that were around anyway — stagnant wages, widening inequality, anger about immigration and, above all, a deep distrust of elites and government — and supercharged them. The result has been a wave of nationalism, protectionism and populism in the West today. A confirmation of this can be found in the one major Western country that did not have a financial crisis and has little populism in its wake — Canada.

The facts remain: No government handled the crisis better than that of the United States, which acted in a surprisingly bipartisan fashion in late 2008 and almost seamlessly coordinated policy between the outgoing Bush and incoming Obama administrations. And yet, the backlash to the bailouts has produced the most consequential result in the United States.

Tooze notes in his concluding chapter that experts are considering the new vulnerabilities of a global economy with many new participants, especially the behemoth in Beijing. But instead of a challenge from an emerging China that began its rise outside the economic and political system, we are confronting a quite different problem — an erratic, unpredictable United States led by a president who seems inclined to redo or even scrap the basic architecture of the system that America has painstakingly built since 1945.

How will the world handle this unexpected development? What will be its outcome? This is the current crisis that we will live through and that historians will soon analyze.

Dr. Fareed Zakaria is a CNN anchor, a Washington Post columnist and the author of “The Post American World.”

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A version of this article appears in print on , on Page 1 of the Sunday Book Review with the headline: The Aftershocks.

Jho Low’s Super Yacht –Equanimity– Back in Malaysia


August 7, 2018

Jho Low’s Super Yacht –Equanimity– Back in Malaysia

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https://www.asiasentinel.com/politics/low-taek-jho-yacht-malaysia/

The US$250-million super-yacht Equanimity, which led international authorities on a high-seas chase across half the world before it was seized by Indonesian authorities in February, is expected to be turned over to Malaysia at Port Klang’s Boustead Cruise Center, according to authorities.

Equanimity, launched in 2013 in a Netherlands shipyard, was the brainchild of the youthful financier Low Taek Jho, who at age 28 helped former Malaysian Prime Minister Najib Razak turn an obscure investment fund into 1Malaysia Development Bhd., which became the biggest scandal in Malaysian history, with US$4.5 billion missing to scandal and billions more lost to epic mismanagement.

Najib is now free on bail facing corruption charges, maintaining his innocence, although he is barred from leaving the country. The cherubic Jho Low, as the Penang-born Wharton grad was known in his playboy days, is nowhere to be found. He is listed on Wikipedia as having a fortune estimated at US$1.5 billion.

Jho Low’s lawyer, James F. Haggerty, said in a prepared release that the seizure of the vessel was “a violation of an Indonesian law and court decision by a politically motivated Malaysian government bent on advancing its own political agenda with little regard to existing court rulings or basic legal rights.”

Equanimity, Haggerty said, is owned by Equanimity (Cayman) Ltd and the company was already litigating the matter in Indonesia and the United States. In April, a US judge ruled the yacht could be transported to the US and into the Justice Department’s custody. However, that ruling has never been carried out.

“Mahathir has chosen to bring the asset illegally into a rigged Malaysian system manipulated by a man who only cares about his absolute political rule. It is ultimately justice that suffers,” the statement said.

Finance Minister Lim Guan Eng, the head of the Democratic Action Party, said the vessel would be auctioned off.

News reports in July had Jho Low fleeing Macau, which has been a bolt-hole on several occasions, for China in front of a series of search warrants issued across the planet over his part in the 1MDB scandal.  Malaysian police on July 9 said Macau authorities informed them by email that Low had left the gaming enclave.

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Najib Razak and his cell mate, Jho Low

“The e-mail did not specify when Low left Macau,” Malaysian National Police Chief Mohamad Fuzi Harun told reporters on July 11. “It is hard to trace him as he is believed to be using multiple passports.”

The US Justice Department, which called 1MDB the biggest kleptocracy case in the agency’s history, had been trying to find the yacht since 2016 to add it to the vast list of confiscations it had made in the United States of goodies bought with stolen 1MDB money. Equanimity’s crew turned off the transponders which would allow it to beam its position to satellites and sought waters where G-men couldn’t go, turning up sometimes in New Zealand, sometimes in Macau, sometimes off Korea.

But eventually it turned up in Bali, where the US alerted Indonesian authorities. Jakarta’s notoriously corrupt South District Court blocked the Justice Department’s move to seize the vessel, raising concerns that it might take to the high seas again.

But when the United Malays National Organization and Najib lost the May 9 general election, the game was up. Prime Minister Mahathir Mohamad announced on August 6 in a Facebook post that that “we are happy since the Equanimity yacht has been handed over to us by Indonesia.”

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Miranda Kerr–One of Jho Low’s Playmates

The 90-meter yacht is said in yachting magazines to feature a deck-level Jacuzzi, a sauna, helicopter pad, swimming pool, beach club, beauty salon, zero-speed stabilizers, gym, spa, elevator, movie theatre, tender garage, swimming platform, air conditioning, steam room, Turkish bath, beauty room, underwater lights and owner’s stateroom study, sleeps 26.  Registered in the Cayman Islands, it was at the center of a truly astonishing burst of excess by Jho Low, his Arab Gulf buddies and the Najib family that raised questions how they ever thought they would get away with it.

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The fund got underway in 2008. A couple of years later, Jho Low turned up in New York, buying magnums of Cristal Champagne and pouring it over the likes of Paris Hilton and other blondes. He buddied up with singer Lionel Ritchie and, with Arab friends who turned out to be heavily involved in fleecing 1MDB, staged a moveable feast across Broadway, making the notorious Page 6 of the New York Post, where celebrities go to be photographed.

Vast collections of jewelry, homes in New York and Beverly Hills, airplanes, paintings, a staggering panoply of loot has been sequestered by the US government, including the proceeds from two movies by the production company set up by Riza Aziz, the son by a previous marriage of Rosmah Mansor, Najib’s wife.

Although Malaysia authorities confiscated an astonishing US$193-233 million in jewelry, watches, handbags and other valuables from the Najib family’s homes, as much as RMB100 billion (US$24.8 billion) of funds linked to Najib and his wife, Rosmah are stashed in bank accounts outside Malaysia, according to a source quoted by Sarawak Report, which said much of that money is believed to be in Hong Kong bank accounts, after having travelled through German and Swiss banks.

That leaves the question of what’s become of Jho Low himself. It’s hard to believe Chinese authorities will have much patience with him.

Mahathir thanked Indonesian President Joko Widodo for his cooperation in returning the vessel.  Mahathir visited Jakarta in June.  Ties between Malaysia and Indonesia are close with Mahathir visiting Jakarta in June, his first official tour of the region.

FELDA–Tun Razak’s Legacy– is the Next 1MDB


July 9, 2018

FELDA–Tun Razak’s Legacy– is the Next 1MDB

by Dr. M Bakri Musa, Morgan-Hill, California, USA

FELDA (Federal Land Development Authority), the massive plantation development scheme that was Tun Razak’s brainchild and crown jewel of his rural development program, threatens to rival the massive scandal of 1MDB in terms of corruption, grand larceny, and inept management.

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IMD/IMEDE-Educated Laundromat Entrepreneur, Shahril Samad

Its new head (now former, with UMNO’s rout in the May 2018 elections), one Shahril Samad, admitted that title to the prime property on which its head office is sited was transferred to a developer without his or his agency’s knowledge! This character claims to have an MBA (from IMD/IMEDE–Switzerland) but his private venture up till then was to run a laundromat. He, in turn, had replaced the scandal-ridden Isa Samad (no relation) who earlier was found guilty by UMNO for “money politics.”

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FELDA Chairman, Isa Samad

FELDA is now a large, diversified agro-based GLC having morphed from its origin as a modest federal agency. It boasts revenues (2017 figures) in excess of RM17 billion. The profit picture, however, is another story and best reflected by its stock price which languishes at about a third of its initial offering price. When FELDA was listed in 2012 as FGV (FELDA Global Ventures), it was the largest in Asia and globally second only to Facebook.

Visit FELDA’s settlements today and compare them to the 1960s or 70s. Nothing much have changed. The settlers’ standard of living has not improved. If there is any economic enterprise on those settlements, they would be under the control of FGV. The social and economic dynamics of those settlements resemble the old company town, except that the company here, FGV, is not in the least benevolent.

There is one significant change which the settlers are not even aware of, or if they are, not appreciate the full financial and other ramifications. Whereas before they had title to their land (about 16 acres each), today that has been subordinated to FGV as part of the IPO. When FGV shares tumbled, those settlers’ assets went with it.

Those settlers as well as FELDA managers do not understand such sophisticated financial instruments as dividends, stock offerings, and capital gains. FGV should have emulated Nestlé and invested in its settlers and not be enthralled with pseudo high finance. FELDA is uniquely positioned to execute that as its leaders and managers are Malays, as are the settlers. As such there would be no cultural barriers in appreciating their problems, unlike Nestlé’s European managers had with their African growers.

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FELDA has done little to stimulate entrepreneurial activities among its settlers. It has not encouraged them through funding or training to be FELDA’s vendors, suppliers, or subcontractors, nothing beyond harvesting the palm nuts and tapping their rubber trees.

I would have expected that with the huge profits FELDA often brags about, the schools and clinics in its settlements would be among the best so as to give those settlers’ children a flying head start, as those of Nestle’s African cocoa growers. Instead FELDA schools perform below average. Regrettable considering that the mission of these GLCs is “national development foundation,” in particular that of Bumiputras.

FELDA has only recently set up a residential school exclusively for the children of its workers. Over half a century later, and only one school! FELDA brags ad nauseum about the few successful “AnakFELDA” (children of FELDA). They are outliers, not the consequence of enlightened policies.

As for the settlements, few have electricity or piped water, much less a clinic. Again, compare that to what Nestlé is doing to those African cocoa growers. Those Malay managers and executives at FELDA ought to be ashamed of themselves and their lousy performances!

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FELDA has introduced little innovation to make the settlers’ lives and work more bearable and less dangerous. Oil palm is harvested in the same old, crude, and dangerous manual ways as it was in the 1960s. FELDA have not introduced hydraulic lifts (like the ones telephone repairmen use to fix overhead lines) to make the harvesting of palm nuts more efficient. Those workers still use pitchforks and bare hands to collect those nuts. Not only do the pitchforks damage the nuts, their sharp shells often scrape the workers’ hands giving rise to painful tumor-like growths (granulomas). Those chores are archaic and literally backbreaking; they should have been mechanized.

Only through such innovations could you increase your workers’ productivity, not endlessly exhorting “work harder!” or “be more efficient!”

FGV is the largest employer of unskilled laborers, meaning, illegal immigrants. Instead of investing in the skills and productivity its workers, as well as modernizing its plantations to be less dependent on unskilled workers, FGV took the easy way out by importing them and with all the attendant social problems.

There is also little research done on maximizing the use of land, as with growing flowers and vegetables or raising livestock in between the trees to raise the settlers’ income.

FELDA has many subsidiaries. All look impressive until you examine their activities; few materially advance the settlers’ plight. Those subsidiaries are but crass opportunities for politicians and civil servants to earn extra-lucrative directorship fees by being appointed to their boards, all at the poor settlers’ expense.

With the resources it has and freed from the micromanagement of the the civil service, FGV could have superb build schools to benefit the settlers’ children.

These GLCs as exemplified by FGV have failed in their primary mission of developing Bumiputra human capital. They succeed only in duplicating existing governmental programs, and adding to the costs. They do not bring in added value despite the tremendous resources, financial and otherwise, expended on them. Good enough reason to get rid of them.

US Mounts Major Global Anti-Money-Laundering Campaign


June 19, 2018

US Mounts Major Global Anti-Money-Laundering Campaign

by John Berthelsen@www.asiasentinel.com

The US Treasury Department has initiated a wide-ranging campaign against money laundering across the globe and is leaning on governments particularly in Cyprus, Beirut, Singapore and the Gulf states including Dubai in an attempt to stop the flow of billions of dollars that wash through the financial system every day from Russia, Iran and China.

Although planning for the campaign, headed by the department’s Marshall Billingslea, Assistant Secretary for Terrorist Financing and Financial Crime, began during the administration of former US President Barack Obama, the Trump administration is seeking aggressively to stop the flow of illegally gained money from the three countries into UK and French real estate, small German banks and the Gulf states.

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Paul Manafort is charged for money laundering.

It is uncertain how much of the new assertiveness can be traced to the US initiative. A spokesman for the Treasury Department said only that the department is “undertaking initiatives against money laundering in several different countries as part of an ongoing process.”

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However, banks from Cyprus to Singapore to the long-standing boltholes for hot cash in the Caribbean are being told to clean up their act or lose access to the Belgium-originated Society for Worldwide Interbank Financial Telecommunication – the SWIFT system, as it is known, through which almost all of the world’s financial transactions travel. Hundreds of billions of dollars a day move through the system, which enables the world’s financial institutions to send and receive secure information about financial transactions.  The SWIFT system has come to dominate the world’s movement of money.

Sources speculate that the US aggressiveness played a role in the demand last week by the UK government, also triggered by the poisoning of the former Russian spy Sergei Skripal and his daughter Yulia, that Russian oligarch Roman Abramovich, the owner of the Chelsea Football Club, explain the source of his vast wealth before he is granted a new UK visa. The UK government has launched a further crackdown on wealthy investors into the UK.  Offshore destinations of illicit funds in the Cayman Islands, Guernsey, Jersey, Gibraltar and Nassau are also under the microscope.

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Read this:  https://www.khmertimeskh.com/92067/

The amount of money spirited out of developing countries is astonishing. The Washington, DC-based NGO Global Financial Integrity, in a 2017 report, estimated that illicit currency flows in and out of the developing world amounted to at least 13.8 percent of total trade, or US$2 trillion, in 2014, the last year for which reliable data were available. An astonishing US$3.97 trillion in illicit funds left China between 2000 and 2011 alone, according to Global Financial Integrity.

Laundered money has been pouring out of Russia for the better part of two decades as oligarchs made rich by the Putin regime have looted a long string of government-linked companies, particularly in oil and gas. The money has gone into expensive homes along the Cote d’Azur in France as well as London, and New York and Beverly Hills in the US. At one point, realtors in New York said roughly 30 percent of condominium sales were going to buyers who listed international addresses including – notably – the family of the now-disgraced former Prime Minister of Malaysia, Najib Razak, as well as Viktor Khrapunov, the former mayor of Almaty, Kazakhstan’s capital city, who has been accused of stealing hundreds of millions of dollars from the country.

With the Trump administration on a rampage against Iran, US authorities are seeking to shut down Iranian funds flowing into Dubai, Bahrain, Kuwait and Qatar as well as banks in Asia including Woori Bank and Industrial Bank of South Korea, according to Bloomberg News Service, which cited documents and testimony on how Iran siphoned US$1 billion from escrow account funds to evade US-imposed sanctions. Other banks that have been hit with compliance lapses included the Agricultural Bank of China, one of the country’s Big Four banks as well as

Songhua Bank of South Korea and Mega International Commercial Bank of Taiwan, according to Bloomberg.

The campaign to lean on Middle Eastern banks could well cause a liquidity crisis in the region including Dubai and Qatar, two of the region’s biggest banking centers, as well as in Lebanon, equally with Cyprus a repository of laundered funds that have flown into financing of terrorist activities by Hezbollah and other groups.  One source speculated that uncertainty over a liquidity crisis was spurring unsettled emerging markets over the past couple of months, with Argentina again facing crisis.

The problems for Cyprus are enormous.  Stelios Orphanides, writing in the Cyprus Business Mail on May 29, said that there is “increasing concern in the ranks of professionals and entrepreneurs in Cyprus over the impact of stricter anti-money laundering and terrorist financing practices being applied, amid fears that recent US pressure on the islandʼs financial and business service providers to take US sanctions more seriously into account, may have a transformative effect on the economy.”

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The disgraced former Prime Minister Najib Razak and his wife Rosmah Mansor are now under investigation

The problems are exemplified by the notorious FBME Bank, headquartered in Tanzania although at least 90 percent of its business was conducted in Nicosia before it was shut down by the US Treasury Department’s Financial Crimes Enforcement Network, or FinCEN last October after a three-year campaign. The bank, owned by Fadi and Ayoub-Farid Saab, was the repository of funds from such notorious characters as Dmitry Klyuev and Andrei Pavolov, key suspects in the looting of Hermitage Capital, once controlled by William Browder before he was driven out of Russia. Dozens of outlaw organizations allegedly banked at FBME, although the Saabs continue to deny any wrongdoing.

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The Hermitage looting and its aftermath resulted in the so-called Magnitsky Act, passed in the US Congress after Sergei Magnitsky, an associate of Browder’s, was beaten to death in a Russian jail while he was attempting to investigate the theft. As a result, a list of top Russian officials were barred from transacting financial business through the SWIFT system.  Natalia V. Veselnitskaya, the Kremlin-backed lawyer who met with Donald Trump Jr. and others in Trump Tower in June of 2016, was attempting to get the Magnitsky Act reversed. That meeting is now a subject of the investigation by Robert Mueller into Russian attempts to subvert the 2016 election that brought Trump to power.

FBME was the subject of a 2016 series of stories by Asia Sentinel that described the alleged laundering of millions of US dollars out of the Indonesia-based Bank Mutiara, formerly known as Bank Century, which was looted by its owner, Robert Tantular, and others during the global financial crisis of 2009.  Bank Mutiara was taken over by the Tokyo-based J Trust financial conglomerate, heavily backed by Nobuyoshi Fujisawa.  J Trust and the Saabs have threatened multiple lawsuits against Asia Sentinel over the stories. Asia Sentinel stands by its reporting.

Another of the primary targets of the campaign is Singapore, which by one report has the equivalent of US$368 billion from Indonesia in its banks – 40 percent of the island republic’s total bank deposits. In one astounding heist, more than  US$13.5 billion was looted from the Indonesian central bank’s recapitalization lifeline to 48 ailing banks during the 1997-1998 Asian financial crisis. As the government poured money into the banks in the attempt to save them, the bankers were stealing it and moving the money to Singapore.

According to a 2007 Asia Sentinel story, some 18,000 Indonesians described as “rich” live in Singapore. They were said to be worth a combined total of US$87 billion, more than Indonesia’s entire annual government budget at the time.

Indonesia’s Corruption Eradication Commission is said to be investigating the movement of as much as US$1.5 billion from Bank J Trust, the former Bank Mutiara, which was sold to the Japanese financial services corporation J Trust Group. J Trust is heavily backed by Taiyo Pacific Partners, the Washington State-based investment fund whose chief investment officer was Wilbur Ross, now President Donald Trump’s commerce secretary. The Indonesian bank is believed to be connected to some of the country’s most powerful politicians. KPK targets are said to ionclude Boediono, the former central bank governor and vice-presidential running mate of former President Susilo Bambang Yudhoyono.

Others are said to be Rafat Ali Rizvi, a British citizen who at one point faced the possibility of a death penalty for helping to loot Bank Century, the carcass from which Bank Mutiara was fashioned, and Hesham Al Warraq, a Saudi national who was also a major shareholder in the bank. Only Robert Tantular, the president of Bank Century, has been jailed.

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Other countries’ leaders have used Singapore as a piggy bank as well, including Myanmar, whose generals moved millions of stolen funds out of their country into Singapore banks. The Singaporeans were so grateful that in 2009, they named an orchid planted in their spectacular Singapore Botanic Garden for Thein Sein when he paid a visit.  More recently, Singapore cracked down on Swiss banks BSI Bank and Falcon Private Bank and withdrawing their licenses in 2016 for acting as conduits for billions of dollars funneled from the scandal-ridden 1Malaysia Development Bhd. Two other banks – the Singapore-based DBS and the major Swiss bank UBS were hit with heavy fines.

End Outrageous “Double Dipping” By Top Malaysian Civil Servants and GLC Executives


June 4, 2018

End Outrageous “Double Dipping” By Top Malaysian Civil Servants and GLC Executives

by Dr. M. Bakri Musa, Morgan-Hill, California

The revelation by Transport Minister Anthony Loke that the Malaysian Aviation Commission (Mavcom) Chairman Abdullah Ahmad earns about RM85K a month, while a shocker, is not a secret. It is a long-held practice, and he is not alone. Far from it!

This practice proliferated under Najib, one of the many manifestations of his cash-is-king schemes to buy the loyalty of senior public officials. He of course received much more in return through their loyalty and cooperation, as evidenced by the loot hauled from his private residences after he was booted out of office.

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 Chief Secretary to the Malaysian Government, Dr. Ali Hamsa

Prime Minister Mahathir, who earns less than a quarter of what that Mavcom Chairman gets, has ordered Chief Secretary Ali Hamsa to review the remunerations of top public officials as well as heads of GLCs and statutory bodies.

There is no need for such a review. Instead, Mahathir should just ban them from having extra income beyond their salaries. They are being paid to devote their time and effort exclusively to their current positions. Theirs is not a 9-5 job; they have no business assuming added responsibilities except in an ex officio capacity. For that they already have generous allowances to cover the expenses incurred, as with traveling and lodging.

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Malaysian Aviation Commission (Mavcom) Chairman Abdullah Ahmad–The RM85,000 (per month) Man

Ali Hamsa is also the wrong person to undertake such an important review. Foremost is the issue of conflict of interest. He is as guilty as that Mavcom Chairman. Hamsa should begin by declaring how much extra compensation he was paid in addition to his regular salary as Chief Secretary by virtue of appointing himself to be on the various boards. The recently-disgraced Treasury Secretary Irwan Serigar was on Khazanah’s and Bank Negara’s Boards, as well as others not yet revealed. He must have raked in substantial additional income from director’s fees.

Ali Hamsa, Irwan Serigar, Abdullah Ahmad and countless others are guilty of double dipping into the public purse. The poor rakyat bears the burden of such rampant lucrative practices.

Ali Hamsa is also ill-qualified to undertake such a review. He has spent all his career in the civil service. He knows nothing of the culture or value of talent in the competitive private sector. He has been receiving not giving out paychecks all his life; he has no appreciation of the challenges in having to meet a payroll

Scrutinize the corporate structures of many GLCs and statutory bodies. They have myriads of subsidiaries and associated companies. The reason is simple – management greed; more corporate entities, more board of director’s positions! Ever wonder why those GLCs and statutory bodies lose money.

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The High Flying and Publicity Seeking Former Secretary-General to the Treasury, Irwan Serigar Abdullah, now in cold storage at Intan

If companies like Petronas need outside directors, the Professor of Petroleum Engineering from the University of Malaya would be a far superior choice than a recently retired Chief Secretary to the government. All the latter would do is graft the stultifying civil service culture onto the company.

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Tabung Haji Chairman Abdul Azeez Rahim with a Phd from Preston University who was a used car salesman

Appointing that professor as director would also be a way to augment his otherwise meager academic pay. That might just be the inducement for him to stay on campus instead of joining the private sector, to the loss of his students who would be the country’s future petroleum engineers. The professor would also gain real world experience, again to the benefit of his students. Likewise with Tabung Haji. Why not appoint the local Professor of Economics or Accounting to its board? That would be far superior than having that mamak with a PhD or MBA from Preston University!

 

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 Isa Samad–Former FELDA Chairman and Head of SPAD

 

Another common and lucrative double-dipping scheme occurs when retired civil servants or former public officials are appointed to statutory bodies or GLCs. The number one culprit in the news today is Isa Samad. He is notorious for other reasons. For this discussion, while he is drawing a substantial pay as the head of SPAD (the Malay initials for the federal public transportation agency), he is still getting his pension as a former MP and a Federal Minister, as well as that of a State (Negri Sembilan) Chief Minister, and as a state legislator (ADUN). Beyond that he is also getting one for being the former head of FELDA. These entities may have different names but their paymaster is the same – the rakyat.

Such “double dipping” should be banned. If a retired civil servant or public official is appointed to a GLC or statutory body and he is getting a regular salary, then he should not be allowed to draw on the pension of his previous job. Instead he should be considered as continuing to work for the same paymaster but in a different capacity. Of course if he were to start his own business or be employed by a private company, that would be a different matter. In that case he should be entitled to the government pension of his old job.

If such a policy were to be instituted, then all those soon-to-retire civil servants would remain busy in their jobs instead of preoccupying themselves lobbying for a post-retirement position in a GLC or statutory body.

There would two immediate positive effects of such a policy. One, those civil servants would now be less likely to be seduced by their political masters as is the current culture. They would now be more likely to be independent if not outspoken in disagreeing with their political superiors. That could only be good for the country’s administration.

The other positive effect would be to encourage more Malays (most civil servants are Malays) to enter the private sector either as employees, directors, or to create their own businesses. That would increase the rate of Malay participation in the private sector far more effectively and efficiently than starting expensive and often money-losing GLCs. They would then be more like Rafidah Aziz with Air Asia, or set up their own professional practices as Aziz Abdul Rahman, former Managing Director of Malaysia Airlines, with his own law firm.

In the 1960s Tun Razak lowered the retirement age (it was 55 then) so enterprising young civil servants could retire to start their own businesses. That initiative spawned many Malay-owned businesses. This was also the practice of the Italian government and resulted in the blossoming of entrepreneurial activities spurred by young retired civil servants who had the safety net of their retirement income.

This double dipping by senior civil servants and public officials costs the nation a hefty bundle. With Malaysia’s debt now exceeding a trillion ringgit, the nation can ill afford such outrageous wastage. Time to ban double dipping outright. There is no need for further unnecessary studies.

Whither Sarawak As CMSB shares Nosedive?


May 24, 2018

Whither Sarawak As CMSB  shares nosedive?

 

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According to Bernama, the present Chief Minister of Sarawak, Abang Johari, has confirmed that the Editor of this website is still banned from entering the state.

He has not yet made up his mind whether to revoke a ban slammed on the writer, along with a number of prominent agency journalists back in 2008, after they visited Penan blockades protesting against the logging of their indigenous lands.

Perhaps the sense of threat in the minds of the leading party PBB and its BN allies as they contemplate how to respond to the changed political scene, is related to this week’s release of a statement by the state’s largest conglomerate CMSB, largely owned by the family of the Governor Taib Mahmud.

CMSB’s shares went into a nosedive on Friday as the likely implications of proposed anti-corruption reforms on the favoured position of this company sank in with shareholders. Those shareholders fled, showing a plunge of prices after lunch of 30%, before trading was suspended to stem the panic.

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Explaining the shameful event, the CEO of the company, Isac Lungan, could not have been more frank in his view that revelations over the years by Sarawak Report could affect the profitability of the company in a new cleaner ‘reformasi’ environment.

In a management note to investors he said the catastrophic collapse had been caused by factors, of which the first was the combined effect of the Bruno Manser Fund offer to release research first published on this website and also the decision of the federal government to unblock Sarawak Report, which has articles spanning a number of years covering corruption in the state, including its largest company.

CMSB statement

“The following in our view, has led to the steep sell-down:

1.  Bruno Manser Fund’s offer to share information and unblocking of Sarawak Report website:

Possible reaction to an article carried by the Star Online portal stating that the Bruno Manser Fund (BMF) is willing to share information with the new Pakatan government on the Tun Taib family as a basis for reopening of investigation.

This followed a report on Thursday 17 May 2018 that news portal Sarawak Report, which has been known to release anti Tun Taib family (as well as anti-CMS) related articles, has been unblocked. The Sarawak Report website was blocked by Malaysian Communications and Multimedia Commission (MCMC) in 2015. The news they publish is now widely available for the general public to access, including reports portraying CMS negatively.”

The statement, which then goes on to list various other anti-corruption demands issued by opposition MPs in the state as being further threats to the company, is a open acknowledement that CMSB does not see itself as being in a particularly strong position to refute criticisms of cronysm and corruption with regard to the Taib family connection.

 

Otherwise, the threats of a small NGO and reappearance of a small online portal would not  create such a devastating impact.

Johari Cannot Make Up His Mind?

What the admissions of CMSB and the waverings of Abang Johari prove is first that Taib still holds a continuing grip over business and politics in Sarawak and second that the present Chief Minister and his PBB followers have not been able to make up their minds about whether to throw their lot in with the new guys in charge in KL or to cling to the crumbling BN coalition, which still holds sway in the state government.

It is weak and vacillating behaviour that will not impress local voters, who will be entering state elections in the next couple of years or so. Admitting that he has yet to formulate a position on such a crucial matter as whether or not it supports the new federal government has revealed Johari to be every bit as stunned and indecisive as Najib was on election night.

The longer this Chief Minister fails to make up his mind about the political direction of the state that was once known as BN’s ‘safe deposit’, the less safe that ‘deposit’ is likely to remain.

As for Taib, much in the way that Najib railed against Sarawak Report over 1MDB, claiming dark plots and plans for an ‘overthrow of the state’, the former Sarawak Chief Minister had responded equally disproportionately and irrationally after he lost the urban vote in 2011, largely because of devastating corruption allegations online, followed up by opposition progress in the 2013 general election.

Not long after that disappointing election, Taib had marched into the state parliament and singled out Sarawak Report along with other NGOs as a dangerous force. He accused the website of seeking to overthrow the state and of malicious slander ‘poisoning the minds’ of the ‘simple people’.  The raging CM even went so far as to suggest that SR’s motive involved a plot to re-colonise Sarawak and to steal its remaining oil revenues!

It was following this somewhat unhinged and disproportionate rant that Najib apparently saw his chance to remove Taib from the position of absolute power that he had held as Chief Minister, Finance Minister and Planning Minister of Sarawak for over three decades.

It was no secret that his power and wealth irked the new Prime Minister, who nonetheless used him as a model for his own subsequent pillaging of public coffers.  Taib was booted upstairs into the Governor’s mansion on a vague understanding that it brought immunity.

What Do The People of Sarawak Want?

As they weigh up their best options for the future Sarawak’s ruling parties ought not to be placing a priority on the perceived dangers of incomers, such as SR, BMF or civil rights and reform campaigners from Malaysia.

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Sarawakians have access to information and can form their own opinions with or without such visitors these days.  The Chief Minister needs to listen to what people are now asking in the coffee shops or commenting online.  There has been very vocal concern from the moment of the election that the state could yet again be left out of the progress that is now sweeping federal changes.

People want to know if the programme to root out of corruption and open up of freedoms will reach their state and Abang Jo needs to finally get off the fence and decide if he can afford to ignore that yearning.

Source: http://www.sarawakreport.org/2018/05/whither-sarawak-as-cmsb-nose-dives/