March 14, 2018
Malaysia: 1MDB– A Major GE-14 Issue
by P. Gunasegaram@www.malaysiakini.com
QUESTION TIME | They say rural Malays and other deprived Malaysians don’t care about 1MDB and that their major concern is only with the higher cost of living. I say, utter rubbish.
I refuse to believe that any Malaysian, rural or urban, is unconcerned that effectively as much as over RM40 billion was stolen from 1MDB and of this, over RM30 billion was borrowed money.
The problem may be that the magnitude and significance of what has been allowed to happen by BN – that means all of them from Ministers to MPs to state assemblypersons to delegates from all BN parties but particularly UMNO – has not been explained to all of the Malay masses.
And the only person who seems able to explain it in an understandable manner to Malays is Dr Mahathir Mohamad in his own inimitable style.
But make no mistake about it – if 1MDB is still not an election issue it has to be made one. Essentially, 1MDB borrowed money and most of the borrowed money was allegedly stolen by transferring it out through a convoluted process into accounts controlled by an associate of the Prime Minister, Jho Low (photo).
A total of US$681 million (RM2.7 billion) came into Prime Minister Najib Abdul Razak’s account before US$620 million (RM2.5 billion) was transferred back. These are facts.
It is unprecedented in the annals of Malaysian history. Never before was money “stolen” from a government-owned company (100 percent owned by the Minister of Finance Inc) in such a manner and tens of billions of ringgit at that.
It is much bigger than the Bumiputra Malaysia Finance (or BMF) scandal (RM1.8 billion) and much more blatant and audacious.
There is a hole in 1MDB which at some time will show itself, despite all the denials by the government simply because one cannot hide the movement of international funds.
The government is already engaged in desperate moves to try and fill up these holes such as getting into lopsided contracts with others, including companies from China.
Such things are a double-whammy as more and more money is thrown away through overpriced contracts and the like to try and return money into 1MDB accounts and to perhaps steal some more. No matter what they do, such flows can eventually be traced through the international financial system.
It is through identification of international flows that the US Department of Justice (DOJ) has managed to obtain an overwhelming amount of evidence that money was stolen and laundered for the purchase of luxury assets including a US$27 million pink diamond necklace.
If we don’t collectively get rid of this government and hold it to account for all the losses incurred at 1MDB, the future of this country is very bleak indeed.
If anybody needs a recap of what 1MDB is, and we all need one from time to time, here it is 10 points:
1. RM40 billion or more ‘stolen’ from 1MDB. It’s allegedly the biggest theft by a government (kleptocracy) the world has ever seen. Malaysian officials like world records and this is truly a world record but of the very wrong kind. It has made Malaysia rather notorious and infamous.
2. US$7 billion (RM28 billion) unaccounted for. Press reports quoting the Auditor-General’s Report on 1MDB, a report which is kept unrevealed to the Malaysian general public by using the Official Secrets Act, say this. If it was untrue, all the government has to do is unveil the auditor-general’s report which it has not done so far. The figure amounts to most of the long-term bonds of RM31 billion at current exchange rates.
3. Interest, asset and fees over-payments could cost over RM10 billion. The under-pricing by 1MDB of long-term bonds through needlessly high-interest rates, excessive fees to Goldman Sachs which arranged the bonds and over-payment for power assets, which now belong to a China entity, would have cost over RM10 billion more.
4. US$4.5 billion (RM18 billion) stolen, according to DOJ. This is the definitive figure given by the DOJ which is now in the process of recovering US$3.5 billion (RM14 billion) in assets. The yacht Equanimity belonging to Jho Low costing US$250 million or RM1 billion was the latest large asset to be seized, to be handed over to the FBI in Bali by the Indonesian authorities.
5. US$681 million (RM2.7 billion) of the money went to Najib. It came from an account which the DOJ says was controlled by Jho Low, a family friend of Najib’s.
6. US$238 million (RM952 million) went to Riza Aziz, Najib’s stepson and Rosmah’s son. Riza is a close associate and friend of Jho Low and reportedly did a deal with the US recently – the company that Riza (photo) is associated with, Red Granite Pictures, last week agreed to return to the US government US$60 million (US$240 million).
7. Najib must be aware of 1MDB deals. According to Section 117 of 1MDB’s memorandum and articles of association, Najib had to be informed of all of 1MDB’s major decisions. Najib was and is Finance Minister and the highest officer of Minister of Finance Inc which owns all of 1MDB. He was also chairperson of the advisory board. It is highly unlikely he did not know and the fact that he does nothing now is a sure sign of a cover-up.
8. Authorities maintain all is well at 1MDB. Despite overwhelming evidence in a number of countries that money was stolen from 1MDB, the authorities, including the Police and Attorney-General maintain nothing wrong was done. 1MDB has not even reported the loss of the money to the police.
9. US$4 billion (RM16 billion) of ‘stolen’ money can’t be returned. The Malaysian government steadfastly and ridiculously continues to insist that 1MDB did not lose money, making it impossible for various governments to return money and assets bought with allegedly stolen 1MDB funds which they have seized or are seizing in the course of their own investigations.
10. Desperate measures and a weakened ringgit could further aggravate the situation. The government is aggressively doing deals which may raise illegal money through contract overpricing to plug the holes in 1MDB such as the RM55 billion East Coast Rail project with China companies and others. These will have deleterious effects on the future of the country. Meanwhile, the weakened ringgit has resulted in the latest rounds of price increases (not GST whose full impact finished at the end of 2016) as confidence evaporates, to price in a risk premium for the ringgit.
There is more but that pretty much sums up the main points. So whoever wants to do the messaging for the rural and other folk needs to focus mainly on the below three points, using the 10 above to add colour and illustration:
1. 1MDB lost RM40 billion. 1MDB borrowed over RM30 billion money through long-term loans which were “stolen”. A further RM10 billion was lost through high-interest rates, paying too much for things bought and to advisers.
2. The current Prime Minister, government and all major BN politicians were aware of this, and some even benefited from the “loot” with UMNO division heads admitting they received money from the Prime Minister e.g Shahrir Samad ( pic above). UMNO still supports its leader.
3. If this government is not changed, even worse things will happen to this country as more and more money could be stolen.
How can anyone even think that 1MDB is not a major issue in these elections? If it is not, isn’t it time it was made one?
If anyone was aware of the facts, would they actually think 1MDB is a non-issue? It will be a major mistake to underplay the issue of 1MDB in the forthcoming elections.
P GUNASEGARAM is sceptical of surveys which claim to show this and that when they clearly go against plain old common sense. E-mail: firstname.lastname@example.org