A Rogue Currency Trader’s Confession–Bursting Bank Negara Malaysia


September 7, 2017

A Rogue Currency Trader’s Confession–Bursting Bank Negara Malaysia

 

Text of Statement by Khazanah Nasional Berhad’s Deputy Chairman Tan Sri Nor Mohamed Yakcop before Royal Commission on Bank Negara Forex Fiasco

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The Rogue Currency Trader–No Excuses for Recklessness

The forex losses happened. There is no denying it. There is also no denying my accountability for the forex losses. I accepted my fair share of the accountability for the forex losses and resigned from BNM. At that time, it appeared to me to be a sad end to my 25 years of service to the nation, through Bank Negara Malaysia.–Nor Mohamed Yakcop

Introduction

I joined Bank Negara Malaysia (BNM) in September 1968. I was promoted to the post of Manager, Banking Department in 1986.

The Banking Department was responsible for external reserves management, regulation of the domestic money market, including the discount houses, development of Islamic banking, approval of domestic bond issues, managing the Export Credit Refinance Facility (ECR), development of new financial institutions and promoting trade by way of Bilateral Payment Arrangement (BPA) with other central banks in developing countries. When I resigned from BNM in April 1994, I held the post of Advisor. I re-joined BNM again, as an Advisor, in September 1998, after the implementation of the Unorthodox Measures, which I will describe later in my statement. I served in BNM in that capacity until April 2000. In May 2000, I was appointed as the Economic Advisor to the Prime Minister, and subsequently, in January 2004, I was appointed as the Minister of Finance II. In April 2009, I was appointed as Minister in the Prime Minister’s Department responsible for the Economic Planning Unit (EPU). I retired in May 2013, and joined Khazanah Nasional Berhad as Deputy Chairman in June 2013.

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Policy imperatives of active external reserves management by BNM

Prior to 1985, BNM was not active in external reserves management, including forex trading, given the relative stability in the international foreign exchange market.

The situation changed in 1985. On 22 September 1985, five OECD countries, met in private at the Plaza Hotel in New York and decided among themselves, without consulting other countries, that the Yen and the German Deutsche Mark should be strengthened significantly against the US dollar by way of market intervention. This is known as the Plaza Accord. The Plaza Accord was historic because it was the first time central bankers agreed to intervene in the currency market in such a big way and the first time in history when governments set target foreign exchange rates to be achieved through active intervention.

One important outcome of the Plaza Accord was that the exchange rate of the Yen versus the US dollar strengthened sharply. (The Yen strengthened from 240 Yen to the dollar in 1985 to 120 Yen to the dollar by early 1988).

The strengthening of the Yen resulted in many developing countries suffering huge losses, since a significant portion of their external borrowings was denominated in Yen. The Malaysian Government, Government agencies, including GLCs, as well as the Malaysian private sector suffered significant forex losses on repayment of Yen loans and foreign exchange revaluation of Yen loans, following the sharp appreciation in the value of Yen arising from the Plaza Accord.

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Malaysia’s borrowings in Yen during the early 1980s were mainly for infrastructure building. At that time, the Malaysian bond and sukuk markets were not yet developed to enable large amounts of borrowings for long periods to be obtained domestically in Ringgit. Given that infrastructure projects required long gestation period, the Malaysian government and its agencies chose to borrow in Yen, since, at that time, long term yen loans were available with low interest rates. The borrowings also coincided with the building of major infrastructure projects in the country.

Since the Plaza Accord of September 1985, the international forex market also became much more volatile, with sharp and sometimes erratic movements in the daily forex rates. While the Plaza Accord of September 1985 was intended to strengthen the Yen and the Deutsche Mark, another agreement, the Louvre Accord was signed on 22 February 1987 in Paris by six OECD countries, again without consulting other countries, to halt the over-appreciation of the Yen and the Deutsche Mark, and this created another round of turmoil in the foreign exchange market.

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Dr. Lin See Yan–Deputy Governor, Bank Negara Malaysia

This was the background that led to the decision by BNM to begin active external reserves management. I understand that the Commissions attention has been drawn to Allahyarham Tan Sri Jaffar Hussein address in New Delhi, India on 5 December 1988. In that speech the Governor had publicly set out BNM’s rationale for the active external reserves management policy. Let me quote, extracts from that speech by Allahyarham Tan Sri Jaffar Hussein:

“Why are we so active in the market now, compared to before? There are a number of reasons. First, until recently, our external reserves were not large, being only US$4 billion at the end of 1984. This has now increased to US$7.8 billion, thus justifying a more active management of reserves.

Secondly, the exchange rate volatility since the Plaza Agreement of September 1985, had changed the stakes of the game. Whereas in the past an active management of reserves might have made a difference on yield of twenty basis points; it now makes a difference of maybe 500 basis points. So it is worth the trouble. Thirdly, forex trading is today a 24-hour business and there are opportunities throughout the day to deal…

I recall one occasion when some bankers made an attempt to speculate against the ringgit in off-shore centres on one of our national holidays, when they thought we would be closed for the day. To their surprise and cost, we opened up our dealing room during that national holiday and intervened in the off-shore centres to stabilize the ringgit and in the process taught those bear speculators a lesson they are not likely to forget…

…When I joined the Central Bank in 1985 from the private sector, I was informed that the main thrust of reserves management in Bank Negara was to preserve the value of what we have and the main considerations were safety and liquidity. To that, I have added a third and fourth dimension: profit optimization and market expertise.

I basically took the stance that risk-taking in reserves management included not only the risk of losses, but also the risk of falling behind inflation, of not earning as much with our scarce resources as we could. The primary motivation is still to preserve and conserve the value of what we have…

To me, in the last analysis, an active reserves management policy goes beyond the additional return and risks. A key advantage is that the active involvement has given us a greater feel of what is really going on in the foreign exchange and capital markets…

Central banking by decree and fiat can no longer budge markets, but market skills and influence of market psychology can do the trick…

I might also add that in a developing country, where foreign exchange trading skills are scarce, it is the duty of the Central Bank to be the provider of skilled manpower in the market, to be an educator of such technical skills and to be in the forefront of banking and computer technology…….I notice even the Bank of England is now actively adopting this policy”

The Governor’s main point was that the primary motive for the active external reserves management was the mitigation of the downside impact of major changes in foreign exchange rates on Malaysia’s foreign currency assets and liabilities. Let me repeat what the Governor said in New Delhi: “the primary motivation is still to preserve and conserve the value of what we have.” We sought to acquire the skills to manage the external reserves better and also, in a broader context, to assist the nation when required. The larger deals, beyond the limits given to the forex traders, were to protect the external reserves and the value of the Ringgit, by way of diversification. At that time, BNM had no specific limit for such diversification deals.

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To understand further the role of external reserves management in achieving the objectives of a central bank, please allow me to elaborate on the link between the stability of the Ringgit exchange rate, monetary policy and external reserves management.

Maintaining a stable Ringgit in the late 1980s to early 1990s

In the Malaysian domestic market, since the late 1980s, there was a continuous large inflow of US dollars by investors, including some short-term inflows or “hot money”. If BNM did nothing, the inflows would have resulted in the Ringgit strengthening significantly from the BNM policy range of between 2.50 and 2.80 against the US dollar. That would have created major implications for the economy, particularly since it would have reduced the competitiveness of Malaysian export sector.

This was an important consideration for a country which is one of the largest trading nations in the world.

14. In order to maintain the stability of the Ringgit, BNM had to buy the excess US dollars from the banks in Malaysia, in its role as the buyer of last resort for foreign currencies in the domestic market. This activity is termed as BNM’s foreign exchange intervention operations. The US dollars were then used by BNM mainly to purchase US Treasury Notes. The yield on the US Treasury Notes in the early 1990s was on average about 4.5 per cent p.a.

If BNM did nothing after mopping up the US dollars, there would be the issue of a large overhang of excess Ringgit in the system, since BNM would have paid Ringgit for its purchase of the US dollars. This large overhang of excess Ringgit in the system would adversely affect BNM’s monetary policy. It would cause the Ringgit interest rates to fall sharply (based on supply and demand), and create inflationary pressures. Therefore, BNM had to borrow back the Ringgit funds that it had provided to the banking system in its intervention operations. The purpose of BNM borrowing back the Ringgit funds from the banks is to neutralize the effect of the original forex intervention in the domestic money market. This is known as the sterilization operation. The borrowing rate that BNM had to incur (during the early 1990s) for the sterilization operation was about 7.5 % p.a.

Therefore, the combination of the BNM intervention and sterilization operations would cost about 3 % p.a. This is because the cost of borrowing back the Ringgit was higher than the yield of US Treasury Notes. This negative margin would be recorded as a loss in BNM’s books. In BNM’s active external reserves management, one consideration was to mitigate this loss.

The issue of moving into an active mode of external reserves management must also be seen in the context of Allahyarham Tan Sri Jaffar Hussein’s philosophy regarding Bank Negara’s role in national development. I need to elaborate on this point because Allahyarham Tan Sri Jaffar Hussein is no more with us, and it is important that we recognize the wisdom of this great man. The Governor believed that by active management of the external reserves, we will be able to acquire the skills, knowledge and experience required to serve the nation, when required, both in developmental activities as well as to overcome any financial crisis that the nation may face in the future. He termed this as “market expertise”.

Lessons for the 1997/1998 Asian Financial Crisis

Indeed, Allahyarham Tan Sri Jaffar Hussein’s foresight regarding market expertise saved the nation during the 1997/1998 financial crisis. In a strange twist of history, the skills, knowledge and experience acquired in BNM enabled the nation to implement the Unorthodox Measures of September 1998. It provided the nation with the ability to frustrate the foreign currency manipulators, whose intention was to destabilize Malaysia and cause chaos in the socio-economic fabric of the nation.

Unlike Thailand, Indonesia and South Korea, Malaysia was able to overcome the financial crisis of 1997/1998, without borrowing a single cent from the IMF or the World Bank or anyone else. We reset the Nation back on the growth trajectory without outside help. The Unorthodox Measures of September 1998 saved Malaysia from dire consequences, following the worst financial crisis in our history, and restored the sovereignty and dignity of our beloved nation.

In economic terms, the result of the Unorthodox Measures of September 1998 is substantial. Just to illustrate using one of many measures of economic gain, the Unorthodox Measures resulted in the market capitalization of the Malaysian stock market recovering from a low of RM 181.5 billion on September 1, 1998 to RM 579.2 billion on March 24, 1999, a gain of RM397.7 billion. The Stock Market Index jumped from 262.7 (September 1, 1998) to 851.7 (March 24, 1999), a multiple of 3.24 times.

Let me briefly illustrate how the skills, knowledge and experience that we acquired from the forex activities in Bank Negara became critical in formulating the Unorthodox Measures of September 1998:

(i) There was great deal of confusion, during the early days of financial crisis of 1997/1998, on the concept of “Offshore Ringgit”. The initial view was that bags full of cash in Ringgit were taken out to Singapore and Malaysian customs officials at the border were instructed to check thoroughly the bags of Malaysians departing to Singapore. Obviously no big amount of cash was found.

I explained to the Prime Minister in 1997 and 1998 that the term “Offshore Ringgit” does not refer to Ringgit physically located outside Malaysia. The bulk of Ringgit will always remain in Malaysia. The term “Offshore Ringgit” refers to Ringgit (in Malaysia) which is owned by foreigners. The currency manipulators borrow the Ringgit, both local Ringgit owned by Malaysians or “Offshore Ringgit” owned by foreigners, to sell the Ringgit for US dollars. This is called short-selling. We knew from our forex trading days that on Black Wednesday (16 September 1992) when Pound Sterling crashed, Soros had borrowed £ 10 billion to short-sell the pound sterling. Therefore, an important aspect of Malaysia’s Unorthodox Measures of September 1998 was to disallow foreigners from borrowing Ringgit to speculate. The concept of “Offshore Ringgit” is very complicated and it took me a few attempts to ensure that the Prime Minister fully understood the term, as you can read from the book.

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Notes to the Prime Minister by Wong Sulong published in 2011. I wrote 5 notes on this subject, namely Note 2 (October 13, 1997), Note 13 (December 12, 1997), Note 25 (May 19, 1998), Note 31 and Note 32 (both on June 29, 1998). Without the knowledge acquired at BNM’s forex desk, we would not have fully understood the concept of “Offshore Ringgit”, which was key to the implementation of the Unorthodox Measures;

(ii). Malaysia initial response during the financial crisis was to increase the interest rate level to stabilize the Ringgit. This created chaos for the many business entities, pushing them to the verge of bankruptcy. We knew from experience that this does not work. During the Black Wednesday incident in United Kingdom, the British Government increased the interest rate from 10% p.a to 12 % p.a. in its desperate attempt to stabilize the pound. But this move was completely ineffective.

Therefore, our Unorthodox Measures involved, among others, bringing the interest rate down, rather than increasing the interest rates, after fixing the exchange rate at RM 3.80 to the dollar, and disallowing foreigners from borrowing the Ringgit for speculative purposes. This significant lowering of the interest rates, as well as our measures of implementing an expansionary monetary and fiscal policy, as part of the Unorthodox Measures, saved many corporations from becoming bankrupt and some banks from becoming insolvent; and

(iii). When we pegged the Ringgit on 2 September 1998, we pegged it at RM 3.80 to the US dollar.

The 3.80 rate was on the weaker side since, based on fundamentals, we could have fixed the rate at 3.50. But we knew that it was better to fix the Ringgit at a slightly weaker rate, anticipating that the market players would feel that, at 3.80, the Ringgit was undervalued and they would therefore buy the Ringgit. We expected that this move would result in large inflow of funds into the country. This is exactly what happened. There were substantial inflows following the peg.

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There were no outflows, as the market players expected the Ringgit to subsequently strengthen, not weaken. This was something we learned at the forex desk in Bank Negara Malaysia.

In fact, the 45 notes that I wrote to the Prime Minister between October 1997 and August 1998 analysing in detail the 1997/1998 financial crisis and proposing the solution would not have been possible without the market expertise acquired at Bank Negara’s forex desk, thanks to Allahyarham Tan Sri Jaafar Hussein.

I should add that even after Allahyarham Tan Sri Jaafar Hussein and I left BNM, we kept closely in touch meeting regularly for long chats. The last time I met him was in July 1998, a month before he died. We spent two hours discussing about the financial crisis of 1997/1998. I informed Allahyarham that I was working with the Prime Minister to find a solution to the financial crisis, based on the knowledge the he made possible for me to acquire in Bank Negara. He was happy that he had made the right decision on the importance of market expertise and he was confident that we can overcome the crisis. I wrote about this meeting with Allahyarham on 21 August 1998 and it appears as Note 43 in the book “Notes to the Prime Minister” by Wong Sulong. Allahyarham Tan Sri Jaafar Hussein’s contribution to the nation is undoubtedly significant.

My role at BNM in external reserves management in the late 1980s and early 1990s

I was tasked with implementing the external reserves management policy as determined by the BNM’s Board having regard to the considerations I have mentioned above. In so doing, I reported both to the Governor and the External Reserves Committee (ERC). I spoke to the Governor on external reserves management regularly, and certainly whenever there was a large movement in the exchange rates. I also reported to the ERC whenever it met. The membership of the ERC comprised, amongst others, the Governor, Deputy Governor, and the Advisors. Further, there were weekly Senior Officers Meeting, where the external reserves matters were sometimes discussed.

These Senior Officers Meetings were chaired by the Governor, and were also attended by the Deputy Governor, Advisors and all Managers. I did not report to either the Finance Minister or the Prime Minister on any issues regarding external reserves management, as that was not my reporting line.

I was not involved in deciding on the accounting treatment of the losses. In fact, I have no knowledge whatsoever of the accounting treatment.

I was also very careful not to execute any trade by myself, although I had the authority to do so. It was always, without any exception, done by the staff. I did this for the purpose of transparency, so that there would always be more than one person aware of every trade.

BNM made significant gains from its trading activities in the 1980s. The loss does not include the gains made in the 1980s. Based on the period of 1985 to 1993, I believe that the total forex losses will be lower. The significant losses that were incurred in 1992 arose from two unexpected events:

(i) The unexpected rejection in the Danish Referendum of 1992 of the Maastricht Treaty; and

(ii). “Black Wednesday” on 16 September 1992, when the pound sterling was forced out of the European Exchange Rate Mechanism.

In the early 1990s, the European currencies started to gather strength on the basis of the then conventional wisdom that, given the potential for European integration, Europe was going to overtake the United States as the strongest economic power in the World. We subscribed to this view and bought the European currencies and the Pound Sterling.

Unfortunately, following the non-ratification of the Maastricht Treaty by Denmark in February 1992, the value of the European currencies crashed. This was compounded in September 1992 when both the Pound Sterling (and Italian Lira which we did not trade) were forced out of the European Exchange Rate Mechanism despite the best efforts of the far more powerful and wealthy European central banks.

As we were ‘long’ in the European currencies, including the Pound Sterling, we suffered significant losses. We were not the only central bank to have suffered significant forex losses as a result of these events.

Whenever we received information of large inflows of US Dollars from investors, both long-term and short-term, we would decide on whether or not to diversify these inflows into other currencies, depending on the anticipated exchange rate movements. If we expected the US Dollar to weaken, we would purchase European currencies forward based on the expected US Dollar inflows. The size of the purchases would correspond to the anticipated size of the US Dollar inflows.

All the external reserves activities, including forex activities, were based on strategic considerations. Admittedly we misread the turn of the market. As staff of a central bank we naturally believed that the Bank of England would win in its fight against Soros. We had confidence in our fellow central banker and bought Pound Sterling. Unfortunately, the Bank of England lost.

Similarly, our best intelligence was that the Maastricht Treaty would be ratified in the referendum in Denmark in 1992, but unfortunately it was rejected.

We learnt a bitter lesson from these incidents. That lesson proved crucial in helping us formulate policies to defend the country against the currency attacks in the 1997/1998 Asian Financial Crisis, saving the nation hundreds of billions of Ringgit that would otherwise have been lost.

Conclusion

The forex losses happened. There is no denying it. There is also no denying my accountability for the forex losses. I accepted my fair share of the accountability for the forex losses and resigned from BNM. At that time, it appeared to me to be a sad end to my 25 years of service to the nation, through Bank Negara Malaysia.

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Nor Mohamed Yakcop, Deputy Chairman, Khazanah Nasional Berhad: Rewarded by a grateful national leadership (from Mahathir Mohamad, Abdullah Badawi, and Najib Razak) for distinguished services rendered to Malaysia

However, with the Grace of Allah SWT, I was given the opportunity in 1997/1998 to contribute to King and Country during the financial crisis of 1997/1998. The important point is that the experience in the forex unit during those years proved extremely useful later in saving Malaysia from the devastating effects of the financial crisis of 1997/1998, which otherwise would have caused losses worth hundreds of billions of Ringgit for Malaysia and could have resulted in many Malaysian companies becoming bankrupt, with large scale unemployment and poverty spreading throughout the country. The political stability and the socio-economic framework of the nation would have been destroyed. It was an accident waiting to happen. It did not happen because of the Unorthodox Measures of September 1998, which in turn was conceived and implemented based on the knowledge, skills and experience acquired at the forex desk in Bank Negara Malaysia.

I also contributed to the nation during my second tour of duty in Bank Negara (September 1998 to April 2000) as well in my role as the Economic adviser to the Prime Minister (May 2000 to December 2003) and as a Federal Minister (January 2004 to May 2013). The record speaks for itself.

TAN SRI NOR MOHAMED YAKCOP
Wednesday, September 6, 2017

http://www.theedgemarkets.com/article/tan-sri-nors-full-written-statement-rci-hearing-today

No Reason to celebrate 60th Merdeka Day


August 18, 2017

No Reason to celebrate 60th Merdeka Day

by Stephen Ng@www.malaysiakini.com

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COMMENT | As we approach Merdeka Day, one thing is too obvious not to be noticed.

This observation that I make will answer the question I pose: “How can BN gain back people’s confidence after 2008?”

Sixty years have passed and BN has ruled the nation. This year is crucial as it may be the coming general election that will decide whether Malaysia will return to BN or see a change of government at the federal level.

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On August 31, 2017–In stead of rejoicing, we Malaysians  mourn the state of our country. After 60 years of Merdeka, we are being colonised by corrupt and racist UMNO kleptocrats and their partners in MCA, MIC, Gerakan.–Din Merican

My observation is based on the mood of the people as we approach Merdeka Day. It is obvious that the flags are not flying. By now, most shops would be carrying the Malaysian flag and cars would be adorned with the Jalur Gemilang.

But, unless some arm-twisting tactics are used, by now the flags would be all over the place. Patriotism is not something that can be forced. It has to come from the people’s own sentiments.

Although patriotism has nothing to do with giving support to the government of the day, its absence can indicate the people’s sentiments and confidence towards those in the powers of corridor.

This year is the 60th anniversary since Malaysia achieved its independence from the British colonial government in 1957, yet Malaysians are generally lukewarm about the celebration this year.

Why are Malaysians not showing their patriotism?

It does not cost more than RM10 to purchase a Malaysian flag, but could it be that Malaysians are unwilling to fork out even that amount of money, not forgetting the additional 60 sen for the Goods and Services Tax (GST)?

After three years, by now, most Malaysians would have felt the burden of the GST on their rising cost of living.

Only a total reversal of the GST, which unfortunately Prime Minister Najib Abdul Razak said is impossible to implement, is the only way BN can gain the people’s confidence.

Pakatan Harapan said the moment they win the general election, they would remove the GST. So, why is BN saying it cannot be abolished?

Is it because the country has reached such a financial state that despite the oil money, the government would not be able to meet financial obligations without the income from GST collection?

All the “positive” reports aside, one needs to only read Tricia Yeoh’s open letter to Najib to realise how much of Najib’s speech at Invest Malaysia last month can be swallowed.

The truth is most people have a very negative economic outlook, with most saying that the country appears to be going nowhere. Malaysians are beginning to see the doom ahead of them with the latest report that in 2016, the country’s debt has hit RM908.7 billion or 74 percent of the gross domestic product (GDP).

This is one of the highest since the country achieved independence. To say it is no problem is something hard for even ordinary Malaysians to believe. Imagine you are earning RM10,000, but you have to service your loan for the RM7,000 that you have borrowed.

You may be living a lifestyle of someone earning RM17,000 a month, but how many people even earn RM5,000 a month? This is called “over gearing”.

If people smell that something is not right, they will panic to think that the country’s total foreign debts may show that we are in real danger of bankruptcy.

One explanation after another has been given. For example, everyone knows that it is the weaker ringgit that is contributing to the higher cost of foreign debts, but what is the BN government doing about controlling external debts?

What we are hearing about are the mega projects being carried out using borrowed funds. The East Coast Rail Link (ECRL) for example is to be built using money from a soft loan provided by China’s Exim Bank at 3 percent over a period of 20 years.

Anyone borrowing from the bank for a housing loan for that period of time will realise that it is not that rosy after all. The moment someone defaults on a loan, there will be penalties. The bank may even force the property to be auctioned off.

Would the RM55 billion soft loan place Malaysia under the control of a Chinese bank, hence, indirectly the Chinese government? No banks would loan any amount of money if it does not have the assurance that it is able to get back the money.

Besides, we all know that Keretapi Tanah Melayu (KTM) is not making any profit despite running the North-South corridor. What makes us think that the ECRL would be able to pay back the loan?

Political violence

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UMNO-Malay Unity, not National Unity

It is not only the financial aspect that people are worried about. No thanks to its past record, and people like Jamal Mohd Yunos and his Red Shirts, people seem to have the impression that UMNO is given the right to use violence.

Peace-loving Malaysians are no longer easily intimidated. The silent majority may not do much, but the sentiments are definitely not with UMNO when more political violence unfolds, whether linked to the party, its members, or otherwise.

They may not be outspoken, but they are waiting for the right moment to strike with another tsunami. This is my observation especially after Mahathir and his men abandoned UMNO.

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Jamal Ikan Bakar Yunos and his Red Shirts on a rampage?

The answer to my question, “How BN can gain back people’s confidence?” therefore requires more soul-searching on the part of BN leaders, including those from Sabah and Sarawak.

If flying of the Jalur Gemilang is any indication of the people’s sentiments, it is time for some serious discussions at the higher level.

STEPHEN NG is an ordinary citizen with an avid interest in following political developments in the country since 2008.

Bank Negara Governor Jaffar Hussein–The Fall Guy in Forex Scandal


January 31, 2017

The Late Bank Negara Governor Jaffar Hussein –The Fall Guy in the Forex Scandal

COMMENT: The truth will always haunt those who abuse power, even if it can take ages before it is exposed. The Bank Negara forex  scandal is just a case in point.

Image result for tan sri dato' jaffar bin husseinMaybe he can help in the investigations

The government of the day must open investigations to uncover the facts of the case and those behind this scandal including bank officers in the Bank Negara Investment Department which managed the bank’s reserves who were protected by the former Prime Minister, Tun Dr. Mahathir bin Mohamad should be asked to testify before a Commission of Inquiry. Those who were entrusted with the management of 1MDB too should be treated in a similar fashion. –Din Merican

Nur Jazlan: Father-in-law quit for ‘someone else’s mistake’

by malaysiakini.com
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Nur Jazlan Mohamed has claimed that his father-in-law, a former Bank Negara Malaysia (BNM) Governor, the late Jaffar Hussein, had resigned for “someone else’s mistake”.

The Deputy Home Minister’s remarks came in light of former BNM assistant governor Abdul Murad Khalid’s claims that the central bank had lost US$10 billion in the foreign exchange market during former Prime Minister Dr Mahathir Mohamad’s era.

Murad said despite the heavy losses, there was no investigation into the matter. Jaffar, who served as the central bank’s governor from 1985 to 1994, resigned on April 1, 1994. He passed away four years later, in 1998.

His resignation followed his admission that Bank Negara had lost RM5.7 billion the previous year. “After 22 years, my late father-in-law’s story comes out. He resigned to cover someone else’s mistake,” tweeted Nur Jazlan.

The tweet was accompanied with news paper clippings, one on Murad’s revelation last week and an Utusan Malaysia report on the day Jaffar resigned, quoting the former governor as saying he made a mistake, posted side by side.

Image result for Bank Negara Governor Jaffar HusseinTan Sri Jaffar Hussein

Commenting further on his father-in-law’s resignation “to take responsibility for someone else’s mistake”, Nur Jazlan said this was rare in both politics and government in Malaysia, even today.

“Such misdeeds are usually brushed over for unity and stability’s sake to preserve the present order until exposed years later for expediency,” he added

Apart from Murad’s claims that Bank Negara had lost US$10 billion during Mahathir’s tenure as premier, declassified reports by the US Central Intelligence Agency (CIA) suggested that Mahathir’s government was also aware of Bumiputera Malaysia Finance’s (BMF) dubious dealings in the 1980s.

Mahathir had responded to the BMF allegations by accusing the CIA of conspiring against him.He also wrote a blog post to point out differences between the BMF and 1MDB scandals, such as that the CIA report on the BMF scandal did not implicate the Prime Minister.

UMNO Rule for 5 more Years?


December 18, 2016

COMMENT: UMNO Rule for 5 more Years?

by Narhaniel Tan@www.malaysiakini.com

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Five more years under greedy Rosmah Mansor?–God Help Malaysia

Are we truly prepared for five more years under UMNO? Should DAP and PKR be thrown out together with PAS?

In the aftermath of the US elections, I came across one article by Kurt Eichenwald that I can probably best describe as… memorable?

It opens as such:

“On Friday, I almost assaulted a fan of my work. I was in the Philadelphia International Airport, and a man who recognised me from one of my appearances on a television news show approached. He thanked me for the investigative reporting I had done about Donald Trump before the election, expressed his outrage that the Republican nominee had won and then told me quite gruffly, “Get back to work.” Something about his arrogance struck me, so I asked, “Who did you vote for?”

He replied, “Well, Stein, but – ” I interrupted him and said, “You’re lucky it’s illegal for me to punch you in the face.” Then, after telling him to have sex with himself – but with a much cruder term – I turned and walked away.

A certain kind of liberal makes me sick. These people traffic in false equivalencies, always pretending that both nominees are the same, justifying their apathy and not voting or preening about their narcissistic purity as they cast their ballot for a person they know cannot win.

I have no problem with anyone who voted for Trump, because they wanted a Trump presidency. I have an enormous problem with anyone who voted for Trump or Stein or Johnson – or who didn’t vote at all – and who now expresses horror about the outcome of this election. If you don’t like the consequences of your own actions, shut the hell up.”

Drinking poison to quench thirst?

Let me insist at the outset that I do not quite share Eichenwald’s self-righteous anger, nor would I generally condone employing the approach he did (then again though, I’m not the one who just got Donald Trump as his president. Poor guy.).

The points he raises though, certainly bear some reflecting on. I was reminded of this article when I read one of the comments about PAS in Malaysiakini’s Your say, which suggested that allying with PAS was akin to drinking poison to quench one’s thirst. My compliments on a vivid and highly effective metaphor.

I truly do respect all political opinions. I daresay the commentator, one self-styled ‘Existential Turd’, could even be correct for all we know. Perhaps allying with PAS will indeed only solve short-term problems while creating bigger long-term ones.

I think that if we are objective about all available evidence, we must certainly concede that possibility.In the same breath, and judging from the same pool of evidence,

I do also believe however that we must also concede the possibility that the opposite is true – perhaps rejecting PAS is what will solve short-term problems, while creating long-term ones. It’s not necessarily easy as yet to say for sure which is which.

The problem with not voting Hillary Clinton

Eichenwald spends the rest of his article ranting about liberals who refused to vote for Hillary Clinton because she did not live up to their high ‘standards’. What he simply couldn’t stand was people complaining that Trump won, despite having themselves failed to vote for the one candidate who had a chance of beating him.

I’m not here to add to his rant; and given all the misleading information that was in the media in the lead-up to the election, perhaps some Americans can be forgiven for thinking that they did not need to vote for Clinton in order to prevent a Trump presidency.

I do concur somewhat though, with Eichenwald’s sentiment that those who did not vote for Clinton are perhaps not the best qualified to be expressing outrage regarding Trump’s victory. I think it’s fair to expect such people to instead take some responsibility themselves for the outcome, rather than rage at others.

Battles vs the war

The obvious parallel here is that those who eschew any sort of cooperation with PAS should be prepared to face the consequences of another Barisan Nasional victory in the next general elections.

Of course, there are some who insist that the opposition can win the next general elections despite three corner fights with PAS. I don’t think I’m exaggerating excessively though when I express my doubt that any serious, objective political analyst sees that as a likely scenario.

Let me preface the following by stating my beliefs strongly: I think it is a perfectly valid and defensible position to believe that it is worth sacrificing battles in order to win a war, however many general elections down the road of the distant future.

If PAS truly is as bad and hopeless as some people think, then yes, it could make sense to three corner everything, lose the next general elections and hope for better sometime in the years or decades to come.

I’m not saying that this is what I believe, but I am saying it is in theory a defensible position.

Taking responsibility for more Najib, more UMNO, more BN

What I am also saying is that if this is your belief and the road that you choose, then you must be prepared to accept the consequences of continuing to live at least another five or so more years under Najib Abdul Razak, UMNO and BN.

Image result for Najib is a crook

This means, that you will bear some responsibility for the continued alleged rape and pillage of our country’s resources, continuing human rights abuses, the lack of judicial reform, ongoing repression of the media, the ongoing sale of our country to China, and so on.

If you believe it is all worth it, you are a hundred percent within your God-given rights to your belief; but the responsibility still applies, and no one will know whether it was all justified until some distant day in the future.

Again, despite all the implications one might read into these arguments, I believe there is simply not enough clear evidence (to an outsider like me at least) to provide a simple answer to the question as to whether PAS should be given a meaningful role in the opposition (it is perhaps worth noting that the ‘meaningful role’ PAS has declared it’s looking for amounts to a maximum of 70 out of 222 seats in Parliament).

I do feel however, that for most of the people vocally opposing any more association with PAS whatsoever, there is perhaps an iota of bias – something of a dislike, perhaps, of the ‘type’ of people in PAS, and the ‘type’ of people that they represent (almost exclusively for now, given the evident nascency of Amanah and Bersatu).

Those ‘type’ of people however, are much larger and politically significant than most of us urbanites care to understand; and they are 100 percent as much Malaysian as the rest of us.

If PAS should be abandoned, so should PKR and DAP

Many commentators brought up the issue of trust, and how PAS essentially deserves none of it. I suppose that is one of many interpretations, and about as fair as any of the others. My own interpretation however, is that if PAS deserves distrust, then so does any existing opposition party.

I could be wrong of course, but my reading is that PAS has not betrayed its advertised principles any more than PKR or DAP has. I’m sure that will be a controversial statement, and maybe saying so makes me sound like exactly the type of liberal that Eichenwald was ranting against.

I’m also quite confident that a sizeable number of the usual suspects will rage at such an equivalency; the arguments of those who defend DAP or PKR (or PAS) no matter what however, will probably be taken rather less seriously. In any case, debating this claim at length would require the space of one or more additional articles.

If you want to abandon one of the former Pakatan Rakyat parties on principle, abandon them all. Abandon all of the old generation. Build something new, something untainted, something truly grounded in real values. I guarantee you there are enough principled, compassionate and able Malaysians to make it happen.

After Anwar, PKR and Pakatan have failed Malaysian Voters


December 16, 2016

After Anwar, PKR and Pakatan have failed Malaysian Voters

by Cmdr (rtd) S. Thayaparan

http://www.malaysiakini.com

“For if you suffer your people to be ill-educated, and their manners to be corrupted from their infancy, and then punish them for those crimes to which their first education disposed them, what else is to be concluded from this, but that you first make thieves and then punish them.”– Thomas More, ‘Utopia’

PAS friends of mine have been writing to me and saying that I am being unfair to PAS. They claim that calling their party a religious cult and branding their style of politics as UMNO collusion is extremely partisan. Amanah is a DAP creation and while in Pakatan Rakyat, PAS was a team player until it was “bullied” and vilified by DAP after the passing of Tok Guru Nik Aziz.

While I dispute this narrative, I think it is pointless hammering on PAS for deciding to go their own way. Instead, I will hammer on PKR for maintaining this charade that there is value for Pakatan Harapan to continue working with PAS.

Image result for Anwar Ibrahim

Sorely missed by the Fractured Opposition

Mind you, this has nothing to do with PAS. For whatever reasons, they have chosen to recalibrate their politics and while I disagree with it, this is still a free country and political parties are free to choose whom they align with. However, the problem here is not PAS, it is PKR. When I questioned why Harapan was still working with PAS, I acknowledged two salient points:

1) “Harapan should have learnt this lesson a long time ago. PAS construes the alliance as weak. They were always a virulent anti-Anwar strain within PAS which looked at the coming together of the supposed liberal reformer and convicted ‘sodomist’ – to their minds one and the same – as anathema to their zealotry.”

2) “People talk about the UMNO DNA within PKR but they forget that the only reason why the opposition was able to get itself off life support after the brutal beating they took during the short-lived Abdullah Ahmad Badawi glory days was because of the support of PAS.”

Image result for Wan Azizah

Wan Azizah leads a fractious PKR

PKR’s Batu MP Tian Chua claim that there is nothing to be alarmed about PKR attending PAS’ mega rally points to the dysfunctionality of the opposition. There is enough evidence that the opposition only makes gains in elections when UMNO is weak and the opposition is united.

While I understand that PKR is in a difficult situation when it comes to PAS, the reality is that PAS is preying on the weakness of the opposition front and will happily turn the tables when the time is right for them, and most definitely, link up with UMNO.

Also attending that rally was Parti Ikatan Bangsa Malaysia (Ikatan), which in my opinion is the political wing of the outsourced thugs of Umno. Take the “simple” issue of PAS President Abdul Hadi Awang’s “not hudud” amendment recently adopted by the Najib regime.

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The Kedah Mamak and The Hadi–Strange Bedfellows

The public stand of Ikatan’s President Kadir Sheikh Fadzir (who was absent at the rally) on this issue was: “Justeru, semua pihak jangan cuba nak main ‘game upmanship’ (tunjuk siapa lebih hebat) dengan DAP, selain membuktikan siapa paling anti-Islam dan Melayu semata-mata untuk meraih populariti.

“PAS adalah parti besar dan antara yang menunjangi politik negara selain UMNO, justeru sudah tiba masanya PAS tunjukkan taring mereka.”

How does it look? We just had the MCA issuing a stern reprimand (or whatever that was) to the representative who “walked out” at the Perlis state assembly vote. And now we have PKR attending a rally that ultimately descended into a DAP and Amanah bashing rally.

In other words, PKR thinks there is nothing to be alarmed about when it attends a rally that supports policies that they are supposed to be against and attacks their political allies.

Image result for Mahathir and Pribumi Bersatu

Meanwhile, Parti Pribumi Bersatu Malaysia’s attempt to play bridge builder has achieved nothing beyond giving PAS the opportunity to vent at their former ally and recalcitrant children. Which of course is fair enough, since Amanah has declared open season on PAS and DAP has made its disdain publicly apparent.

Straight fights

Furthermore, we have to remember that when it comes to PAS, straight fights are not the top priority.  PAS Information Chief Nasrudin Hassan said, “A straight fight or multi-cornered fights (in the general election) can only be derived from the (correct) political attitude. It (straight fights) is not the main issue here.”

I have no idea what the “correct political attitude” is, but the PAS I remember was more interested in bringing down UMNO, rather than advocating the fine points of political theory or nursing hurt feelings on the political battlefield.

If the correct political attitude means working with UMNO when it comes to Muslim issues, then I would suggest that anyone working with UMNO on Muslim issues is anathema to the oppositional voices in this country, but sadly not anathema to Harapan, which has demonstrated that when it comes to Muslim issues, it is quick to fold under pressure. But I digress.

It is really no point in reminding PAS that it lost whenever it went at it alone against BN, because all indications point to the fact that, when it comes to UMNO, PAS does not need to win elections to pose a threat to UMNO. All they have to do is hamper the efforts of the Harapan and Bersatu and they would be more useful to Umno than any of the other BN members.

With this in mind, the electoral pact between Harapan and Bersatu means very little with PAS out of the picture, unless by some miracle – and at the moment I do not see how – the “other” electoral pact between Bersatu and PAS provides an opportunity for straight fights with the UMNO hegemon.

Ultimately, all these attempts at bridge building are pointless. What the opposition should be doing is concentrating on formulating policies and spreading the message of how a Harapan government differs from the present kelptocratic regime. What the opposition should be doing is building a foundation to work from, and not repeating the mistakes that led to its fracture.

This whole idea of straight fights with UMNO is merely a pipe dream now. The “compulsory” precondition of PAS will never be met, and it really does not matter how much time is given to disparate groups’ intent on preserving power instead of removing UMNO. The reality is that unless there is a tsunami in Sabah and Sarawak, there will be no change of government in the next elections.

It will be cold comfort if PAS does not do well in the coming general election but Harapan is in tatters.  Moreover, while opposition supporters think that the opposition has a chance of winning in the coming election, the reality is that the dream of changing government in this political terrain it is still a dream deferred.

Challenges in Nation Building–TR Hamzah


September 17, 2015

Message to My Man of the Moment: Tengku Razaleigh Hamzah

The easy part is to talk about our problems and challenges. What we need now is a political leader with strong decision making skills backed by a very professional team of competent and honest people to deal with them. For that to happen, we require a leader who dares to risk it all to take on the corrupt Najib regime in UMNO and wrestle power for the rakyat’s sake.

Enough of talk. Tengku Razaleigh must walk the talk and take the risk. So Tengku, just do it because nobody in UMNO will voluntarily hand over the job on a silver platter to you. UMNO is the problem and also the means to get the job done.  Make history. The question is, will you do it? –Din Merican

Challenges in Nation Building

by Tengku Razaleigh Hamzah. MP

Tengku Razaleigh Hamzah
I am singularly honoured to have been invited to deliver the keynote address to signal the start of the National Unity Youth Fellowship Conference jointly organised by IDEAS and Merdeka Centre for Opinion Research. The theme – Nation Building, Unity and the Malaysian Dream: Yesterday, Today and Tomorrow – is apt; apt because it summarises the reason for being of politicians of whom I am one. I also think that this conference provides the appropriate forum for a meeting of minds to address the socio-economic dysfunctionality afflicting our beloved country today.

At the same time it offers you the opportunity to explore the ways and means of overcoming it. The significance of this proposition is not lost upon us; for you, being of Gen Y, are arguably among the more important stakeholders of Malaysia. Your finding ways to rectify the sorry mess that we are in and putting the country back on an even keel in accordance with what our founding fathers had in mind would most certainly not be lost upon the powers that be. If nothing else, it would register your legitimate position to offer your views – critical or otherwise – of how the Malaysia of tomorrow should shape up as she takes her place within the community of nations.

It is timely for us to remind ourselves that Tunku Abdul Rahman Putra, our founding father, had wanted a multiracial, united democratic sovereign state when he held the Merdeka talks with Lennox-Boyd in London in January, 1956. This was reflected by the composition of his team which had representatives of the MCA, MIC and the Malay Rulers. It did not matter to him that the country was a Malay state. He accepted the plurality of our society and the multiracial facet of the country. He was very focused in wanting a democratic nation that guaranteed human rights such as freedom of speech and free, peaceful life as its cornerstone.

He cherished peace very much and was willing to negotiate for an end to the insurgency by the militant Malayan Communist Party which started after the Second World War and dragged into 1960, even though the economic cost of that insurrection was high. The Tunku had wanted to leverage on the country’s potential wealth to wipe out this menace and the people rallied around him. All the communities rejected the brand of government being touted by the MCP which had shown that it would use violence as a tool of governance.

The Tunku had wanted to build a nation that used its wealth to create a happy people in his own image as, to use his own words, the happiest prime minister in the world. Being tutored in law as a barrister, he had wanted a country where the separation of powers between the Executive, Judiciary and the Legislature are honoured and practised in the true spirit of democracy, thereby providing the checks and balance against each other. He had wanted the instruments of state such as the civil service and security enforcement bodies to operate professionally as policy implementers.

Red Shirt PosterThis is Our National Failure and Shame

The sad reality is that we have been badly let down by both the three branches of government and the government bodies. The Executive has, once too often, been known to be brow beaten by the head of government. Our Judiciary had been weakened in the past and is perceived, rightly or wrongly, as less than effective. And in regard to the Legislature, it is not unknown that matters which are within the purview of the Dewan Rakyat had often been discussed by the executive committee of the ranking party within the coalition forming the government of the day. This amounts to usurping the power of the Lower House of Parliament. At the same time, one or two government bodies are becoming political forces unto themselves. Apart from these abuses, politics in our country has long been colluding with business which has led to unbridled corruption. It would seem that honour has deserted our leaders and insatiable greed for wealth has taken over its place.

Apart from the abject state of our governance, our effort to build a nation is nothing to shout about either. Our political leaders keep on parroting in a mantra-like manner that Malaysia is a nation. We are not; and that is the sad truth. We are polite to each other in public but there is, at times, a lack of sincerity in it. In group interactions, we are not above breaking into a language not being understood by everybody in our effort to not share our inner thoughts on whatever we have in mind with everyone. In the privacy of our homes we can be scathing in running down, for instance, cultural traits of other Malaysians that we are not familiar with.

Much as we hate to admit it, we live a compartmentalised life. This is compounded by the pluralistic nature of our society and our lackadaisical attitude towards the ethos and worldview of Malaysians who are not of the same ethnicity as us. In the end, unless we come from a family background that includes the presence of interracial marriage, we will not be able to understand their philosophy of life or their world view or their attitudes and aspirations. We will not be able to come as one and develop a Malaysian culture made up of the cultural traits of our various and diverse racial make-up. Our inability to evolve a Malaysian culture has a negative effect on nation building for culture is a key element in such a process.

Ahmad Maslan at Red Shirt eventA Blinkered and Idiotic Ahmad Maslan

Much as I hate to say this, I think the Malays must admit that they have a blinkered view regarding other Malaysian communities. As Malays we are proud to think of ourselves as democrats; but we forget the very essence of democracy which promises equality to everyone. We forget that democracy is government by the people as a whole rather than by any section, class or interest within it.

In our desire to remain on top of things, we conveniently forget that our other Malaysians have contributed more than their fair share in the service of the country. We choose to forget that there are other Malaysians who, upon coming to these fair shores, adapted and assimilated themselves into the dominant native culture. We choose to forget that there are other Malaysians who accepted the Malay hierarchical stacking order with the ruler at the apex; and that this harmony had convinced the British that we were ready for independence.

But the Malays, to my mind, are short on confidence and this makes us a scared lot especially in our relationship and interaction with other Malaysians. We are even given to jealousy and are not above harbouring ill will among ourselves. This has become a marked characteristic of the Malay psyche which unfortunately has found its way into politics.

It is quite normal for religion to be used in Malay politics in an effort to attract mass support. Given that Malay values are generally derived from Islamic values, this is not unusual. The sad thing is that a religious issue is sometimes given different explanations by ulamas to suit their political leanings. These, more often than not, lead to confusion. It does not help that these religious scholars sometimes do not fully explain the backgrounds to such issues which leave those who are not familiar with the intricacy of the religion having wrong ideas about it. It is therefore time that the ulamas addressed issues of religious concern with clarity and avoid the confusion that befuddles the people. More importantly, these ulamas cannot, willy-nilly, make religious pronouncements which are in effect fatwas. Such an authoritative ruling of Islamic law can only be made with the assent of the Sultan who is the head of Islam for his state.

We can conclude from the foregoing that we are still muddling through 58 years after 1957. We make believe and delude ourselves that we are a nation. The reality is that we are not. We justify our watered down democracy by rationalising that there are democracies and then there are democracies. But we are never told by what yardstick our democracy is measured.

The gloomy picture that was painted notwithstanding, you – of Gen Y who will be in the proverbial driving seat within the next few years – can brighten and change it. You must shoulder the task, for you are the inheritors of this rich and beautiful land. You should and must be at every level of decision-making in government and politics. In this way, you do away with the cynicism of being consulted by politicians only during the hustings once every five years. You will be able to build a Malaysia that your children will be proud to inherit – a confident and united nation whose sons and daughters are equal in her eyes, a proud nation admired and respected by the global community.

As a gentle reminder of the dire straits we are in, the rapid decline of our quality of life and the serious attention that you need to give to the ever sagging Malaysian morale, allow me to draw your attention to two emotive areas that are close to our heart. In the recent past our national football XI was given a 10-0 drubbing by a side not known for their footballing prowess. That is sad, tragic even; for we used to defeat the likes of South Korea and Japan which have now progressed far beyond us to find parity with European and Latin American football. Our mismanagement of the sport has led to the drying up of talents. Gone are the days when such idols as Chandran, Mat Che Su, Soh Chin Aun, Mokhtar Dahari, Santokh Singh and Ghani Minhat struck fear in our opponents. The same goes for our field hockey. We used to be in the top four in the sport, but now our hockey performances are just as lackadaisical as many other sports that we involve ourselves in. Given that sports are an effective tool to cultivate unity and, by extension, to build nations, this regression is a blow we can do without.

The other negative development that is sagging our morale is the indifferent economic performance and in particular, the value of the Ringgit that continues to drop. Countries that used to lag behind us such as Vietnam, Laos, Cambodia and Myanmar are now beginning to draw away foreign investments from our country. On the other hand the floundering Ringgit is drawing sighs of frustration from traders and importers. The same is the case with parents who have to grimace and bear the pain of underwriting their children’s tertiary education outside the country.

*Keynote Address at The Institute For Democracy And Economic Affairs (IDEAS) Conference On Nation Building, Unity And The Malaysian Dream: Yesterday, Today And Tomorrow At The Institut Integriti Malaysia, Bukit Tunku, Kuala Lumpur–September 16, 2015