UMNO leaders complicit in 1MDB cover-up

May 24, 2015

Phnom Penh

Umno leaders complicit in 1MDB cover-up


by Matthias Chang@

Najib and the Devil WomanThe Prime Minister cum Financial Minister (above), being a member of Parliament cannot be deemed ignorant of this fraudulent misrepresentation. Answers to parliamentary questions, whether from backbenchers or the opposition, are vetted before presented in Parliament. If the cash has been “diverted” or “unaccounted for” there is a basis for a charge of criminal breach of trust by all the relevant personalities involved in the transaction. There may also be elements of corruption.–Matthias Chang

It is elementary, Mr.Najib. You cannot be ignorant of what constitutes cash. Even a child knows what cash is, and when cash is deposited in a bank, the bank statement would reflect the cash deposited in the bank. Any paper or document other than cash cannot be deposited and reflected in a bank statement as cash.

Documents such as share certificates, treasury notes or bonds or other documents that are not considered as money, when deposited in a bank for whatever reason or placed in a fixed deposit box are never ever reflected in a bank statement.

The Minister of Finance, treasury officials, and members of the 1MDB Board of directors and its advisers are all experienced in finance and cannot by any stretch of the imagination be deemed ignorant of what is cash.

The balance sum amounting to US$1.103 billion is not some chump change and, when converted to Malaysian ringgit, would be more than RM3 billion. Therefore it is inconceivable that the Prime Minister, who is also the Finance Minister, and senior officials in the Ministry of Finance and Bank Negara do not know the difference between cash deposited in a bank and some “paper assets” to be held by the bank in Singapore, allegedly as custodian.

Therefore it is unpardonable that the Prime Minister, who is also the Finance Minister, and senior officials in the Ministry of Finance and Bank Negara do not know the difference between cash deposited in a bank and some “paper assets” to be held by the bank in Singapore, allegedly as custodian.

So when Ministry of Finance replied to Tony Pua’s queries in March 2015, surely its officials must have checked with the bank in Singapore or examined the relevant documents from 1MDB before confirming that 1MDB had “redeemed its balance of investment from the Cayman Islands in cash and transferred it to BSI Singapore”.

However, MOF has now issued a contradictory statement. A news report said, “The Finance Ministry has corrected its Parliamentary written reply in March that said the US$1.1 billion transferred by 1Malaysia Development Bhd (1MDB) from Cayman Islands to Singapore was not in cash.

“According to the latest written reply to Petaling Jaya Utara MP Tony Pua, the Ministry said the money that was “redeemed” was in the form of assets in US dollars.”

We cannot but agree that this is the Malaysian scandal of the century. Heinous and despicable crimes have been committed.


  1. For MOF to have issued the statement in March, forged documents must have been presented to show that cash was in fact deposited. This was corroborated by the current CEO, who said recently that the bank statement reflected that cash was so deposited. But the bank in Singapore has denied that cash had been deposited.
  2. The criminal offence of fraud and forgery is prima facie established and all the relevant personalities concerned with this transaction must be charged and it is for them to offer their defence in a court hearing
  3. When the statement by MOF/Prime Minister was made in Parliament that cash was deposited when it was not true, the august house was misled by a fraudulent misrepresentation. It was a blatant contempt of the house. The entire country was misled. The rakyat was cheated and led to believe a falsehood.
  4. In the past, members of Parliament were suspended for making a mere misrepresentation with no adverse financial consequences to the country. The members were penalised because the misstatement constituted an affront to the integrity of the proceedings of Parliament as well as to Parliament itself.
  5. The Prime Minister cum Financial Minister, being a member of Parliament cannot be deemed ignorant of this fraudulent misrepresentation. Answers to parliamentary questions, whether from backbenchers or the opposition, are vetted before presented in Parliament.
  6. If the cash has been “diverted” or “unaccounted for” there is a basis for a charge of criminal breach of trust by all the relevant personalities involved in the transaction. There may also be elements of corruption.
  7. The period between the March 10 and May 20 announcements in Parliament would by any measure be construed as a period when there was a massive cover-up. And all those personalities involved are accomplices in this cover-up.

The Deputy Prime Minister, the heads of Wanita UMNO and UMNO Youth and the members of the party’s Supreme Council, have failed to demand answers and to insist on seeing all the relevant documents so as to verify for themselves the truth or falsehood of the allegations brought by all concerned citizens. They should have done so especially after the bank in Singapore had declared the banking documents showing cash was deposited was a forgery. Alarm bells ought to have rung loud and clear, but these leading members of Umno chose to bury their heads in the sand and slavishly declare their so-called undivided support to the Prime Minister.

The Board of 1MDB even had the audacity to threaten to sue any one who dared question its integrity. Shame on you, UMNO.

The Prime Minister must resign and if UMNO leaders do not demand the resignation of the Prime Minister and continue to use their public office to deny this irrefutable confession by the MOF then they are all complicit in this heinous crime.

All the UMNO leaders who have accused Tun Mahathir Mohamad of wrongfully criticising the Prime Minister and sounding the alarm bells and raising the red flag of imminent crisis should humbly seek forgiveness not only from him, but from the entire country. The rakyat demands a public apology and the culprits must be charged in court for their crimes.

Matthias Chang is a Barrister and once served as the political secretary of Dr. Mahathir Mohamad

Incompetent, dishonest and shameless Najib Razak clings his job

May 10, 2015

Phnom Penh by The Mekong

Incompetent, dishonest and shameless Najib Razak clings his job

TAWAU 10 May 2015. Perdana Menteri, Datuk Seri Najib Razak ketika Perhimpunan Solidariti Rakyat Sabah di Padang Perbandaran Tawau. NSTP/Datu Ruslan Sulai

TAWAU 10 May 2015. Perdana Menteri, Datuk Seri Najib Razak ketika Perhimpunan Solidariti Rakyat Sabah di Padang Perbandaran Tawau. NSTP/Datu Ruslan Sulai

Datuk Seri Najib Razak declared tonight that he will not succumb to calls for his resignation and even urged for support from Tun Dr Mahathir Mohamad, telling his harshest critic not to disrupt UMNO by making “too much noise”.

At a function in Tawau, Sabah, the embattled Prime Minister, in his strongest response yet to Dr Mahathir, reminded the latter that he had supported him during his tenure in government. “In 1987, I was among those who supported him. Why he (Dr Mahathir) remained as Prime Minister? Because we were united in difficult times.

“When in difficult times we support him to remain in power. If we did not support the leader during trying times, Dr Mahathir would not have been the Prime Minister for 22 years,” Najib was quoted in Bernama as telling a large crowd for the “Sabahans Solidarity Gathering” at a field in Tawau.Therefore, do not forget the past, when he (Dr Mahathir) was the Prime Minister, we fully supported him. Now he is not the Prime Minister, so return the support.

“Even if you cannot support, don’t make too much noise and disrupt the party. We can clarify the 1 Malaysia Development Berhad (1MDB) issue,” he said, according to the national news agency.

Dr Mahathir, the country’s longest serving former prime minister, has been at the forefront of the ongoing attacks against Najib’s leadership, even saying recently that the prime minister should resign before Barisan Nasional (BN) loses the next general election.

Chief among Dr Mahathir’s concerns is the leadership’s handling of allegations surrounding 1MDB, the state-owned investment firm that has amassed a debt pile worth over RM42 billion in just a few years.

But Najib said tonight that Dr Mahathir has issued conflicting remarks about 1MDB, noting that the veteran leader had at one time claimed that the firm has lost RM42 billion but at another, he reportedly said it owes RM42 billion.

According to Bernama’s report, the prime minister then said that the government will have its own way of solving the 1MDB issue, if given time.

“I will only bow to the people and party members. As long as the people and members of UMNO support me and have trust in my leadership, I will continue to carry on,” he was quoted saying.

Although Najib has ordered a federal audit on the 1MDB, the latest controversy that emerged earlier this week on the firm’s land deal with Lembaga Tabung Haji (LTH) has led to top leaders in his party coming forward to publicly express concern.

On Friday, Najib’s Deputy Tan Sri Muhyiddin Yassin chimed in from his working visit in Milan, Italy, and said that Putrajaya must be proactive over the attacks against 1MDB and not merely react to the criticism against the state-owned firm.

Apart from Muhyiddin, UMNO leaders like Datuk Seri Hishammuddin Hussein and Khairy Jamaluddin have also weighed in on the LTH-1MDB land controversy.

Explaining the matter for the second time today, Najib again insisted that LTH’s purchase of the land from 1MDB was not a bailout for the troubled investment firm. According to Bernama, he claimed the LTH could have made a RM170 million profit from the investment but because the purchase was made an issue, he decided to advice the pilgrims fund to sell the plot of land.

“Since the facts of the purchase has been twisted and became a hot topic, you can say it was like ‘shooting oneself in the foot’. This is what I call ‘not rationale’ because why are we doing this? For the benefit of the people, so, give us a chance to do it.

“Every issue can be solved but let the leaders solve such issues,” he was quoted saying. Najib has been criticised for his alleged haste in advising LTH to sell the land in question ― a 1.56-acre plot in the Tun Razak Exchange (TRX) that it had purchased last month from 1MDB.

LTH reportedly paid RM188.5 million at RM2,773 psf for the land, which is 43 times what 1MDB paid four years ago when it purchased the plot for just RM4.5 million at a rate of RM64 psf.

A blog called “The Benchmark” first raised speculation on the purchase when it published purported documents of the controversial transaction that critics now claim could be a bailout for 1MDB.

According to LTH Chairman Datuk Seri Abdul Azeez Abdul Rahim yesterday, the move to sell the land was a complete U-turn from the Fund’s Board of Directors’ decision on Friday not to do so.Responding to the announcement, several lawmakers said today that 1MDB should instead cancel the transaction entirely and refund the RM188.5 million paid by LTH.

Will Next Time Be Different?

March 13, 2011

Will Next Time Be Different?

by Raghuram Rajan

Chicago–Carmen Reinhart and Kenneth Rogoff, in their excellent, eponymous book on debt crises, argue that the most dangerous words in any language are “This time is different.” Perhaps the next most dangerous words are “Next time will be different.”

These words are often uttered when politicians and central banks want to bail out some troubled segment of the economy. “Yes,” one can almost hear them saying, “we understand that bailing out banks will subvert market discipline. But you cannot expect us to stand by and watch the system collapse, causing millions of innocent people to suffer. We have to live with the hand we are dealt. But next time will be different.” They then use every tool they have to prevent economic losses on their watch.

The government’s incentives are clear. The public rewards them for dealing with the problem at hand – whether building levees to protect houses built on a flood plain or rescuing banks that have dodgy securities on their balance sheets. Politicians and central bankers gain little by letting the greedy or careless face the full consequences of their actions, for many innocent people would suffer as well. A sympathetic press would amplify their heart-rending stories of lost jobs and homes, making those counseling against intervention appear callous. Democracies are necessarily soft-hearted, whereas markets and nature are not; government inevitably expands to fill the gap.

To the extent that the rough justice meted out by markets or nature teaches anyone to behave better, it has consequences far beyond the horizon of anyone in power today. When asked to choose between the risk of being known to posterity as the central banker who let the system collapse and the intangible future benefits of teaching risk takers a lesson, it does not take genius to predict the central banker’s decision. Democracy tends to institutionalize moral hazard in sectors that are economically or politically important, such as finance or real estate, allowing them to privatize gains and socialize losses.

Even though the authorities insist that the next time will be different, everyone knows that they will make the same decision when confronted with the same choice again. So, knowing that next time will not be different, the authorities try their best to prevent a “next time.” But risk takers have every incentive to try their luck again, knowing that, at worst, they will be bailed out. In this cat-and-mouse game, risk takers have the upper hand.

For one thing, risk takers are typically small, cohesive interest groups that, once rescued, have a powerful incentive, as well as the resources, to buy the political influence needed to ensure a return to the status quo ante. If risk takers were allowed to face more serious losses, they would have fewer resources to fight political attempts to constrain their risky activities.

Moreover, the public does not have a long memory, a long time horizon, or an appetite for detail. Even as the United States’ voluminous Dodd-Frank bill tried to ensure that bankers never subjected American taxpayers to undue risk again, public attention had moved on to the state of the real economy and unemployment. Why focus on financial regulation when the risks of an immediate collapse are small, and when the details are so tedious? As technical experts and lobbyists took over, and the public lost interest, Dodd-Frank became friendlier and friendlier to the banks.

So how can this one-way betting be stopped? The scary answer may be that it does not end until governments run out of money (as in Ireland) or the public runs out of sympathy (as in Germany vis-à-vis the rest of Europe).

To avoid that fate, governments should start by recognizing that the system is programmed to respond to deep distress, and that they can do nothing about it. But they must try to ensure that they do not destroy incentives by doing too much. And they must offset the distortions created by intervention in other ways.

For example, the US Federal Reserve has essentially guaranteed the financial sector that if it gets into trouble, ultra-low interest rates will be maintained (at the expense of savers) until the sector recovers. In the early to mid-1990’s, rates were kept low because of banks’ real-estate problems. They were slashed again in 2001 and kept ultra-low after the dot-com bust. And they have been ultra-low since 2008. Senior Fed policymakers deny that their interest-rate policy bears any responsibility for risk taking, but there is much evidence to the contrary.

It would be difficult for the Fed to respond differently if the financial sector gets into trouble again. But it does not have to maintain ultra-low interest rates after the crisis has passed, especially if those rates have little impact on generating sustainable economic activity. Doing so merely rewards banks for their past excesses – and taxes savers.

More importantly, if the Fed wants to restore incentives for risk takers and savers, it should offset the effects of staying “low for long” in bad times by increasing interest rates more rapidly than is strictly necessary as the economy recovers. This will, of course, be politically difficult, because the public has been programmed to think that ultra-low rates are good, and higher rates bad, for growth, without any consideration for the long-term sustainability of growth.

Finally, the pressure on governments to intervene would be lower if individuals had access to a minimum safety net. Official US policy is so activist in downturns (regardless of its effectiveness) partly because unemployment is so costly to workers – who have little savings, unemployment benefits that run out quickly, and health care that is often tied to a job. A stronger safety net for individuals might allow politicians to accept more corporate or financial-sector distress, and help bolster their claim that next time really will be different.

Raghuram Rajan, a former chief economist of the IMF, is Professor of Finance at the University of Chicago and the author of Fault Lines: How Hidden Fractures Still Threaten the World Economy.

Copyright: Project Syndicate, 2011.