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Where has all the money gone? Who is probing 1MDB debacle, RM2.6bn ‘donation’?

Source: theedgemarkets.com

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Shall we form yet another special committee, wonders Francis Loh.

Once again, Prime Minister Najib Abdul Razak has declared, this time in New York, that the Malaysian economy has strong fundamentals. Also, “Malaysia is on track to achieving its goal of becoming a high-income nation by 2020.”

In his speech delivered at the 5th Global Science and Innovation Advisory Council (GSIAC) on 28 September 2015 at a hotel in midtown Manhattan, he tried to excite his audience about Malaysia’s economic success and transformation, its strong fundamentals and clever policies, especially his National Transformation Policy – all these, despite the current volatile economic situation.

Success has occurred, he claimed, but Malaysia “must always be prepared for changing conditions and external shocks that are beyond its control”!

So many questions flashed by as I speed-read the headlines and news reports. But we shall only mention two. And then we want to return to the mother of all questions: where has all the money gone?

First, what is the point if our incomes increase and even if we are categorised as a high-income nation if the value of the ringgit keeps dropping against the US greenback, the Singapore dollar, and other major currencies! All the imported goods we have become dependent on will cost more, and we shall be importing inflation over time.

On the day that he spoke, the exchange rate was RM4.4 plus to US$1, where it has been hovering for about a month. Indeed, any time now, automobile companies including Proton and Perodua will be announcing price hikes for their cars. (There is also the GST factor, but we shall not go into that now.)

Second, the PM and his economic policy supporters have gone on and on about how external factors have been responsible for the devaluation of the ringgit and the overall decline of the economy. This is true to some extent viz. the sharp decline in the price of oil, the Chinese bubble, and the Feds who have been mulling over an interest rate hike in the US.

It is significant that they seldom ever discuss structural or policy weaknesses at home. And the PM has never acknowledged that there exists a serious deficit of trust and confidence in his leadership over the still unresolved fiasco involving 1MDB, of which he is the adviser, and the RM2.6bn donation, apparently from the Middle-East, ending up in his personal accounts. (The last time around, those who raised these matters like his deputy Muhyiddin Yassin and minister Shafie Apdal, got themselves removed immediately.)

Yet, the matter is critical.

Bank Negara governor Zeti Akhtar Aziz had expressed the hope that the ringgit would recover once issues related to 1MDB were resolved. Predictably, she was criticised by the investment company for singling it out as the cause of the depreciation of the ringgit.

CIMB chairman Nazir Abdul Razak, the PM’s brother, expressed concern in an Instagram post that “the market [was] more negative about Malaysia than the rating agencies, taking us down into the junk category, way below our fundamentals”. For him, this turn was due to negative reports in the international media. These had to be “dealt with clear answers or legal civil suits”… “Can’t just ignore them.”

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Meanwhile The Edge (28 September 2015) reported that the trinity of political stability, past practices of good governance, and the integrity of public institutions that previously made Malaysia an attractive investment destination is now at risk, no thanks to the 1MDB debacle.

But instead of addressing the 1MDB question frontally and immediately, the PM goes to New York and pronounces how successful his policies particularly his National Transformation Policy have been. (On 1 October, he also went to the UN to praise his own Global Moderates Movement and offered advice to the world on how to handle and defeat the IS threat.)

More than that, Najib further claimed that success occurred in Malaysia because his government had been open and transparent. Listen to this: “We have achieved all these successes because we have not been averse to evaluating our performance in an open and transparent manner, and to make the changes that prevailing conditions demand.”

Hullo, Mr PM, how shameful to tell this fib to the world!

In fact, your government has done the very opposite. You have refused to come clean, and you have not responded to your critics at home. These include your own former deputy, Muhyiddin, former PM Dr Mahathir, the usual Opposition and civil society organisations, and many prominent individuals .

Instead, you have removed the attorney general (who reportedly was about to initiate charging procedures), suspended The Edge Weekly and The Financial Daily (the High Court later lifted the suspension order), and arrested many of these critics.

Not a few were probed or arrested under Section 124(b) of the Penal Code (for threats to Malaysia’s parliamentary democracy), the Communications and Multimedia Act, and Sosma. Talk about investigating the serious allegations against the PM! Why, the police have been going after the whistleblowers instead!

Admittedly, you have set up several ‘special committees’. Although it is not clear what they are expected to study and/or do, none, it appears, is tasked to investigate the 1MDB debacle. Those that developed a momentum towards the truth of the debacle have been dismantled instead.

A Special Committee formed, again

In August 2015, the PM, with some fanfare, had announced the formation of a ‘Special Committee’ comprising an initial group of 10 economists and corporate leaders. They were tasked to formulate immediate and short-term policies to strengthen the Malaysian economy.

On that occasion, as in New York, the PM also resorted to the same mantra about strong “economic fundamentals”. Accordingly, he attributed the depreciation of the ringgit “largely to the volatility of the global economic market” and the bursting of China’s economic bubble in particular.

At that time, in late August, the exchange rate had weakened beyond RM4.20 to US$1, the lowest the ringgit had been in years. This sharp drop meant that the ringgit was the worst performing currency in East Asia. And while the other Asian currencies have eased against the US dollar subsequently, the ringgit has not, at least not to the same degree.

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Although the mainstream media tried to hype up the formation of the Special Committee, very few people, I suspect, wanted to listen to the prime minister about how to put the economy right!

Instead, they wanted him to break his silence over the 1MDB fiasco and those donations from the Middle-East into his personal accounts! This was a major reason for the Bersih 4 rally on 29-30 August.

The fact that the PM also doubles up as the finance minister, a practice introduced by former PM Mahathir, has also been at the back of people’s minds.

Worse, the Prime Minister’s Department has doubled, then trebled, and even quadrupled, in size. In the latest cabinet reshuffle, which saw the ousting of Muhyiddin as deputy PM and several other ministers, Najib has now emplaced 11 ministers and two deputy ministers in the Prime Minister’s Office, ultimately reporting to him. Imagine the power he has accumulated!

Significantly, the PM’s Office also receives the second largest allocation in the overall budget. Such concentration of power, political control and financial clout in the hands of the PM is unprecedented! It must be the mother of all PM’s Departments, anywhere in the world.

Invariably, as people lose confidence in the prime minister, who is also the finance minister, the performance and integrity of the vast network of 11 ministers and two deputy ministers under the PM’s charge is also affected. Can you imagine how many special committees have been formed? Many, including this one, are supposed to report to the PM directly as well.

Nobody believes that this Special Committee will help to rescue Malaysia from the economic crisis. Not when the fundamental mother of all questions – where has all the money gone? – has not been addressed.

Moreover, if the ‘Special Task Force’ (comprising the heads of the MACC, Bank Negara, the attorney general and the IGP), which was originally tasked to probe into the workings of the 1MDB and how the original RM2.6bn got into Najib’s personal accounts, could have so easily been dismantled, what’s the big deal about this ‘Special Committee’?

More special committees, task forces, teams, what-have-you

Meanwhile, as the ‘special task force’ was being dismantled, the new attorney general, Apandi Ali, announced the formation of the National Revenue Recovery Enforcement Team (NRRET) that he will head. It will include representatives from Bank Negara, the police, the customs and the Inland Revenue Board, but not the MACC.

The NRRET would assist the government in investigating tax evasion (by individuals and corporations), smuggling, subsidy misappropriation, money laundering and corruption.

But the NRRET would not be looking into the 1MDB fiasco nor into the personal accounts of the PM. After all, it had been clarified by the MACC that the money deposited was actually a ‘donation’, which was enough for the attorney general to drop the probe (theSun, 26 August 2015).

Then there is the National Consultative Committee on Political Funding set up by Paul Low Seng Kuan, one of the 11 ministers in the PM’s department (theSun, 24 August 2015). But this Committee, Low explained, is neither an investigative nor a law enforcement agency.

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The Committee would also not be investigating the RM2.6 bn donation that went into the PM’s private accounts, Low clarified, in response to civil society organisations who had asked him and the government to focus on the 1MDB problem first, before looking into the problem of political funding. But, no, this government is forward-looking, it seems.

And, oh, the Parliammentary Accounts Committee (PAC) has also stopped functioning, after four members, including chairperson Nur Jazlan Mohamed, were suddenly promoted as deputy ministers in the recent cabinet reshuffle. And because parliament has not been sitting, and the chairmanship of the PAC cannot be filled, it had to suspend its probe.

What a shame! The PAC, comprising BN as well as Opposition parliamentarians, is answerable to Parliament and not the Executive. It had the potential of probing deeper and more transparently into the debacle. Is this why its initial momentum towards seeking the truth about the 1MDB fiasco had to be nipped in the bud? How odd that four of its members would be promoted simultaneously?

So there you have it. The original ‘Special Task Force’ and the PAC have both been dismantled. Many new committees and bodies have been formed. One is tasked to help the government jump-start the economy; another is to recover monies from tax evaders and smugglers; yet another will study political funding. All, around the PM’s Department.

Looks as if it is only government bodies overseas and the foreign-based media who are continuing the probe into the 1MDB. We have read that the office of the attorney general in Switzerland has opened a criminal procedure against two entities of 1MDB on grounds of suspected corruption of public foreign officials, dishonest management of public interests, and money laundering.

According to the New York Times and online daily Malaysiakini, the US Federal Bureau of Investigation is probing 1MDB over money laundering, while a US Justice Department unit overlooking international corruption is looking into property purchases by shell companies associated with the PM Najib’s stepson as well as other real estate purchases involving a close family friend. Put another way, the PM now faces a corruption enquiry by a federal grand jury in the United States!

Maybe, we will need to have a change of government before we can discover where all the money has gone. Either that or we, the rakyat, form our own special committee, involving all who value justice and truth, to pursue this matter.

Together, let us demand from the BN government and the PM the truth about this matter. No more giving the Rakyat the runaround and taking us for a ride. And don’t let them distract us from pursuing this matter with their resort to authoritarian and racist politics at home and to pretenses of being a moderate and transparent government at the UN and elsewhere outside of Malaysia.

Francis Loh
Co-editor, Aliran newsletter
3 October 2015

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