Three camps on 1MDB scandal and Malaysia as global kleptocracy in the UMNO elections

Former Prime Minister Datuk Seri Najib Razak is so predictable  but he is getting to be slow-witted and slow-paced.

I told my staff yesterday that Najib was sure to come out with a clarification of his Reuters interview on Wednesday and sure he did – but very much later than I had expected. He seems to have become slow-witted and slow-paced, as I had expected his clarification by mid-day yesterday and not till the  evening at 6 to 7 pm.

And what a clarification – one of its kind, for it is a clarification which does not clarify but further obfuscates!

Najib denies blaming the 1MDB board for the financial scandal that plagued the state development fund.

His spokesman said Najib was not shifting the blame to the board as reported in the Reuters interview, and “clarified” that what he said was any board had a fiduciary duty to act in best interests, and that the 1MDB board had a duty and responsibility to advise him on the running of the investment fund.

His faceless and nameless spokesman said:  “He did not at any time during the interview said that the 1MDB board was to be blame for what had happened.”

Najib should stop going round in circles and get to the point.

Did he or did he not say that he would have acted if he knew 1MDB fund were being misappropriated, and that it was the fiduciary duty of the 1MDB board and management to do the right thing to follow the law and that if they were in the know that something was not right, then it was incumbent upon them to tell him?

Was Najib passing the buck of the responsibility of the 1MDB scandal to the 1MDB board and management, clearing himself of all responsibility, or was he  not doing so – not blaming the 1MDB Board and Management of failing  their fiduciary duty to  do the right thing and follow the law?

If he was not blaming the 1MDB Board and Management for the 1MDB scandal, what is all the hullabaloo about the Reuters interview about?

If the 1MDB Board and Management had performed their fiduciary duty to do the right thing and follow the law, and there was no misappropriation of 1MDB funds,  then what is the need to mention the subject?

Najib talks so much about the fiduciary duty of the 1MDB Board and Management to do the right thing and follow the law – what about his own fiduciary duty as the final decision-maker in 1MDB, in addition to  his dual capacities as Finance Minister and Prime Minister?

Lets take an example.

Who was responsible for making former Goldman Sachs banker Tim Leissner, who had been linked to the 1MDB scandal, an instant billionaire by approving RM1.8 billion commissions to Leissner or 9% of the three 1MDB bonds totally US$6.5 billion in 2012/3 – which was several times the industry average for underwriting risky bonds?

Recently, it was reported that Malaysia is considering asking the U.S. Department of Justice (DoJ) to get Goldman Sachs to return nearly US$600 million in fees it earned from bonds raised for scandal-tainted 1Malaysia Development Berhad (1MDB).

Leissner has been barred from the US securities industry for failing to provide documents for 1MDB investigations.

The US Financial Industry Regulatory Authority (Finra) said the indefinite ban on Leissner was issued on Sept 11 last year  as he did not respond to requests for documents and other information on 1MDB investigations.

The US industry body was probing Leissner’s departure from Goldman Sachs in early 2016, in particular into a reference letter he allegedly wrote during his time with the firm.

Leissner, who was formerly Goldman Sachs’ Southeast Asia chairperson, was an adviser to 1MDB and had allegedly issued an unauthorised letter in June 2015 to a financial institution in Luxembourg, vouching for controversial entrepreneur Jho Low, a key figure in the scandal surrounding the Malaysian sovereign wealth fund.

Goldman Sachs suspended him, and he later quit the firm. Subsequently, the Monetary Authority of Singapore (MAS) issued a 10-year ban against him trading in the country, effective March 13, 2017.

Malaysians are entitled to know  whether Najib was responsible for approving US$593 million (or some RM1.8 billion) profits to Leissner or 9% of the three 1MDB bonds totally US$6.5 billion in 2012/3 – which is several times the industry average for underwriting risky bonds. If Najib was not the final approving authority, who was?

Najib cannot really disclaim responsibility for creating an instant American billionaire  in the 1MDB scandal because under Article 117 of the 1MDB Memorandum and Articles of Association (M&A), the Prime Minister was the ultimate authority who exercised final direct control of 1MDB, as Article 117 required all major decisions of the company involving financial commitment (including investment), restructuring and major appointments to have the written authorization from the Prime Minister.

Under Article 117, the Prime Minister had powers exceeding those of the Advisory Board, the Board of Directors and the Top Management of 1MDB all added together, being the final approving authority for all 1MDB decisions, deals, investments and transactions.

Is Najib seriously suggesting at this late day of the 1MDB scandal (i) that he was not aware of any misappropriation of 1MDB funds; and (2) that he would have acted if he knew that 1MDB funds were being misappropriated?

Let us take another example – the disappearance of Nik Faisal Ariff Kamil from Malaysia after the 14GE on May 9, 2018.

As reported by The Malaysian Insight, nearly every day before May 9, Nik Faisal Ariff Kamil was a feature at shopping complexes and cafes in Bangsar, the middle-class suburb in Kuala Lumpur.

When  Najib Razak and Barisan Nasional lost in the 14GE ,  “the urbane former chief executive officer of SRC International hurriedly packed his bags and fled to Indonesia”.

Why?

Nik Faisal is a crucial witness in the 1MDB investigations. As  the CEO of SRC International, he held the power of attorney for Najib – which meant that Najib legally authorised Nik Faisal to represent him and act on his behalf.

Why didn’t Najib direct Nik Faisal to stay in Malaysia and to co-operate with the authorities in their SRC and 1MDB investigations?

The upcoming UMNO party elections will be an eye-opener for there will be three factions –  firstly, those who want to minimize or even whitewash the 1MDB scandal; secondly, those who want to pretend the 1MDB  scandal is not a problem and need not be addressed; and thirdly, those who want UMNO and UMNO leaderships to admit responsibility for the 1MDB scandal.

The UMNO Strategic Communications Unit is busy plugging the first line. It will be interesting to see how the 1MDB scandal and Najib’s transforming Malaysia into a global kleptocracy pan out  in the UMNO Assemblies at the end of the month.

(Media Statement in Kuala Lumpur on Friday, 22nd June 2018)

                This entry was posted on Friday, 22 June 2018, 10:27 am and is filed under
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After 67 years, the great difference between the first-generation and present-generation UMNO leaders

UMNO veteran and political secretary to the first Penang Chief Minister, Tan Sri Yusoff Latiff is fond of reminiscing that when the late Tunku Abdul Rahman took over the UMNO leadership from Onn Jaafar in 1951, the party had no money, and Tunku sold his house in Penang to fund the running of UMNO.

Sixty-seven years later, we do not have an UMNO President who had to sell his house to fund the running of UMNO, but instead, there was the international  spectacle of nearly 300 boxes of designer handbags and dozens of bags filled with cash and jewellery among the items taken away by police in raids at properties linked to the former Prime Minister’s family – which contained  RM114 million in cash in 26 currencies and  Birkin handbags each worth up to hundreds of thousands of dollars!

Tunku’s integrity was undoubted and never challenged.  Najib is a kettle of fish who is now mentioned in the ranks of kleptocrats like Marcos of Philippines and Suharto of Indonesia.

This is not the only difference between  the first-generation of UMNO leaders and the current batch of UMNO leaders.

Incumbent Umno Youth vice-chief Khairul Azwan Harun has pledged to donate 50 percent of his salary as a senator to the movement’s coffers should he be elected as Umno Youth leader.

How can Azwan help restore UMNO’s credibility and moral authority when he should have resigned as Senator, since he was appointed Senator by the UMNO/BN government which had been defeated in the historic and watershed 14th General Election on May 9, 2018?

Dewan Negara has 70 senators, of which  44 are appointed by the Yang di Pertuan Agong on the advice of the Prime Minister with 26 others elected by their respective assemblies for the post.

There are currently 31 UMNO/BN Senators, two from PAS, 11 from Pakatan along with 26 vacancies in Dewan Negara.

Will Azwan lead the 31 UMNO/BN Senators to resign from the Dewan Negara, fully accepting the verdict of the electorate in the May 9, 2018 Polling Day of the 14GE?

Today, the Gerakan Central Committee unanimously decided for Gerakan to  leave Barisan Nasional. Would the Gerakan Senator resign from the Dewan Negara?

(Media Statement in Kuala Lumpur on Saturday, 23rd June 2018)

                This entry was posted on Saturday, 23 June 2018, 5:26 pm and is filed under
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MALAYSIA’S MORNING BREAKS

By
Pauline Fan
 | May 23, 2018

If politics is ‘the art of the possible’, Malaysia’s 14th General Election has reignited a call for a politics of hope, what Václav Havel – dissident playwright turned President of the Czech Republic – beautifully termed ‘the art of the impossible’.

In the two weeks since GE14, the impossible has become reality. Malaysians have witnessed changes we never imagined we would see in our lifetime – the fall of the ‘invincible’ Barisan Nasional, Mahathir Mohamad’s return as prime minister, the release and royal pardon of Anwar Ibrahim, former political prisoners sworn in as top cabinet ministers.

Like the Velvet Revolution of Czechoslovakia, Malaysia’s historic yet peaceful transition of power unseated a regime that ruled for decades and saw a people’s movement swept into government. Yet our ‘revolution’ was won quietly through the ballot box as much as through people power campaign rallies throughout the country. What impelled most Malaysians to bring down the old regime was the need to restore the rule of law and reform systems of governance plagued by corruption. In essence: a yearning to return to a Malaysia that could have been.

For many of us, ‘the Malaysia that could have been’ (and things in Malaysia that should never have happened) came to be embodied in the figures of Mahathir and Anwar. While celebrating the arrival of a ‘new dawn’, many of us were simultaneously thrown back in time, for the inextricably entangled destinies of these two men – allies, adversaries, allies once more – has shaped the collective and personal memory of Malaysians for the past 20 years.

For me, the return of Mahathir, the release of Anwar, and the reconciliation between them evoked memories of my late father, the firebrand opposition leader and two-term DAP parliamentarian, Fan Yew Teng. During the political developments of the past few months and particularly the past few weeks, I often wondered what ‘Papa’ would have made of it all. Would ‘Papa’ have embraced the transformed Mahathir – the man he spent much of his life criticising – as the leader of Pakatan Harapan, and now, again, as the prime minister of Malaysia?

In 1999, my father wrote Anwar Saga: Malaysia on Trial, a book that chronicled the unfolding of the Mahathir-Anwar grand political drama and the beginnings of the Reformasi movement. Like his previous books – If We Love This Country (1988), Oppressors and Apologists (1988), The UMNO Drama: Power Struggles in Malaysia (1989), and The Rape of Law (1990) – Anwar Saga sought to expose the grave injustices of Malaysia’s political system under Mahathir. It was difficult to publish such ‘anti-government’ books then, so ‘Papa’ set up a small press called Egret Publications, which was mostly funded by my mother.

After my father passed away in 2010, Anwar Ibrahim recalled in a tribute to him: “There had been two converging moments in our lives. The first was when he was convicted of sedition in 1975 and I, though not charged, was condemned to incarceration in Kamunting under the ISA. When I was thrown back into jail in 1998, he published Anwar Saga: Malaysia on Trial soon after. Here was someone who had been a victim of oppression and injustice too, not just some armchair commentator. I had to get hold of that book … So, with a little help from my friends, I had it secreted to my cell and devoured it from cover to cover.”

Anwar was right. ‘Papa’ spent his life fighting political repression because he himself had been subjected to it. In 1971, under Prime Minister Tun Abdul Razak, ‘Papa’ had been charged with sedition for publishing a speech as editor of DAP’s The Rocket. After a long drawn-out and infamous trial, he was eventually convicted of sedition in 1975 and disqualified from his second term in Parliament in 1977. After his years in formal politics, ‘Papa’ persisted as a vocal critic of Barisan Nasional’s excesses, scandals, and abuses of power. In particular, he was an acute observer of the power struggles within UMNO.

In a 2008 article for Harakah entitled ‘Can UMNO ever change?’, he wrote: “After more than 62 years of existence and more than half a century in power, UMNO has become a party of political pretenders and fakes, not of political protectors who were originally so much admired and needed by the Malays. UMNO’s idealism died when the spoils of office killed convictions and eroded the spirit of sacrifice. Soon enough, the unsaid and unwritten motivation was: ask not what I can do for the party; ask what the party can do for me.”

The article reveals my father’s long-standing conviction that UMNO had cast off its principles for selfish interests and sunk too deep in its own mire to ever redeem itself. I think he would initially have opposed Mahathir’s alliance with the very oppositionists he once put behind bars. Over time, however, I believe he would have seen Mahathir’s necessary role in dealing the deathblow to UMNO and Barisan Nasional.

As Malaysia’s new cabinet was sworn in a few days ago, I could not help but think of ‘Papa’ and his comrades. I felt the absent presence of the pioneers who are no longer with us – Karpal Singh, P. Patto, Tok Guru Nik Aziz and others, those who dared to fight for decades against the dark so that today we may forge a path of hope.

My father once wrote: “History has shown us repeatedly that no long night can last forever. Before long, morning must break.”  On 10 May, as the long sleepless night of waiting for GE14 results turned into a day of euphoria for millions of Malaysians, I whispered: “Papa, your morning has arrived.”

* Pauline Fan is a writer, literary translator and Creative Director of the cultural organisation PUSAKA

                This entry was posted on Sunday, 24 June 2018, 3:54 pm and is filed under
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Will the  UMNO Assemblies this week make serious amends on three major issues confronting the nation?

There are at least three things to look for in the upcoming UMNO Assemblies to be held this week beginning from Wednesday.

1. 1MDB and global kleptocracy

First is whether UMNO will embrace, ignore or repudiate the Najib legacy in particular with regard to the 1MDB international money-laundering scandal and the  infamy, ignominy and iniquity of a global kleptocracy.

When Tunku Abdul Rahman took over the UMNO leadership from Onn Jaafar in 1951, he had to sell his house in Penang to fund the running of UMNO. Contrast this with the Prime Minister-cum- UMNO President rejected by the electorate in the 14GE  – the nearly 300 boxes of designer handbags and dozens of bags filled with cash and jewellery among the items taken away by police in raids at properties linked to the former Prime Minister’s family, which contained  RM114 million in cash in 26 currencies and  Birkin handbags each worth up to hundreds of thousands of dollars!

Tunku’s integrity was undoubted and never challenged.  Najib is a different kettle of fish who is now mentioned in the same league  of kleptocrats like Marcos of Philippines and Suharto of Indonesia.

A video of the five “First Ladies” in world history  who have notoriously  squandered the people’s wealth is making the rounds in social media – and the five “First Ladies” featured are Asma al-Assad, wife of President of Syria; Grace Mugabe, wife of Zimbabwe President Robert Mugabe; Marie Antoinette, Queen of France in the 18th century whose opulence and extravagance triggered the French Revolution; Rosmah Mansor, wife of Malaysian Prime Minister Najib Razak (2009 to 2018); and Imelda Marcos, wife of President Marcos of Philippines.

Najib has made Malaysia doubly infamous. Will the UMNO Assemblies this week redeem Malaysia’s reputation and integrity?

There are three views as to how to handle the question of  Najib’s legacy on 1MDB and global kleptocracy  – to duplicate Najib’s position of denial and even ignorance; to ignore the whole question; or to take a belated stand on the 1MDB and global kleptocracy by repudiating these abuses of power, corruption and excesses.

The faceless and headless UMNO Strategic Communications unit set up after the 14GE is already busy advocating the first option – to duplicate Najib’s  public stand and defend Najib’s record on integrity and the fight against corruption.

Will the UMNO Assemblies dare to say no and to adopt  categorical and no-nonsense motions to denounce the 1MDB scandal and Malaysia’s dishonour as a global kleptocracy?

Will there be an inventory from  all UMNO  leaders, individuals, divisions and branches on the amounts of  the 1MDB monies they had received from Najib, and will they all come clean  and donate whatever “dirty money” they had received from Najib from 1MDB to Tabung Harapan Malaysia to help pay the trillion-ringgit national debt?

2. Politics of race, religion,  hate, fear,  lies and fake news

UMNO was the main peddlar of the politics of race, religion, hate, fear, lies and fake news in the run-up to and during the 11-day  14th General Election.

On the eve of the 14th General Election, Najib repeated for the umpteenth time the Big Lie that the 14th General Election is a battle between the UMNO-led Barisan Nasional and the DAP-led Pakatan Harapan, that Tun Dr Mahathir Mohamad was being paraded as the leader and icon of the opposition which was just a charade as the DAP and I were the real power behind the scene.

Would the UMNO Assemblies  own up this week to the downright fake news and false information which UMNO had unleashed in the general election, express regret and contrition for such irresponsible and divisive tactics, and commit themselves to clean, honest and moral politics and total rejection of such vicious and irresponsible politics of race, religion, hate, fear,  lies and fake news?

3. “Ketuanan Melayu” degenerated into “Ketuanan UMNO”- when its time for “Ketuanan Malaysia”

For 61 years, as the lead political party and then as the hegemon in the ruling, Alliance/Barisan Nasional coalition, UMNO failed  Tunku Abdul Rahman’s Malaysian Dream for the nation to be “beacon of light in a difficult and distracted  world””, leveraging on the strength and assets of our diversities of race, religion, language and culture to transform Malaysia into a top world class nation in every field of human endeavor and be an example to the world of an united, harmonious, successful, progressive and prosperous nation.

Instead, we became a rogue, kakistocratic and kleptocratic state, where the concept of Ketuanan Melayu degenerated into “ketuanan UMNO” when it should have been  developed into “ketuanan Malaysia”.

Will the UMNO Assemblies this week demonstrate to Malaysians that UMNO will become Malaysian political force for the future and not  a throwback to the past?

In the national transformation of Malaysia in the  next few decades, is UMNO going to lead the Malays towards a great Malaysian tomorrow  or the opposite will take place?

For the first time in its history, UMNO has become like the other BN coalition parties like MCA, Gerakan or MIC, where it secured less votes than its party membership.

UMNO claims to have a total membership of 3.6 million members but the total votes polled by UMNO candidates in the 14GE came only to 2.5 million voters.

The 2018 General Election saw UMNO/BN ejected from the corridors of power in Putrajaya, with UMNO  winning the least number of parliamentary  seats under five  previous Prime Ministers/UMNO Presidents  of Tun Razak, Tun Hussein, Tun Mahathir and Tun Abdullah – i.e. 54 parliamentary seats as compared to 109 seats during the 2004 General Election.

The  candidate for UMNO Deputy President, Tan Sri Annuar Musa said a preliminary analysis of the 14GE results showed that UMNO is still the preferred choice of the majority of the Malay voters.

I do not believe that Malay voters who voted for UMNO in the 14GE wanted Malaysia to be a global kleptocracy, just as I do not believe that the Malay voters who voted for PAS wanted PAS President Datuk  Seri Hadi Awang to be a “kingmaker” to prop up a global kleptocrat to continue as Prime Minister of Malaysia.

Now the truth of the enormous crime of kleptocracy and immoral turpitude of the 1MDB scandal are being revealed to Malaysians, all those who were misled to vote for global kleptocracy or to prop up a global kleptocrat as Prime Minister of Malaysia would have realised how gravely they had been misled to cast the wrong vote in the last general election.

Will the UMNO Assemblies this week make serious amends on these three major issues confronting the nation?

(Media Statement in Gelang Patah on Sunday, 24th June 2018)

                This entry was posted on Sunday, 24 June 2018, 11:53 am and is filed under
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Lawyer Siti Kasim’s wrongful arrest and police abuse of powers have catapulted the issue of IPCMC to the forefront of  agenda for institutional reforms in a New Malaysia

Lawyer Siti Kasim’s wrongful arrest and the police abuse of powers have catapulted the issue of Independent Police Complaints and Misconduct Commission (IPCMC) to the forefront of the agenda for institutional reforms in New Malaysia.

Malaysians are not interested in any  police-bashing as the police play a vital and essential role in any ordered and  civilized society.

What they want is to institutionalise two fundamental rights which should be enjoyed by all Malaysians, regardless race, religion, rank or socio-economic status, viz:

– The right to a crime-free, safe and secure environment to live, work and play; and

– The right to greater police efficiency, accountability and transparency and meaningful  public consultation and participation in the formulation, implementation  and monitoring of the policing agenda to reduce crime and the fear of crime.

The people want an effective and efficient police force, and will  co-operate with the police to make the streets, public spaces and homes safe.

This is why the propsed IPCMC is important.

The IPCMC was the most important recommendation of the Police Royal Commission set up by the fifth Prime Minister, Tun Abdullah Ahmad Badawi in the first flush of his premiership to transform a Malaysia with “First World Infrastructure, Third World Mentality” into an advanced nation in all dimensions, especially good governance and government accountability and transparency.

The IPCMC was to restore public confidence in the police by eradicating police corruption, police misconduct and abuses of power!

However, we seemed to have regressed to the period before the establishment of the Police Royal Commission headed by the former Chief Justice, Tun Dzaiddin with former Inspector General of Police Tan Haniff Omar as Deputy Chairman when public confidence in the police was at an all-time low, with widespread complaints about police corruption, brutalities and indiscipline resulting in many deaths in police lock-ups.

All the horror stories of police abuses of power, brutality and even custodial deaths would have  been checked and would not have happened if the IPCMC had been established as proposed by the Police Royal Commission more than a decade  ago, as the Enforcement Agency Integrity Commission (EAIC) which was formed instead is a toothless agency with neither powers, staffing nor funds to be an effective check on police misconduct and abuses of power.

The Police Royal Commission had rightly  warned that its recommendations will fail to secure desired results “if the leadership in PDRM does not rise to the challenges and champions change in the service for its own benefit”.

It said: “Effective change management starts from the top. The role of leadership at all levels is absolutely vital in a command organization like PDRM. Leaders are role models. They should be incorruptible and take ownership of programmes to eradicate corruption in PDRM.”

What the policy-makers and the police leadership failed to do more than a decade to set up the IPCMC must be remedied now, so that Malaysia would have a world-class police force.

We must quickly rise above the present malaise, where public confidence in police is  at an all-time low with impunity for gross police misconduct and indiscipline – like police custodial deaths, police brutalities and most recently, the outrageous police arrest  of lawyer Siti Kasim.

The Pakatan Harapan Government should present a programme of institutional reforms when Parliament meets for the first time after the 14th General Elections in the middle of July, with  the IPCMC  high on the programme of institutional reforms.

(Media Statement in Kuala Lumpur on Monday, 28th June 2018)

                This entry was posted on Monday, 25 June 2018, 10:53 am and is filed under
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KPMG’s declaration that  no 1MDB accounts are “true and fair” since its formation in 2009  should be the last straw that breaks the camel’s back and make the 1MDB scandal  the single biggest issue in the UMNO Assemblies this week

Never before in the history of UMNO Assemblies are there so many elephants in the room which every UMNO leader is  strenuously trying to ignore in the  UMNO Assemblies this week.

The biggest  elephant is undoubtedly the international 1MDB money-laundering scandal, which brought infamy and ignominy to Malaysia as a global kleptocracy, but there are also  other elephants in the shoal of mini-1MDB scandals like those affecting MARA, Felda and Tabung Haji.

The 1MDB elephant has continued to grow in size since  UMNO/BN  was evicted from Putrajaya in the 14th General Election on 9th May 2018, and the UMNO Assemblies this week will be doing UMNO and the nation the greatest disservice if the charade to ignore the 1MDB elephant is continued.

This charade cannot go on, especially after the shocking revelation by one of the Big Four auditors in Malaysia, KPMG, that the accounts of 1MDB  cannot be relied on from the time of its inception in 2009 – as it should be the last straw that breaks the camel’s  back and make the 1MDB scandal the single biggest issue in the UMNO Assemblies this week.

In fact, the preparedness to face up to the terrible consequences of the 1MDB scandal, which had already made Malaysia a global kleptocracy in the past few years, should be the acid test as to whether a candidate qualifies  to be a contender for the various UMNO posts in the next three years.

KPMG, which signed off on three unqualified audit reports for 1MDB for the financiaol years ending March 2010 to 2012, informed the 1MDB board of directors on June 8 that the financial statements audited did not reflect a true and fair view of the company.

KPMG reached the above decision after going through the recently declassified Auditor-General’s report on 1MDB and other relevant documents that were withheld from them by the previous management of the company.

If the documents had been disclosed to the auditors, KPMG believed the information ‘would have materially impacted the financial statements and the relevant audit reports’.

KPMG also called for all necessary steps to be taken by 1MDB to prevent further or future reliance on the audit reports it prepared for the financial years ending March 2010 to 2012.

In 2016, Deloitte also said its audit reports on 1MDB’s financial statements issued on March 28, 2014, and Nov 5, 2014, for the financial years ending 2013 and 2014 should no longer be relied upon.

A company’s set of financial statements is no longer considered audited when auditors no longer stand by their audit reports.

UMNO contender for UMNO Deputy President, Tan Sri Annuar Musa   said that the  1MDB probe had nothing to do with Umno and there was no reason for the party to be alarmed.

Would Annuar similarly declare that his MARA corruption case, which is still being investigated by the Malaysian Anti-Corruption Commission, has nothing to do with UMNO and there was no reason for UMNO to be alarmed?

According to Annuar, Umno had no knowledge of what transpired in 1MDB and was never briefed on any of the dealings handled by the state-owned company.

Either Annuar has very short memory, selective memory or he is not a person who can be trusted with truth and facts.

Didn’t the IMDB CEO, Arul Kanda Kandasamy, probably the highest-paid head of a government company in Malaysian history, go on an UMNO/BN-sponsored “Tanya Tanya”  roadshow covering some 30 locations  during the 14th General Elections to mislead Malaysians about the 1MDB scandal?

This was why I said during the 14GE that  nobody was interested in Arul’s fairy tales about the 1MDB scandal, as the then Prime Minister, Datuk Seri Najib Razak, should step forward to account fully for the 1MDB “kleptocracy at its worst” which had landed Malaysia with the ignominy, infamy and iniquity as a global kleptocracy!

Now,  after the UMNO/BN electoral disaster, even Najib is  claiming ignorance about the criminality, corruption and the moral turpitude in the 1MDB scandal.

Why didn’t Arul tell Najib the  “the truth, the whole truth and nothing but the truth” about the 1MDB scandal and instead went on a national roadshow to mislead the Malaysian electorate?

It is  sad to see the former Prime Minister trying his utmost to extricate himself from the Reuters interview and equivocate as to whether he had blamed the 1MDB board and management for the financial scandal or not.

However, what  is clear is everybody close-up to the 1MDB scandal  is busy disclaiming  responsibility for the “kleptocracy at its worst” after the change of government in the 14GE!

A contender to be UMNO President Khairy Jamaluddin issued a mea culpa early this month in an interview with the South China Morning Post that the 1MDB scandal was the cause of UMNO/BN’s “catastrophic” downfall in the 14th General Election.

Three days ago, he returned to this theme and stressed that UMNO lost in the 14th general elections as the party was plagued with scandals among the top leadership.

After the declarations that the accounts of 1MDB were not “true and fair” since its formation in 2009, all eyes are now on the UMNO General Assemblies this week as to whether UMNO leaders and delegates  will continue the charade of eyes that see not, ears that hear not and mouth that speak not!

(Media Statement in Gelang Patah on Wednesday, 27th June 2018)

                This entry was posted on Wednesday, 27 June 2018, 2:06 pm and is filed under
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UMNO Assemblies this week  present an unbelievably fertile ground for the writing of Greek tragedies and even comedies

The UMNO Assemblies this week beginning tomorrow present an unbelievably fertile ground for the writing of Greek tragedies and even comedies!

Yesterday, the incumbent contender for the  post of UMNO President, Datuk Seri Zahid Hamidi forecast that Pakatan Harapan will implode before the 15th General Election by 2023 and that UMNO will return to Putrajaya soon without the hassle of having to go through a general election.

This is a revised timeline as earlier UMNO leaders were comforting themselves about the disintegration of the Pakatan Harapan government in one or two years’ time.

This is the best illustration of what “whistling in the dark” means.

Will UMNO implode before Zahid’s hope-for implosion of  Pakatan Harapan?

Before the 14GE, not one of the UMNO warlords had expected the UMNO/BN coalition to be chucked out of office by the electorate.

In fact, the then UMNO President and Prime Minister, Datuk Seri Najib Razak was supremely confident that UMNO/BN would not only win big in the 14GE, but would be able to recapture the two-thirds parliamentary majority of at least 149 seats UMNO/BN lost in the two previous general elections in 2008 and 2013.

This was one reason why Najib did not plan any get-away on Polling Day, for he simply cannot envisage any scenario post-14GE where he could be out of  power in Putrajaya to control and direct events, including the continued charade pretending that the 1MDB international money-laundering scandal did not exist and to ignore Malaysia’s international infamy, ignominy and iniquity as a global kleptocracy.

When Najib realized that  he had lost power  for good, it was too late for him to implement any get-away plan!

Another top UMNO contender, Tan Sri Annuar Musa  made what must rank as the stupidest statement of the year in a year of very stupid political statements,  when  he said that the  1MDB probe had nothing to do with Umno and there was no reason for the party to be alarmed.

Would Annuar similarly declare that his MARA corruption case, which is still being investigated by the Malaysian Anti-Corruption Commission, has nothing to do with UMNO and there was no reason for UMNO to be alarmed?

Who is Annuar trying to deceive?

Isn’t he aware that former Minister and Barisan Nasional Backbenchers’ Club (BNBBC) Chairman Tan Sri Shahrir Samad was the first to confirm that he was one of the recipients  from Najib’s infamous RM2.6 billion personal accounts from 1MDB  for the 13th General Election campaign, followed by the disclosure of RM2 million given out to another UMNO stalwart, then Deputy Minister Ahmad Mazlan?

Would Annuar  agree that all former UMNO  Ministers and Deputy Ministers, as well as other UMNO individuals and UMNO Divisions and branches  who received monies from Najib from 1MDB should publicly own up and donate equal amount of the “dirty money” that they had received to Tabung Harapan Malaysia as a sign of their contrition and redemption for aiding and abetting the 1MDB kleptocratic scandal, which plunged Malaysia into the infamy, ignominy and iniquity of a global kleptocracy?

According to Annuar, Umno had no knowledge of what transpired in 1MDB and was never briefed on any of the dealings handled by the state-owned company.

Either Annuar has very short memory, selective memory or he is not a person who can be trusted with truth and facts.

Didn’t the IMDB CEO, Arul Kanda Kandasamy, probably the highest-paid head of a government company in Malaysian history, go on an UMNO/BN-sponsored “Tanya Tanya”  roadshow covering some 30 locations  during the 14th General Elections to mislead Malaysians about the 1MDB scandal?

This was why I said during the 14GE that  nobody was interested in Arul’s fairy tales about the 1MDB scandal, as the then Prime Minister, Datuk Seri Najib Razak, should step forward to account fully for the 1MDB “kleptocracy at its worst” which had landed Malaysia with the ignominy, infamy and iniquity as a global kleptocracy!

Now,  after the UMNO/BN electoral disaster, even Najib is  claiming ignorance about the criminality, corruption and the moral turpitude in the 1MDB scandal. Why didn’t Arul tell Najib the  “the truth, the whole truth and nothing but the truth” about the 1MDB scandal and instead went on a national roadshow to mislead the Malaysian electorate?  And now, we have  Annuar saying that the 1MDB scandal had nothing to do with UMNO!

It is sad to see the former Prime Minister trying his utmost to extricate himself from the Reuters interview and equivocate as to whether he had blamed the 1MDB board and management for the financial scandal or not.

However, what  is clear is everybody close-up to the 1MDB scandal  is busy disclaiming  responsibility for the “kleptocracy at its worst” after the change of government in the 14GE!

Another contender for the post of UMNO saviour, Khairy Jamaluddin, issued a mea culpa early this month in an interview with the South China Morning Post that the 1MDB scandal was the cause of UMNO/BN’s “catastrophic” downfall in the 14th General Election.

Two days ago, he returned to this theme and stressed that UMNO lost in the 14th general elections as the party was plagued with scandals among the top leadership.

Could Khairy now understand why  I had felt so ashamed as a MP in the 13th Parliament although I had been a Member of Parliament for 10 terms from 1969 to 2018, except for the tenth Parliament from 1999 to 2004, spanning 45 years from 1969 – why I was suspended twice, and for six months each, basically because I demanded answers and accountability over the 1MDB scandal?

Would Khairy ask the UMNO Assemblies beginning tromorrow to endorse my call on Najib and the 13th Parliament Speaker, Tan Sri Pandikar Amin Mulia to apologise to all Malaysians for the 13th Parliament’s failure to do anything to clear or purge Malaysia of the infamy, ignominy and iniquity of being regarded worldwide as a global kleptocracy arising from the 1MDB scandal?

I am shocked that the perpetual aspirant to be the Malaysian Prime Minister, Tengku Razaleigh Hamzah has so far not said a single word about the 1MDB scandal – which is typical of his politics of buying insurance most of the time.

Willl Razaleigh take an unequivocal stand to ask UMNO  repudiate the 1MDB scandal and exorcise both UMNO and Malaysia  of the infamy, ignominy and iniquity of  beomg regarded worldwide as a global kleptocracy in the past few years?

(Media Statement in Gelang Patah on Tuesday, 26th June 2018)

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Najib should conduct a “1MDB Tell-All” special session for UMNO delegates at the UMNO General Assembly this week

During the 14th General Election campaign, the 1MDB Chief Executive Officer Arul Kanda Kandasamy toured the country on a national “Tanya Tanya” roadshow, covering over 30 locations, even challenging DAP leaders to ask him questions about what the government claimed was  the fake news about the 1MDB international money-laundering scandal.

I said at the the time that nobody was interested in Arul’s fairy tales about the 1MDB scandal, unless  the then Prime Minister, Datuk Seri Najib Razak, stepped forward to account fully for the 1MDB “kleptocracy at its worst” which had landed Malaysia with the ignominy, infamy and iniquity as a global kleptocracy!

When he was Prime Minister, especially in the past three years since July 2015 when information about the RM2.6 billion 1MDB monies went into his personal banking accounts first became interntional news, Najib had avoided the subject of the 1MDB scandal like a plague, sub-contracting it to Arul, probably with the  highest remuneration the Malaysian government had ever paid to a private person, all at the taxpayers’ expense!

But the 1MDB scandal was no fake news, which the Najib government had tried to make it into one with the Anti-Fake News Act passed hurriedly before the dissolution of Parliament.

Najib had been very busy in the past few days in a “white-washing” campaign of the 1MDB scandal, starting with a Reuters interview claiming ignorance about the criminality, corruption and the moral turpitude of the 1MDB scandal, and subsequently trying to extricate himself from a mine-field by denying that he had blamed the 1MDB board and management for the financial scandal.

Yesterday, Najib did the “unthinkable”, visiting and giving an interview to  Malaysiakini – the news portal which had been banned from several official functions of the Najib administration – which was a crushing vote of no confidence in the stable of UMNO newspaprers including Utusan Malaysia, New Straits Times and Berita Harian by a national leader who has himself lost all public trust and credibility.

Who in Malaysia now believe Najib’s stories?

Pollster Merdeka Centre estimated that 95% of the Chinese voted for Pakatan Harapan while  35-40% of Malays voted Barisan Nasional, another 30-33% supported PAS, and the remaining 25-30% picked Pakatan Harapan. For Indian voters, 70-75% of them supported Pakatan Harapan.

I believe if the general election is held  after the truth about the 1MDB scandal and other mini-1MDB-like corruption in MARA, FELDA and other public bodies have become widely known, the majority of Malay voters would have supported Pakatan Harapan and UMNO/BN would not have secured 35-40% of the Malay votes or PAS won 30-33% of the Malay votes.

I do not believe that if the the truths about the 1MDB scandal and the other mini-1MDBs are known,  the majority of the Malay voters  would want Malaysia to be ridiculed and scorned at by the world in having become a global kleptocracy or support PAS President Datuk Seri Hadi Awang’s plan to become a “kingmaker” to prop up Najib to continue as Prime Minister.

Najib’s “white-washing” campaign of the 1MDB, whether in his interview with Reuters or Malaysiakini, have been dismal failures for they suffer from one common  fatal malady – Najib has lost all credibility.

If Najib wants to regain credibility, probably he  should personally  conduct a special  “1MDB Tell-All” special session for UMNO delegates at the UMNO General Assembly this week to ask any and whatever questions about the 1MDB scandal.

(Media Statement in Gelang Patah on Thursday, 28th June 2018)

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Have UMNO leaders learnt the right lessons from UMNO’s electoral disaster in the 14th General Election?

Tengku Razaleigh Hamzah has joined his rival Datuk Seri Zahid Hamidi in “whistling in the dark”, expecting  UMNO to be back in power before the 15th General Election by 2023.

Four days ago, Zahid said he expects an implosion of the  Pakatan Harapan coalition and the fall of the Pakatan Harapan government in Putrajaya before the 15th General Election.

Both Zahid and Razaleigh are entitled to their fantasies although both should realise that the Pakatan Harapan coalition parties are committed to make the Pakatan Harapan government a success not only at the national level, but also in the states where the Pakatan Harapan is the government –  not just for one term, but in the subsequent general elections as well.

To do this, Pakatan Harapan component parties must fulfill the high hopes of Malaysians for national renewal to fulfill Bapa Malaysia Tunku Abdul Rahman’s Malaysian Dream for the nation to be a “beacon of hope in a disturbed and distracted world” and cease to be  the  laughing-stock of the world by becoming a kakistocracy and global kleptocracy!

Is Malaysia capable of turning outwards to compete with the rest of the world  to become a world-class nation in  one field of human endeavour after another by  leveraging on the strength and assets of our diversities of race, religion, language and culture or  will Malaysia hurtle down the trajectory of a failed and rogue state, turning inwards to cannibalise the nation with the irresponsible and dangerous politics of race, religion, hate, fear and lies?

The more immediate question is whether UMNO leaders have learnt the right lessons from UMNO’s electoral disaster in the 14th General Election

Now, UMNO has 52 Members of Parliament, representing 23.4% of the 222-member Parliament, a far cry from UMNO’s zenith of political power when it had over 50 per cent representation of MPs in Parliament.

But this sorry state of affairs is not just confined to UMNO, as MCA fell from its height of having  26 per cent of Members of Parliament in 1964GE to 3.1% of the Malaysian parliamentary seats in 2013GE and the present 0.45% of Malaysian parliamentary seats in 2018GE; while Gerakan fell from its heyday when it won 5.5% of the parliamentary seats in 1969GE to 0.45% of parliamentary seats in the 2012 GE and zero parliamentary representation in the 2018GE.

Have UMNO, MCA, Gerakan and other BN component parties learnt the lessons from their electoral disaster in the 14GE?

This does not seem to be the case from the speeches and statements from leaders of UMNO, MCA, Gerakan, MIC and other former BN component parties.

UMNO’s Tengku Razaleigh has said that UMNO must ask the rakyat for forgiveness for all its past mistakes if it is to rise again.

He said Umno should apologise to all Malaysians for neglecting its duties and responsibilities as the people had entrusted their faith in the party.

His rival for the UMNO Presidential post, Khairy Jamaluddin agrees with Razaleigh and said that UMNO must first admit its mistakes and explain things to the grassroots before apologising to them for its defeat in the 14th general election.

But no UMNO leaders seem ready to admit as to what are real mistakes causing UMNO/BN’s electoral disaster in the 14GE, as reflected by Razaleigh’s statement that ‘Umno’s standing unaffected by Najib-linked RM1.1b haul’ and that the police seizure making Najib and his wife Rosmah Mansor world news had nothing to do with Umno.

Would Malaysians or the 3.6 million UMNO members agree that the police seizure of RM1.1 billion of items, inclusive of cash, watches, handbags and jewellery at Pavilion Residences linked to Najib had nothing to do with UMNO?

Have UMNO, MCA, Gerakan, MIC and other BN component parties learnt the other important lessons of the 14GE?

(Media Statement in Gelang Patah on Friday, 29th June 2018)

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UMNO should be encouraged to become an effective and constructive Opposition and there should no notion of deregistering UMNO or declaring it illegal

UMNO has clearly acted against the Societies Act 1966 requirements.

Under the UMNO constitution, Umno is required to hold supreme council elections once every three years, but it has the power to give an 18-month extension under special circumstances, like preparing for the 14th general election.

The last Umno triennial elections were held on Oct 20, 2013, which means that Umno supreme council elections should have been held by Oct 19, 2016, to comply with the three-year requirement, or by April 19, 2018, if an 18-month extension was decided upon by the UMNO supreme council.

On June 26, 2015, Najib announced that the UMNO supreme council had decided to put off the party election due in October 2016 by 18 months.

He said: “According to Clause 10.16 of the Umno constitution, the supreme council has the right to postpone elections for its supreme council, divisions and branches. This postponement cannot exceed 18 months from the date the elections were supposed to be held.”

That is, by April 19, 2018.

There was, however, no Umno elections held by that date, and this fatal violation of the party constitution cannot be cured, overcome or rescued in any manner by the Registrar of Societies.

I have studied Section 3A of the Societies Act 1966, which had been quoted by the Umno secretary-general Tengku Adnan Tengku Mansor as vesting powers on the ROS to give a further year-long extension for Umno supreme council election after April 19, 2019.

Section 3A states: “In addition to the powers, duties and functions conferred on the registrar by this Act and any regulations made thereunder, the registrar shall have and may exercise all such powers, discharge all such duties and perform all such functions as may be necessary for the purpose of giving effect to and carrying out the provisions of this Act.”

Anyone who understand English or Bahasa Malaysia will know that the simple and very plain language in Section 3A of the Societies Act does not give the ROS any powers to extend a further year-long extension for UMNO supreme council to be held after 19th April 2018.

The UMNO elections for all the top UMNO national and divisional posts are therefore liable to be declared null, void and invalid.

Although UMNO has blatantly violated the law and its own Party Constitution, UMNO should be encouraged to become an effective and constructive Opposition and there should no notion of deregistering UMNO or being declared illegal by the Registrar of Societies.

It is the responsibility of everyone in Malaysia to promote the healthy growth of democracy which means institutionalising a system of checks and balances not only within the governing parties, but also to  encourage the growth of a strong, effective and constructive Opposition, a free and responsible press as well as a vibrant and active civil society.

Whether UMNO and the other political parties presently or formerly in the Barisan Nasional can play an effective and constructive Opposition role is up to these political parties, but the government-of-the-day should not repress or oppress them, as DAP had been at the receiving end for five decades.

(Media Statement in Kuala Lumpur on Friday, 29th June 2018)

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What supreme irony – Najib trumpets his achievements for UMNO while Syed Hamid bids farewell to UMNO as it has betrayed its founding principles

What a supreme irony -Datuk Seri Najib Razak trumpets his achievements for UMNO while another famous son of UMNO, Syed Hamid Albar, bids farewell to UMNO as it has betrayed its founding principles.

In an exclusive interview with Malaysiakini, Najib said that his successor must be someone who is able to regain the confidence of party members and Malaysians.

He stressed: “This is an opportunity for us to regain the trust, so the person must be someone who can do that so that Umno can emerge as a stronger party.”

It is tragic that 50 days  after the watershed and historic 14th General Election on May 9, 2018, the former UMNO President and Prime Minister is still living in a “bubble” and has not realised that he has lost all credibility and is the last person in the country to talk as to how UMNO is to regain the confidence of 3.6 million party members and Malaysians.

This is borne out by the latest Merdeka Centre survey which shows that more UMNO members believe Najib caused them to lose the government rather than the goods and services tax (GST) issue.

Two out of five Umno members polled blamed Najib but only one out of five said it was the GST. Only 8% believed that Dr Mahathir Mohamad was a factor for Barisan Nasional’s (BN) historic defeat.

The survey by Merdeka Centre for Opinion Research showed about 40% of Umno delegates and members polled believed that Najib was to blame for BN’s shocking defeat last month.

I am struck by the images of UMNO Vice Presidents of the past compared to Najib today.

When the late Tunku Abdul Rahman took over the UMNO leadership from Onn Jaafar in 1951, the party had no money, and Tunku sold his house in Penang to fund the running of UMNO.

Sixty-seven years later, Malaysians have to learn first-hand from the first UMNO couple the existence of unbelievably expensive and rare Birkin and Bijan handbags,  which they had never heard of before, among the police seizure of  RM1.1 billion worth of cash in 26 foreign currencies, watches, handbags and jewellery at Pavilion Residences linked to Najib

The third Prime Minister of Malaysia, Hussein Onn, was synonymous with integrity, but Najib, the sixth Prime Minister, has joined the pantheon of kleptocrats with the likes of Suharto and Marcos.

It is doubly tragic that another famous UMNO son, Syed Hamid Albar, has today given his reasons for saying farewell to UMNO.

Declaring that he is no longer a member of UMNO, Syed Hamid said UMNO is no longer the one he once knew.

He said:  “While Umno was founded upon the ideals of ensuring that the Malay race, the religion of Islam and culture are upheld and protected, this did not in any way mean that other races, beliefs and traditions should be marginalised.”

Syed Hamid said it pained him to admit that “the ideology and philosophy that Umno was built on has been twisted to become intolerant, self-centred and even undemocratic”.

Umno’s leaders had grown “elitist, too far removed and detached from the grassroots” to listen to or understand the needs of the people.

He said the same leaders had “practised and condoned a denial syndrome that has gone on for far too long, foregoing transparency and the rule of law in favour of their own excesses”.

He continued:“Umno’s leadership in recent years has destroyed the party’s image, reputation and good name, as they allowed abuse of power and corruption to thrive.

“Umno is not the party I once knew. It has become a selfish party that strives for its own survival and gain, and cares little or not at all for the rakyat.

“The ideals the party once held sacred were abandoned and at best, were used as rhetorical speeches for Umno politicians with vested interests.

“Be that as it may, the principles that the party once believed in are still very much alive in me, and that ironically made me realise that I can no longer serve the party that has abandoned its principles and ideals.”

Does Najib realise that the only way for UMNO to regain credibility and relevance in Malaysian politics is for UMNO to make a clean break with the past, which means repudiating Najib’s legacy of a kakistocratic and kleptocratic state?

(Media Statement in Kuala Lumpur on Friday, June 29, 2018)

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In view of his strategic role in 1MDB scandal, why was Najib not summoned or himself volunteer to testify at the PAC Inquiry in 2015/6 into 1MDB?

The fourth instalment of the exclusive interview of former Prime Minister Datuk Seri Najib Razak with Malaysiakini has  raised even more questions than his three previous instalments.

Najib admitted that he should have been more open on the Auditor-General’s Report on 1MDB instead of placing it under the Official Secrets Act and on hindsight, he would have also implemented 1MDB in a different manner.

According to Najib, Pakatan Harapan had exploited the 1MDB issue against BN leading up to the national polls with a “negative” campaign involving character-smearing.

He stressed that the bipartisan PAC had absolved him of wrongdoing in the 1MDB issue.

This is the fake news which Najib had been spreading in the past two years as the PAC Report had not absolved him of wrongdoing in the 1MDB issue – which was why I had repeatedly challenged Najib and all UMNO/BN Ministers and leaders to quote, chapter and verse, where the PAC Report had absolved him of wrongdoing in the 1MDB issue.

Najib’s interview had highlighted one significant issue in the “kleptocracy at its worst”, as US Attorney-General Jeff Session described the international 1MDB money-laundering scandal at a recent global anti-corruption conference – why despite his strategic role in the 1MDB issue, the PAC had not summoned Najib to testify at its 1MDB investigations in 2015/16 or why Najib had not  volunteered to appear before the PAC so that an comprehensive and accurate PAC report could be tabled.

This is something that the PAC Chairman, Hasan Arifin must explain.

Hasan Arifin was appointed as PAC Chairman after the previous PAC Chairman,  Nur Jazlan Mohamad was promoted as Deputy Home Minister  in the 1MDB “Week of the Long Knives” in July 2015 as he was getting too diligent in wanting to investigate the 1MDB scandal.

Najib would probably be summoned to testify before the PAC on the 1MDB  issue if Nur Jazlan had continued as PAC Chairman, but Hasan on his appointment as PAC Chairman in October 2015  set his face against any calling of Najib to testify before the PAC.

This is now for Hasan to explain, as well as for Najib to explain why he had not volunteered to testify before the PAC so that it could come out with an accurate and comprehensive report on 1MDB issue.

(Media Statement in Subang Jaya, Selangor on Saturday June 30, 2018)

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Public Accounts Committee committed one of its greatest national disservice in six decades  in allowing its 1MDB Report to be distorted as exonerating Najib from any wrongdoing in the 1MDB scandal

One of the highlights of the “live” UMNO Presidential candidates’ debate last night was the admission by Khairy Jamaluddin that one of his regrets in life was to accept the explanation of the 1MDB scandal.

Although he felt there were holes in the explanation provided on 1MDB, Khairy said he accepted the explanations  as the investigations that was conducted by the Public Accounts Committee (PAC) did not implicate the prime minister at that time.

This is in fact the greatest disservice of the Public Accounts Committee in six decades where, instead of revealing cover-ups, it helped to cover up the greatest financial scandal in the land.

It is to the eternal shame and disgrace of the PAC that it allowed its 1MDB report to be distorted as exonerating the then Prime Minister and Finance Minister, Datuk Seri Najib Razak, from any wrongdoing in the 1MDB scandal.

Except for the protests by Opposition MPs in the PAC at the time, led by the then DAP MP for PJ Utara, Tony Pua, the PAC Report on the 1MDB was cynically and wrongfully used by Najib and his administration as best proof that Najib was not guilty of any wrongdoing in the 1MDB scandal.

In fact, I had many a time in the 25 months between the tabling of the PAC Report in Parliament in April 2016 and the 14th General Election on May 9, 2018 sought to expose and rebut the  bare-faced lies of Najib and other UMNO/BN Ministers, leaders and propagandists seeking to suppress the 1MDB issue on the basis that the PAC had exonerated Najib of any wrongdoing after lengthy and detailed investigations into the 1MDB scandal.

For instance, at the end of March 2018, I extended my challenge  to all Cabinet Ministers and BN leaders to show where in the PAC Report on 1MDB was Najib absolved of any wrongdoing in the 1MDB scandal, described by US Attorney-General as “kleptocracy at its worst”?

I had a day earlier emailed the Prime Minister, Datuk Seri Najib Razak to ask him to fix an appointment for him to show me and DAP National Publicity Secretary and MP for PJ Utara, Tony Pua, where in the Public Accounts Committee (PAC) Report on 1MDB he is absolved of any wrongdoing in the 1MDB scandal.

I stressed that Najib’s claim that he had been cleared of any wrongdoing in the PAC report over 1MBD was false and baseless and was the most recent and worst example of the “fake news” concocted and peddled by the Prime Minister and his Cabinet Ministers in the country.

I had saidl that it was  a sad and shameful day for Malaysia that Malaysians had  to depend on foreign countries to provide “justice” to the 30 million Malaysians, who are the real victims of the 1MDB scandal – when the Malaysian government should be in the forefront to provide justice for the victims of the 1MDB scandal.

The historic and watershed 14th General Elections had provided Malaysians an opportunity to redeem themselves and restore national pride by getting to the roots of the 1MDB scandal.

I have at the last Parliamentary meeting in April proposed a motion  to reject the PAC Report on 1MDB as unsatisfactory and not comprehensive enough in view of the mountain of new evidence about the 1MDB corruption and kleptocracy which have surfaced in the last two years but I was suspended for the second time for six months, and was regarded as a parliamentary “ghost” whom the Speaker and Deputy Speakers could not see, although I was in Parliament every day and sitting near them.

It is most reprehensible that up to now, not a single UMNO leader is prepared to admit to the grave crime and  national betrayals in allowing Malaysia to be turned into a global kleptocracy as a result of the 1MDB scandal, with the 1MDB scandal the elephant in the room of the UMNO party elections.

Every day, the 1MDB elephant has continued to grow in size since UMNO/BN was evicted from Putrajaya in the 14th General Election on 9th May 2018, and UMNO is  doing UMNO and the nation the greatest disservice by continuing  the charade to ignore the 1MDB elephant.

This charade cannot go on, especially after the shocking revelation by one of the Big Four auditors in Malaysia, KPMG, that the accounts of 1MDB cannot be relied on from the time of its inception in 2009.

The KPMG action should be the last straw that breaks the camel’s back to make the 1MDB scandal the single biggest issue in the UMNO elections today,  but this does not appear to be the case.

In fact, the preparedness to face up to the terrible consequences of the 1MDB scandal, which had already made Malaysia a global kleptocracy in the past few years, should be the acid test as to whether a candidate qualifies to be a contender for the various UMNO posts in the next three years.

KPMG, which signed off on three unqualified audit reports for 1MDB for the financial years ending March 2010 to 2012, informed the 1MDB board of directors on June 8 that the financial statements audited did not reflect a true and fair view of the company.

KPMG reached the above decision after going through the recently declassified Auditor-General’s report on 1MDB and other relevant documents that were withheld from them by the previous management of the company.

If the documents had been disclosed to the auditors, KPMG believed the information ‘would have materially impacted the financial statements and the relevant audit reports’.

The question is why the PAC could not be alerted to the wrongdoings in the 1MDB scandal after access to the Auditor-General’s Report, as done by the  KPMG auditors?

Apart from Tony Pua and Opposition MPs on the PAC who had spoken up fortrightly against the 1MDB scandal, the PAC Report on the 1MDB scandal will for ever be an indictment of the failure of the PAC in the 13th Parliament  to perform its  patriotic duty to protect the interests of the nation.

(Media Statement in One City, Selangor on Saturday, 30th June 2018)

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DAP wants Pakatan Harapan Government to succeed not just 50 or 500 days, but for 5,000 days – which means winning the 15th and 16th General Elections

We have just passed the half-way mark of the first 100 days in office of the Pakatan Harapan Federal Government in Putrajaya.

There are teething problems in the first 50 days of the Pakatan Harapan government, whether at the federal level in Putrajaya or in the eight state governments involving Pakatan Harapan – namely Penang, Selangor, Kedah, Perak, Negri Sembilan, Malacca, Johore and Sabah – but we must always maintain a positive mindset that we want the Pakatan Harapan governments to suceed.

We not only want the Pakatan Harapan government to suceed  in first 50 or 500 days but for  5,000 days – which would mean for more than two terms of five years each and the Pakatan Harapan winning the 15th and 16th General Elections!

This is a tall order as the reimagining and remaking of a New Malaysia is not meant for timorous souls but for courageous Malaysians who dare to dream big dreams for Malaysia to be a world top class nation in several fields of human endeavour by leveraging on our unique assets that come from the diversity of the races, religions, languages and cultures that constitute Malaysia.

We want to create a New Malaysia that can fulfill Bapa Malaysia Tunku Abdul Rahman’s Malaysian Dream of becoming “a beacon of light in a distracted and disturbed world” – a showcase to the world of a plural nation which is united, harmonios, just, democratic, competitive, progressive and prosperous!

DAP leaders must learn from the mistakes of UMNO/BN leaders resulting in the decisive repudiation of UMNO/BN politics in the last general elections.

DAP leaders must always remain humble, down-to-earth, approachable, hardworking, clean and honest. DAP leaders must set an example of service to the people and nation over service to one-self.

There is no place for the arrogant, the decadent and the corrupt in the DAP.

In the 14th General Election, Pakatan Harapan secured 48.3% of the popular vote, while Barisan Nasional secured 33.9% and PAS 16.6% of the popular vote.

However, I do not believe that 33.9% of the popular vote which supported Barisan Nasional, in particular UMNO, candidates would have done so if they fully understood that their vote would be regarded as a vote for Malaysia continuing as a global kleptocracy and the slew of abuses and excesses of power under the Najib premiership.

Similarly, I do not believe that there would be 16.6% of popular votes for PAS if these voters had realised that this popular vote would be used by the PAS President, Datuk Seri Hadi Awang to prop up a kleptocrat,  Datuk Seri Najib Razak as Prime Miniser and Malaysia continuing as a global kleptocracy – scorned and humiliated by the world.

The next five year will be challenging ones for it will afford an opportunity to reach out to the 50.5% of popular vote who did not vote for Pakatan Harapan in the 14GE  for they did not realise that their votes would be used to support or prop up a kleptocratic Malaysia – resulting in  Malaysia to continue as the laughing stock of the world.

(Speech at the National Retreat 42 Members of Parliament and 108 State Assembly representatives held at e-City Hotel, One City, Selangor on Saturday, 30th June 2018)

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Najib’s strategists have vindicated themselves –  managed to win in the UMNO elections yesterday  after they had been given a drubbing in the 14GE though  it is likely to be a pyrrhic victory

Datuk Seri Najib Razak’s highly-funded strategists have at least vindicated themselves  – managed to win in the UMNO elections yesterday after they had been given a drubbing in the 14th General Election though it is likely to be a pyrrhic victory.

As if  to drive  home the point that  Najib is still a force  to be reckoned with in Malaysian politics, Najib’s strategists went  “for the kill”  to deliver the message  after the UMNO elections results were known last night that Najib is still the leading  force in UMNO politics and to set the UMNO agenda in post-14GE with the  statement  on the pertinence and sagacity of  Najib’s “bastardised” Malays prediction three years ago.

This is a wily political move to pave the way to create the image that Najib was a great and  self-less  Malay martyr on the eve of his anticipated arrest next week for the 1MDB  “kleptocracy at its worst” – that he is being persecuted  not because of his kleptocratic 1MDB scandal but to save Malays  from being “bastardised” when UMNO loses power.

Najib spoke about  “bastardised Malays”  in Perlis in August 2015, a month after he orchestrated the 1MDB “Week of Long Knives” where he carried out an undemocratic coup d’tat  and  sacked the Deputy Prime Minister, Tan Sri Muhyiddin Yassin, the Attorney-General Tan Sri Gani Patail, and crippled all institutions which might have upheld the rule of law on the 1MDB scandal and enabled “A dead man walking” for  some three years until Malaysians regardless of race, religion and region united  in the 14GE to Save Malaysia from hurtling towards the trajectory of a rogue, failed, kakistocratic and kleptocratic state.

He warned at the Padang Besar, Kangar and Arau  UMNO delegates meeting in Kangar that the Malays and Muslims would lose everything if UMNO loses power

He said: “Some people say that the Malays will be defeated, beaten or fall flat on the ground but I choose the word ‘bastardise’ (Terbangsat).

What was most pertinent was the  immediate rejoinder at the time by a former UMNO leader, Khairuddin Abu Hassan, that the Malays will be “bastardised” (bangsat) if Najib remained in power, as the Malays will be divided  and be bastardised if Najib is not ousted.

Najib’s statement last night is the best proof that there are UMNO leaders who have  not learnt the lessons of 14GE and who see the formula for UMNO’s revival a  return to the irresponsible and extremist  politics of race, religion, hate, fear and lies which was propagated with an intensity and viciousness never seen in previous general elections.

Another recent example was the targeting of the Finance Minister, Lim Guan Eng, for issuing Chinese translations of his statements, which Guan Eng had done for ten years as Penang Chief Minister and  a practice  which had been done by MCA Ministers under the Najib premiership.

For the past decade, Guan Eng was demonized as anti-Malay and anti-Islam Penang Chief Minister  by UMNO propagandists, that the Malays and Muslims in Penang were being oppressed, marginalized and mistreated.

There was no basis whatever to these politics of race, and religion, hate, fear and lies which is best testified by the results in  Penang state for the 2018 General Elections, where the 10 UMNO State Assembly representatives in the 2013 General Elections was reduced four-fifth of its representation to two State Assemblymen.

The Penang UMNO election results in 2018 should be a warning – that if UMNO returns to the politics of race, religion, hate, fear and lies, and continues to be destructive, divisive and dishonest political party,  then UMNO should expect rejection and repudiation by the majority of Malay voters with its parliamentary representation in the 15th General Elections drastically reduced.

Already, UMNO is now reduced to only having 52 Members of Parliament, representing 23.4% of the 222-member Parliament, a far cry from UMNO’s zenith of political power when it had over 50 per cent representation of MPs in Parliament.

Najib’s prescription will ensure that  National UMNO will go the way of Penang UMNO in the 2018 General Elections.

This is a decision that the new UMNO leadership elected yesterday will have to make.

They will have to decide whether the observation of  Faisal Hazis of the Institute of Malaysian and International Studies is correct or otherwise.

Faisal Hazis said:

“Umno now is still the old Umno, which has yet to see a change in leadership. Without the change, there would be no new direction for the party and they will go back to their old roots.

“Umno itself is a big ship. To see changes, it would take many years and a lot of sacrifices.”

He said  Umno is likely to default back to racial politics despite the clear voter rejection as  its new president would have to put in significant effort to turn the Malay nationalist party around.

(Media Statement in Gelang Patah Lim Kit Siang on Sunday, July 1, 2018)

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Agree with new Wanita UMNO chief  Noraini that Ermieyati who resigned from UMNO should resign as MP for Masjid Tanah to seek a new mandate, but the Constitution should be amended first to allow Ermieyati to re-contest in such a by-election

The new Wanita UMNO chief Noraini Ahmad has challenged MPs who quit UMNO to relinquish their positions as elected representatives and trigger by-elections.

So far, three UMNO MPs have announced their resignation from UMNO to become independent MPs, namely Masjid Tanah MP Mas Ermieyati Samsudin, Bukit Gantang MP Syed Abu Hassin Hafiz Syed Abdul Fasal and Bagan Serai MP Noor Azmi Ghazali.

Noraini said:

“The decision by the three MPs, particularly Mas Ermieyati, to become independent MPs, is clearly a betrayal of the people’s trust who had elected them as Umno and BN representatives.

“Wanita Umno would like to remind Mas Ermieyati and other BN representatives that their position as MPs is not due to themselves but a combination of hard work by the party machinery and the people’s trust in Umno and BN.

‘If BN MPs have truly lost faith in Umno, Wanita Umno challenges them to resign as MPs and pave the way for a by-election as the people’s mandate must be respected and they should be given the choice to elect MPs from the parties that they trust”.

Mas Ermieyati was the latest Umno MP to announce her departure from the party today, citing her disappointment at the party election in retaining the old guards instead of choosing reforms.

I am in fact very touched by the reasons given by Mas Ermieyati for leaving UMNO, as it reminds me of what another outstanding scion of UMNO, Syed Hamid Syed Albar, who said a few days ago that UMNO today “is not the party I once knew” as “It has become a selfish party that strives for its own survival and gain, and cares little or not at all for the rakyat”.

Syed Hamid said it pained him to admit that “the ideology and philosophy that Umno was built on has been twisted to become intolerant, self-centred and even undemocratic” and Umno’s leaders had grown “elitist, too far removed and detached from the grassroots” to listen to or understand the needs of the people.

He said the same leaders had “practised and condoned a denial syndrome that has gone on for far too long, foregoing transparency and the rule of law in favour of their own excesses”.

He said “Umno’s leadership in recent years has destroyed the party’s image, reputation and good name, as they allowed abuse of power and corruption to thrive.”

Mas Ermieyatiu should accept Noraini’s  challenge and  resign as MP for Masjid Tanah to seek a new mandate from the voters of Masjid Tanah but after changes in the law to allow her to re-contest in the by-election.

I do not think she would have qualms over such an act of principle, but the Malaysian Constitution must be amended first to allow her to re-contest in such a by-election.

At present, she is barred from recontesting for five years in the event of her resignation as Article 48(6) of the Constitution stipulates:

“48 (6) A person who resigns his membership of the House of Representatives shall, for a period of five years beginning with the date on which his resignation takes effect, be disqualified from being a member of the House of Representatives.”

UMNO/Barisan Nasional is now left with 54 Members of Parliament.  Let all the 54 BN MPs declare they will support any Constitutional Amendment Bill to repeal Article 48(6) of the Constitution at the first meeting of the 14th Parliament later this month so that Mas Ermieyati can re-contest in Masjid Tanah after she has resigned as MP.

With Pakatan Harapan’s 113 MPs, Warisan’s eight MPs as well as Barisan Nasional’s eight 54 MPs, together with the support of the three ex-UMNO MPs, there is more than the requisite two-thirds parliamentary majority of 149 votes to enact such a constitutional amendment – even as a stand-alone amendment bill.

Will the 54 UMNO/BN MPs support such a constitutional amendment when Parliament meets later this month? Let us hear from the new UMNO President elected on Saturday – Datuk Seri Ahmad Zahid Hamidi.

It is now for  Noraini to first  prove her  sincerity and integrity before  Mas  Ermieyati has to prove  her political integrity by resigning from Parliament after the constitutional amendment barring her from re-contesting is given the Royal Assent and gazetted into law.

In such circumstances, I would support Mas Ermieyati contesting against UMNO in a one-to-one contest, and for Pakatan Harapan to stay out of the Masjid Tanah by-election.

(Media Statement in Gelang Patah Lim Kit Siang on Monday 2nd July 2018)

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Managing Malaysia’s Public-Sector Debt

By R. Chander

BACKGROUND

This note, in three parts, focuses on the public sector debt in Malaysia. Part I presents a brief overview of the manner in which the Najib administration approached the issue of public sector debt. Part II presents a summary view of the assessment made by the International Monetary Fund (IMF) in the course of the annual Article IV Consultations completed earlier this year. The IMF Report was critical of the manner in which debt reporting was conducted by the previous administration. Part III looks to the future and makes a number of observations concerning the most appropriate manner in which the new Pakatan Harapan government could better manage Malaysia’s public sector debt.

PART I: THE NAJIB ADMINISTRATION AND PUBLIC SECTOR DEBT

Following the defeat of the BN led Federal Government and the take over of the reins by the Pakatan Harapan (PH)coalition, there has been intense and critical attention paid to fathoming the true nature and size of the Malaysian Government’s public debt obligations.

The BN administration, under Prime Minister Datuk Seri Najib Abdul Razak, had been less than transparent about the true size of the Government’s liabilities. The Najib administration chose an approach that was designed to obfuscate by being less than transparent.

The strategy that appears to have been put in place had a number of components. First, the annual Federal Government budgets (as presented to Parliament) recorded for most years a modest deficit; such deficits were financed by borrowings in Ringgit denominated loans. Direct borrowings from foreign sources were minimal. However, foreign hedge funds and other investors held sizable holdings of Malaysian ringgit denominated paper. These holders were attracted in part by the relatively higher returns from Malaysian government debt instruments at a time when interests rates were at record low levels.

Total Federal Government debt was kept to a level averaging just above 50 percent of GDP. Much of the financing of development projects was however from off budget loans raised by publicly owned/controlled corporations and entities. These loans appear, for the most part, to have been guaranteed by the Federal Government. These guarantees represented contingent liabilities of the Federal Government but were not fully reported. The net effects of these practices were several. These included: a) by-passing the obligation to obtain Parliamentary approval and accountability; b) off budget borrowing obscured the size of debt and permitted the ignoring of self-imposed and statutory limits on public sector indebtedness; c) the virtual out sourcing of development projects provided an opportunity to ignore procurement rules e.g. the need for competitive bidding.

Reporting of debt data was partial and lacked clarity or any semblance of full disclosure. The three main sources of data were Bank Negara Malaysia’s Quarterly Statistical Bulletin, the
Bank Negara SDDS website
 containing economic and social data based on IMF mandated conventions and thirdly the Treasury’s annual Economic Report.

All three sources had limitations: a) The Bulletin provides no details about off budget borrowings or continent liabilities b) SDDS table (see Table 1 below) is also silent about off budget borrowings; it does however incorporate data on Federal Government guarantees without any acknowledgement that these guarantees are, in a strict sense, contingent liabilities. Furthermore, no details are provided as to the nature of these guarantees. c) Economic Report incorporates several tables; the focus of these tables was on Federal Government debt; a single table reported on the consolidated public sector debt made up of the i) Federal Government Budget based transactions ii) borrowings by Statutory bodies and iii) the debt of a group of 29 Non -Financial Public Corporations (NFPC)(see Tables below).

Table 1: FEDERAL GOVERNMENT DEBT

Source:
Bank Negara Malaysia, SDDS website

This table shown here is truncated for reasons of space.

Table 2: CONSOLIDATED PUBLIC SECTOR DEBT

ECONOMIC REPORT 2017/18

Table 4.9. Public Sector Debt

2015 – 2016

Source: Ministry of Finance, Malaysia. Economie

Table3:  Non-Financial Public Corporations

Little information has been provided about the criteria used for selection of the 29 NFPCs. Footnote to Table 6.13 in the Economic Report is far from helpful. The criteria, if applied objectively, would preclude the exclusion of important entities such as 1MDB. Large loans linked with the High Speed Rail Link and the East Coast Railway Link Project were not highlighted in the Economic Report or the Budget presentation.

In brief, off-budget borrowing and the granting of guarantees to NFPCs and other favored entities coupled with less than full disclosure about the coverage of all NFPCs contributed to flawed reporting and less than transparent accounting.

It will be observed that the total reported in the Economic Report as the consolidated public sector debt at the end of 2016 amounted to RM 901 billion. This figure appears to be close to the amount of RM1.087 trillion reported by the new Finance Minister as the debt outstanding as of the end of 2017. This latter figure was however calculated using a somewhat unconventional approach; it was derived from an aggregation of Federal Government debt of RM686.8 billion, Government guarantees of RM199.1 billion, Lease payments for public-private projects of RM201.4 billion.

PART III: THE IMF ASSESSMENT

The report by the IMF following the 2017 Annual Article IV Consultations was laced with numerous observations concerning fiscal transparency, risk management, the high level of contingent liabilities and loan guarantees by the Federal government. Some of these critical observations were couched in terms that departed from the Fund’s usual nuanced language. While Government officials attempted to placate Fund staff by stating that actions were either being taken or under consideration, there is no evidence that this was indeed the case.

Although the IMF Report was publicly available and was referred to by main stream media, such reporting was selective and picked on growth prospects, upward revisions to GDP forecasts (largely linked to a recovery in international oil prices). None of the critical observations or those deemed to be negative were reported or commented upon.

The IMF Report: Selected Quotes

Fiscal transparency and fiscal risks management could be further enhanced. Following the formulation of key projections under the Medium-Term Fiscal Framework, started in 2015, the yearly communication of a more detailed set of accounts, underpinning the authorities’ medium- term objectives, and of annual fiscal risks statements, should be fully integrated in the budget preparation process. An explicit medium-term framework would help in identifying risks and developing risk mitigation strategies and would contribute to anchoring market expectations regarding the course of fiscal policy. A medium-term framework would also facilitate the work of the recently established Fiscal and Financial Committee on Risks and Liabilities, which aims at monitoring and mitigating fiscal risks. This is especially important given the high level of contingent liabilities. Loan guarantees by the federal government, which stand at 16 percent of GDP, are issued mostly to support infrastructure investment, frequently under public-private partnerships

                                 *****************

Borrowing by state owned enterprises, which are in some cases under federal government guarantees, has increased in recent years and is projected to continue to increase in the medium term. 1 Gross debt of consolidated general government is not published by the authorities

                                  *****************

Malaysia’s external debt remains manageable, although external financing vulnerabilities are higher than in the median peer country. Since end-2016, Malaysia’s external debt-to-GDP ratio has stabilized after rising by about 13½ percentage points in the previous seven years. About one-half of the increase in external debt was driven by a rise in nonresident investment in Malaysia’s local-currency debt market. External borrowing by nonfinancial corporations has also increased in recent years. Standard stress tests under the IMF’s External Debt Sustainability Analysis indicate that the external debt-to-GDP ratio would remain close to the baseline level under a variety of shocks over the medium term, except under an exchange rate depreciation shock (Appendix VI). However, about one-third of external debt is denominated in ringgit, which provides some cushion against exchange rate risks. Nonetheless, relative to the median peer country, Malaysia’s external financing vulnerabilities are higher, due to, for example, high amortization-to-GDP ratio, lower share of FDI liabilities in gross external liabilities, and slightly above-average potential claims on FX reserves from non-FDI liabilities.

                          *********************

A contingent liability shock, whereby the government would have to absorb all government guaranteed loans, totaling 15 percent of GDP, over two years, would increase risks significantly. This shock also includes a persistent shock to growth and interest rate increases. The debt-toGDP ratio would rise above 55 percent of GDP. Although this is a low probability scenario, the simulations underscore the growing vulnerability posed by contingent liabilities.

                                      *****************

Despite the low share of foreign currency and short-term debt in public debt, Malaysia faces risks arising from its external financing requirement and relatively large share of public debt held by foreigners. At 39 percent, the external financing requirement is above the upper threshold of early warning benchmarks and the share of debt held by foreigners is relatively high at about 30 percent of total. As discussed earlier, the existence of large domestic institutional investors who tend to make opportunistic investments is a mitigating factor.

                         *************************

Malaysia’s high level of government debt and gross financing requirement calls for using the higher scrutiny framework. Government’s gross debt increased sharply in 2009, reflecting sizable discretionary fiscal stimulus, declining real and nominal growth and a large fall in oil prices. Although growth has recovered since then, the primary deficit has remained high, pushing the debt to GDP ratio to about the authorities’ debt ceiling of 55 percent. Gross financing needs (GFN) peaked at 10.2 percent of GDP in 2013 and are expected to fall and remain below 8 percent in the medium term

                        *************************

Government finance statistics: There is a need to improve the timeliness, detail, and availability of data on nonfinancial public enterprises (NFPEs) and the state and local governments. Dissemination of more detailed data on non-listed NFPEs’ assets and liabilities and domestic and foreign financing by type of debt instrument and holder would be desirable; efforts in this direction will require continued close collaboration among the Economic Planning Unit (EPU), the Treasury, and Bank Negara Malaysia (BNM). There is also a need to disseminate more information on public private partnerships.

Source:
Malaysia 2018 Article IV Consultation-Press Release; Staff Report; and Statement by the Executive Director for Malaysia

The Report contained two Appendices – Appendix IV: Public Debt Sustainability Analysis and Appendix VI. External Debt Sustainability Analysis -that ran simulations under different scenarios and offered policy options for debt management. There is no evidence as of this date that the measures proposed by the Fund have been acted upon by the then BN Government. There is some uncertainty as to the extent to which the new Government as had an opportunity to fully review the Article IV Consultations Report.

PART III: DEBT MANAGEMENT

The speed with which the new Finance Minister of the PH Government acted by issuing a Press Statement together with the statement by the newly installed Prime Minister were commendable actions. They were indicative of the seriousness with which the new Government saw a need for openness and transparency in addressing the economic challenges it faced. These early actions were in part designed to reassure the markets that the new Government was committed to act in a manner to promote stability and to pursue responsible policies. These actions had the intended calming effect on the markets; the public at large welcomed the greater transparency and sharing of information. It led to a surge in the expression of patriotism through contributions to the Tabong Harapan Fund which has attracted over RM 100 million in public donations. These were commendable initiatives and represented positive developments.

That said, it is important to take note of the fact that there were a number of less then positive aspects. The Minister’s Press Statement has been criticized as alarmist by citing the estimated size of the “government’s debt” of RM 1 trillion. The calculations deviated from the standard statistical framework established by the IMF and other international agencies. In citing the RM 1 trillion figure, no attempt was made to distinguish between foreign and domestic debt.

The overall impression conveyed to the public at large was that Malaysia was on the verge of a serious debt crisis akin to what a number of Latin American countries such as Mexico, Argentina had faced in the past. Segments of the public concluded that Malaysia would join a number of European Union countries such as Portugal, Italy, Greece (PIGs) in seeking assistance. This was far from the truth as Malaysia’s debt is made up substantially of domestic debt whilst that of the other countries was mainly foreign debt. Malaysia’s circumstances were thus different. It would have been more appropriate to focus on the size of the external debt.

The disclosure of the size of public debt was accompanied by a series of statements concerning the adoption of austerity measures, cancellation or suspension of a number of mega projects, intent to renegotiate bilateral loans arranged by the previous government etc. However, these actions were not fashioned as part of a coherent and integrated plan to tackle the issue.

The overall impression that has been created is that the PH Government will pay off the debt even as it restores certain subsidies, eliminates the GST and embarks upon new programs. The reality is that repayment of debt is unlikely; at best some reduction in liabilities is likely. The inconsistencies inherent in this populist mix are likely to come back to haunt the coalition. It is thus imperative that steps are taken urgently to develop a coherent DEBT MANAGEMENT PROGRAM.

As a first step there is an urgent need to improve the scope of Government Finance Statistics. Greater transparency pertaining to the activities of all publicly owned corporations is essential. Meaningful consolidation of public finances is demanded as it will provide the basis for evidence based decisions.

It is not feasible to present a fully designed Debt Management Program. Some key considerations in the design of such a program should be:

Separate total public debt into a) Foreign and b) Domestic debt to provide focus and targeted policies;

Malaysia’s foreign debt is made up of two parts. In the first part foreigners hold a sizable part of Malaysian debt instruments. These need careful surveillance as volatile movements can impact on external stability and the exchange rate. A second part of the stock of foreign debt is made up of the significant loans associated with the mega projects contemplated by the previous Government. Two approaches are already being taken by the PH Government. Proposals are being developed to either cancel projects or renegotiate the terms of these loans. The renegotiations will demand actions embracing size, servicing terms, etc., and in certain instances debt-equity swaps should be an option for consideration. Prudent management of the external debt , by the Ministry of Finance, would be greatly aided by the use of tools outlined in the IMF’s External Debt Sustainability Analysis Report. While some reductions could be achieved, the more important element would be to restrain further large scale foreign borrowings.

Management of domestic debt will require a host of actions. Briefly this would need to include:

A combination of austerity measures, removal of overlapping functions and increase in efficiency could contribute towards easing pressures on the Federal Government’s budget;

The Federal Government’s narrow revenue base will need to be broadened. While new taxes may ultimately be needed to service the Government and to enable it to deliver on its electoral promises, there would appear to be scope for reviewing the various “incentives” that the BN Government extended to its crony corporate supporters. These so-called incentives are no more than a form of “corporate welfare” and have grown in successive budgets over recent years. It is time that the Government ensure that corporate entities pay a fair share of taxation.

Off-budget borrowing by the Government via GLCs and other entities, as observed earlier in this note, has been the largest contributor to the growth of public sector debt. To prevent a reoccurrence, as a measure under the proposed Debt Management Program, the accounting system of the Federal Government should move from a cash basis to an Accrual System. This will provide a more realistic portrait of the public sector’s financial circumstances.

The key reform that will need early implementation concerns the GLCs. These are in reality State Owned Enterprises (SOEs). They dominate activities across the entire economic spectrum; they are monopolies that hinder the entry of competing firms; these parastatals are open to abuse as demonstrated by the 1MDB saga and other scandals. Their impact in so far as debt is concerned is clearly enormous: they are able to borrow on preferential terms with the aid of government guarantees; there is minimal accountability and ample opportunities for abuse.  It should be recalled that the Najib Government had promised restructuring and selective privatization of these entities. These promises were not delivered upon. It is important now to push through the long promised reforms. In so far as the existing debt of these entities is concerned, some or all of it should be restructured through debt-equity swaps. Alternatively, these debts should be written down as part of a restructuring effort preceding privatization. It should be noted that reforms of these nature will contribute to enhancing Malaysia’s competitiveness and help country loosen one constraint that is contributing to its entrapment as a middle income country.

CONCLUDING REMARKS

The IMF in its report on the Malaysian economy, following the 2017 Article IV Consultations, observed that despite the low share of foreign currency and short-term debt in public debt, Malaysia faces risks arising from its external financing requirement and relatively large share of public debt held by foreigners. At 39 percent, the external financing requirement was considered above the upper threshold of early warning benchmarks and the share of debt held by foreigners was relatively high at about 30 percent of total. These conclusions cannot be ignored but must receive close attention by the newly installed PH administration. Malaysian officials have modest experience in handling the complex issues and may need advisory technical help to develop and implement a coherent Program.

The
Public Debt Sustainability Analysis
 prepared by the IMF offers useful tools and guidance. The analysis should be up dated periodically.

Datuk R. Chander: The author was the first Malaysian to hold the office of Chief Statistician of Malaysia in the 1960s and 1970s. He then went on to serve as the Senior Adviser to the World Bank’s Chief Economist/Senior Vice President from 1977 to 1996. Upon retirement from the Bank he has functioned as an international advisor to multiple international agencies and governments.

Washington DC

July 1st, 2018

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