16 May 2018
For the first time in 60 years, Malaysia’s ruling coalition, Barisan Nasional (BN), lost power in a general election. Mahathir who institutionalized the BN and ruled the country under its banner for 22 years, dealt the death blow to BN. After the General Election 2018, Mahathir was sworn in as Prime Minister.
Rift in the coalition
Mahathir led coalition consisted of Democratic Action Party (DAP), People’s Justice Party(PKR), National Trust Party(AMANAH) and Malaysian United Indigenous Party(PPBM). On the first meeting of the alliance, rift surfaced over the posts in the new cabinet. Mahathir decided on the appointments of Home Affairs, Finance and Defence ministries. PKR President Wan Azizah did not attend the news conference to announce the new ministers because of the disagreements. She was particularly against a Chinese being appointed as Finance Minister and wanted key posts to go to her party. Straits Times reported.
Rafizi Ramli, Vice-President of PKR, said that Mahathir bulldozed way and unilaterally announced the names of the Ministers. Mr Rafizi had questioned the decision to appoint Democratic Action Party’s (DAP) head Lim Guan Eng as finance minister and Amanah leader Mohamad Sabu as defence minister. At the State level also, there is rift between Mahathir’s party and PKR. PKR has denied any rift in the alliance and this may be true. But a rift is likely to develop soon and will get wider and wider.
Mahathir’s role.
Mahathir is the alliance leader, but Anwar’s PKR has the majority of seats in Parliament won by the group. PKR seems to be very anxious to oust Mahathir and install Anwar Ibrahim as Prime Minister immediately. This may be because Mahathir said that he will hand over power to Anwar after he is released from the prison. In clarification Mahathir has now confirmed that he will hold the post for one or two years so that he can put the house in order before he hands it over to Anwar.
Both Anwar Ibrahim and Wan Azizah have said that Anwar is not in a hurry to become the prime minister.
But the sentiment at grassroots level is for immediate transfer of power to Anwar. The longstanding acrimony between Mahathir and Anwar may also be disruptive of potential cooperation between the two.
If PKR pushes too hard Mahathir will have to dissolve the parliament and call a snap election. He will win with a comfortable majority without the need for any coalition. Already some UMNO MPs want to jump ship and join the ruling alliance. This indicates that some of the of the UMNO votes will go to him. Mahathir also said to Wall Street Journal that he will continue to play a part in the government even after he steps down as prime minister. This would be something like Lee Kuan Yew being the Minister mentor in Singapore after he stepped down and Mr Goh Chok Tong now is.
Lim Guan Eng
Mahathir-led opposition coalition Pakatan Harapan (PH) had campaigned on a promise to scrap a consumption tax within its first 100 days in power, reintroduce petrol subsidies and review toll road concessions. It will also focus on expanding the economy and reducing debt. Mahathir felt the need for a strong person for the finance portfolio to be able to implement these election promises. Hence the appointment of Lim Guan Eng as finance minister.
PM Mahathir has clarified that Lim Guan Eng will be sworn in as Finance Minister if and after he is cleared of his corruption case. This is the background of the pending case against Lim Guan Eng,
There is a corruption charge against Lim Guan Eng. It was alleged that Lim approved the conversion of a piece of agricultural land, to a company, Magnificent Emblem Sdn Bhd, to a public housing zone. In return business woman, Ms Phang, sold her house at RM 2.8 million to Lim Guan Eng. Prosecution alleges that the sale price was below market price. Prosecutor was high profile Attorney General Apandi Ali, who himself has been sent on leave by Mahathir pending investigations of his conduct as AG.
Council of Financial Advisors
Mahathir appointed a ‘council of Financial Advisors’ consisting of the former finance minister Daim Zainuddin, former Bank Negara governor Zeti Akhtar Aziz, former Petronas president Mohd Hassan Merican, tycoon Robert Kuok, and economist Jomo Kwame Sundaram. These are well respected financial wizards. This was another of his measure to put the finances of the country on a sound footing.
Zeti was formerly the Central Bank Governor. Under Zeti, the central bank had urged criminal proceedings at least twice against 1MDB, after slapping a fine of an undisclosed amount on the state fund days before she left the position in 2016.
Before the Asian financial crisis in 1997–98, Sundaram was an early advocate of new capital account management measures, which Mahathir later introduced. When Anwar Ibrahim was imprisoned without trial under the Internal Security Act, Sundaram publicly condemned the repression.
The advisory council has already commenced its work. According to Daim Zainuddin the council will meet every day for at least one hundred days to resolve all pending problems concerning finances of government linked companies.
EPF and Kumpulan Wang Persaraan (KWAP), which manages the retirement funds of government servants had made heavy investments in the scandal-plagued 1MDB. Mr. Daim who heads the council of advisors wants to see a separation between the professional management of the institutions and political or external parties. He would also want to review the situation where the funds have a political representative on their boards. This is to prevent future political corruption in government linked funds.
GST
GST brings in about $11 million in taxes. The government could also consider reducing the GST from the present 6% to 3%. Malaysia’s finance ministry said on Wednesday (May 16) that the 6 per cent Goods and Services Tax (GST) will be zero-rated from Jun 1, effectively abolishing it.
Najib prevented from leaving the country.
Mahathir foiled an attempt by Najib to leave the country purportedly on a short holiday and had his residential area cordoned off, with all vehicles and individuals inspected before they would be allowed to go in. Mahathir will replace the attorney-general who cleared Najib in the 1MDB probe. All these are indicative of a probable jail term for Najib.
Mahathir is moving fast to clean up the government and put the finances in order. He accomplished a lot within the last few days which other persons would take weeks or months to accomplish.
His flow of words and walking have slowed down a bit but yet remarkably better than those of any other person of his age.
Najib
Former Prime Minister Najib Razak’s popularity plummeted after $1 billion went missing from a state-owned investment fund founded by him. According to US authorities $4.5 billion was embezzled out of the investment fund, 1MDB. US Attorney General Jeff Sessions called the scandal “kleptocracy at its worst” after his department alleged US$4.5 billion went astray. Najib is the son of Malaysia’s second prime minister and a nephew of the third. Of the stolen money $800 million ended up in Najib’s personal bank account.
Former PM’s wife Rosmah Mansor was married to Abdul Aziz Nong Chik before she married Najib in 1987. From that marriage, she has two kids – Riza Aziz and Azrene Soraya Abdul Aziz (Najib’s step kids). Nothing is known about her former husband Abdul Aziz Nong Chik.
The United States effectively went easy on Najib, so as not to push him entirely into China’s fold or destabilising the majority Muslim country. Trump invited Najib to White House, played golf with him but did not speak one word about 1MDB. Now the situation has changed and the Americans could be tempted to nail down Najib as a gift to the new regime, in exchange for their alliance with the United States instead of China. The US will also get closer cooperation from Malaysia in its ongoing investigations into 1MDB fraud.
Jho Low
Who is this Jho Low? Why Najib and Malaysia owed so much to him?
In London, while studying in Harrow School Malaysian financier Jho Low developed a “close relationship” with Riza Aziz, step-son of Najib Razak. Using this friendship Jho Low masterminded the heist of billions of dollars from 1MDB.
Jho Low gave diamond pendants, earrings and other jewellery worth about $8 million to an Australian model and actress Miranda Kerr. She co-operated with the US authorities and handed the jewellery to them. Actor Leonardo DiCaprio also accepted artwork by Picasso and Basquiat worth more than $12 million from Jho Low. He also returned the gifts to the authorities. Jho Low invested another $100 million in the production of the film “The Wolf of Wall Street”. Leonardo DiCaprio was the lead actor in this film. He won an award for his role. Jho Low also produced another film “Dumb and Dumber To”.
Jho Low bought for himself or on behalf of Riza Aziz:
- the yacht Equanimity for US$ 250 million,
- A Bombardier Global 5000 private jet for US $30 million,
- a Vincent van Gogh painting for US$ 5 million,
- two paintings by Monet: Saint-Georges Majeur for US$ 35 million and Nympheas for US$ 58 million,
- two paintings by Pablo Picasso: Tete de femme” US$ 40 million,
- A penthouse in the Walker Tower in New York for US$ 50 million,
- The Laurel Mansion in Beverly Hills for US$ 31 million,
- The Qentas Townhouse in London for US$ 40 million,
- A penthouse in Stratton Street, London for US$ 60 million,
- He also bought a US$ 27 million 22-carat diamond pink necklace and he chartered the 147-meter yacht Topaz for one week for US$ 3.5 million.
The Laurel Mansion in Beverly Hills was later transferred to a shell company controlled by Najib Razak’s stepson, Riza Aziz.
Filings by the U.S. Justice Department in a civil lawsuit indicated nearly $30 million of the money stolen was used to buy jewellery for the former prime minister’s wife, Rosmah, dubbed as Imelda Marcos of Malaysia.
The great blackout
Some half-hearted domestic official investigations into the 1MDB fund were made. Najib crushed all dissenting voices within Malaysia. A special task force headed by a former attorney general was set up. The team raided the office of 1MDB in 2015 and took away some documents. Former attorney general Abdul Gani Patail was removed from his position and his post was given to Mohamed Apandi Ali, a former Federal Court judge. Mr Najib has also sacked his deputy Muhyiddin Yassin over critical comments he made about the scandal. Former Rural and Regional Development Minister Shafie Apdal who was also critical of the 1MDB issue was also removed from office.
Bank Negara had revoked permissions earlier granted to 1MDB for investments abroad totalling US$1.83 billion, Bank Negara has called the Attorney General to begin criminal prosecution of 1MDB. Bank Negara Governor Zeti Akhtar Aziz later retired and was replaced with Muhammad bin Ibrahim on 1 May 2016.
Public Action Committee, a parliamentary sub-committee, that was investigating the purported losses in 1MDB was indefinitely postponed due to 4 of its members being given positions in the cabinet.
The Edge Malaysia and The Edge Financial Daily were suspended for three months in July for allegedly publishing reports on the 1MDB issue. An arrest warrant for Clare Rewcastle Brown, who manages the Sarawak Report website was issued by the police.
UMNO (Najib’s ruling party) member Khairuddin Abu Hassan was arrested for lodging police reports in London, Singapore, France and Hong Kong regarding financial improprieties in 1MDB.
Former Kedah Menteri Besar Mukhriz Mahathir, son of Mahathir Mohamad was asked to resign for criticising Najib and 1MDB. Opposition member of parliament Rafizi Ramli was arrested and charged under the Official Secrets Act for leaking information about the Auditor General’s report on 1MDB.
The Home Ministry has stated that they could not complete the investigations on 1MDB as the following persons could not be located: Jho Low, 1MDB’s former senior executives Casey Tang Keng Chee and Jasmine Loo Ai Swan and SRC International managing director Nik Faisal Ariff Kamil, and Deutsche Bank country manager Yusof Annuar Yaacob. The authorities did not reveal the steps taken to bring them back to Malaysia for investigations.
Websites publishing articles on 1MDB were blocked.
Other governments intervene.
In the absence of any serious investigations in Malaysia, other governments such as United States, Switzerland and Singapore had initiated their own investigations. The crime committed constituted embezzlement and money laundering. Singapore ordered Swiss bank BSI to shut down in the city-state for breaking its money-laundering laws in its dealings with 1MDB. Hong Kong police have been investigating US$250 million in Credit Suisse branch deposits in Hong Kong linked to Najib and 1MDB. United Kingdom’s Serious Fraud Office has begun investigations into money laundering involving 1MDB after it was highlighted by Clare Rewcastle Brown and Sarawak Report.
Upon investigation by the Australian Securities and Investments Commission, the Australian fund management company Avestra Asset Management was liquidated for breach of law. The company was managing $2.32 billion for 1MDB. It’s alleged that up to $US1 billion of that money was later stolen by a con man and another $700 million ended up in the bank account of Najib Razak. The Australian High Court has ordered five investment schemes run by Avestra to close down after discovering undisclosed related-party transactions, with 13 potential breaches of corporate law and failure to invest according to the fund’s individual mandates. Australian Federal Police is investigating the proceeds of crime, including property on the Gold Coast, owned by those involved in swindling money from 1MDB.
The United Arab Emirates has issued travel bans and frozen bank accounts of former Abu Dhabi sovereign-wealth fund International Petroleum Investment Company’s employees Khadem al-Qubaisi and Mohammed Badawy Al Husseiny who had close connections to 1MDB and may have been used to funnel money from 1MDB into various accounts and companies around the world. State prosecutors in Luxembourg have also started money laundering investigations concerning 1MDB. The Seychelles’ Financial Intelligence Unit is helping an international investigation into the state fund 1MDB.
Collaboration in investigations
Swiss Attorney General Michael Lauber has been publicly critical of the lack of cooperation his team of prosecutors got from the government of former Malaysia premier Najib Razak. Swiss prosecutors said they wanted to start talks with investigators in Malaysia as soon as possible to better coordinate various criminal probes into the sprawling case. No doubt that other countries investigating the 1MDB case also felt the same way as the Swiss authorities. When they pool their resources, they will get to far deeper into the sprawling web of deceit by the then Malaysian authorities concerning the 1MDB fraud.
Mahathir will not start working with other government until he cleans up the Malaysian anti-corruption agency by replacing the top echelon of its tainted officers.
Anwar pardoned.
Mahathir said that one of his first actions would be to seek a royal pardon for Anwar. Before the election he had promised to step aside once Anwar Ibrahim was free and let him become premier. Anwar was freed on 16 May 2018.
Mahathir
Neither Mahathir nor Anwar loves Chinese debt diplomacy. Mahathir has vowed to renegotiate Chinese loans for Malaysia’s East Coast Railway Link and review Chinese investments in Malaysia.
There was public animosity toward Chinese investments, which flooded into the country as a result of the financial fallout from 1MDB. Mahathir’s alliance and the opposition benefited from this public animosity. The new government therefore has a responsibility to review the Chinese influence in the Malaysian economy.
Mahathir kept his silence for 15 years and remained a close associate of Najib until 1MDB scandal broke out. He began to criticise Najib severely after that.
It is the scale of the embezzlement that made Mahathir to jump into the fray.
His feelings can be understood. The economy and the party which he built over a period of two decades were torn down by a ruthless greedy man.
Lee Kuan Yew said at National Day Rally of 1988, ‘Even from my sick bed, even if you are going to lower me into the grave and I feel something is going wrong, I will get up.’ He was referring to something happening to the Singapore’s reserves. Mahathir must have felt the same way after what Najib did to the party and the government finances.
1MDB – the root of all evils.
In 2013, 1MDB changed of three auditors under suspicious circumstances. The Sungai Besi airport land was to be developed as Bandar Malaysia by 1MDB. There have been questions by the opposition regarding lack of progress on Bandar Malaysia even after 1MDB raised RM3.5 billion in loans and Islamic bonds to fund the project and take ownership of the land. On 31 December 2015, 1MDB entered into an agreement with a consortium comprising Iskandar Waterfront Holdings and China Railway Engineering Corporation to sell 60% of its stake in Bandar Malaysia Sdn Bhd. Iskandar Waterfront Holdings is a property development targeted at Chines investors. This step has moved Malaysia more into the Chinese orbit.
Wall Street Journal reported that 1MDB made overpriced purchases of power assets in Malaysia through Genting Group in 2012. Genting then allegedly donated this money to a foundation controlled by former Prime Minister Najib, who used these funds for election campaign purposes during the 2013 general elections. The Malaysian Anti-Corruption Commission (MACC) subsequently, in August 2015, cleared 1MDB of all wrong doings saying, that the RM2.6bil which was allegedly transferred into the account belonging to former Prime Minister Najib came from the contribution of donors, and not from 1MDB. Wall Street Journal kept reporting all wrong doings as events unfolded in 1MDB.
On 7 September 2015 a member of the board of advisors to 1MDB Abdul Samad Alias resigned stating that he did so after his many requests for information on 1MDB affairs were ignored.
In July 2016, Deloitte Malaysia issued a statement saying that their audit reports of 1MDB financial statements, dated 28 March 2014 and 5 November 2014 covering financial years 2013 and 2014 respectively, should no longer be relied upon. Public discontent grew high at the perceived lack of financial transparency at 1MDB. The then Prime Minister, who is also the Chairman of 1MDB’s Board of Advisors, ordered the Auditor General of Malaysia to carry out an audit of 1MDB. However, on completion of the audit, the final report was classified as an Official Secret and only made available to the Public Accounts Committee (PAC) tasked to investigate improprieties at 1MDB. After Mahathir declassified the 1MDB audit report for 2016, Reuters found out that 1MDB management had presented incomplete or inaccurate information to the 1MDB board before an important decision was made and had taken action without the approval of the 1MDB board.
Some of the 1MDB officers have been put under immigration travel ban.
Heads roll.
New Straits Times reported that Tan Sri Dzulkifli Ahmad, the Malaysian Anti-Corruption Commission (MACC) chief commissioner, resigned on 14 May 2018. He was appointed to head MACC on Aug 1, 2016 to replace Tan Sri Abu Kassim Mohamed.
The former director of Malaysia’s anti-corruption office, Abdul Razak Idris, has lodged a complaint against the former prime minister, Najib, which states that with the help of other civil servants, Najib blocked an investigation into the $3.2bn 1MDB scandal.
Mahathir said that the attorney general, Mohamed Apandi Ali, has been told to go on leave pending an investigation of his role in allegedly covering up a massive corruption scandal involving Najib and that the country’s solicitor-general will take over Apandi’s job while he is on leave.
Attorney general, Mohamed Apandi Ali and the Malaysian Anti-Corruption Commission (MACC) chief commissioner (who has just resigned) are the biggest culprits who froze the 1MDB probe. They could have removed, destroyed or tampered with vital evidence under their care. In order to bring charges against them the new attorney-general would have to show there was bad faith or malfeasance in their decision to clear Najib.
The Government will also investigate whether certain businesses were harassed by the Inland Revenue Board (IRB) into paying more taxes than what was due. IRB did this to prevent individuals from donating to opposition parties.
Some of the civil service officers must have done what they did thinking that they were following the orders of their superiors. Those who did so will now come forward to reveal how they were pressured.
Mahathir removed treasury Secretary-General Mohamad Irwan Serigar Abdullah from his duties. He was transferred to the Public Services Department until 13 June this year, and his contract of service has been shortened to 14 June
Mahathir latched on to social media, drawing hundreds of thousands of viewers. He brought political heavy weights such as Muhyiddin Yassin, Abdul Daim bin Zainuddin etc. for the election campaign. The coalition would not have won the election if Mahathir had not stepped into the fray.
