Najib case: The importance of not being Prime Minister

When Mahathir began his campaign against Najib more than a year and a half ago, it was given little chance. The former Prime Minister had been out of office for more than a decade and was regarded as a loud but irrelevant force. But political analysts in Kuala Lumpur say his campaign has been gaining traction over the 1MDB issue
“Realistically Najib’s situation is untenable,” a member of the Mahathir faction said. “Certainly he will fight back but whether he resigns or not point is he is he cannot function as PM.”The vehicle for his surrogates’ attack on Najib is 1MDB, the five-year-old state investment fund which as of March had amassed debts of RM49.1 billion (US$14.04 billion) against assets of RM51.4 billion, registering losses of Malaysian ringgit 63.5 billion at the end of the quarter, mainly on huge finance costs.

Mahathir and his allies have been dissatisfied with Najib’s performance for more than two years over a wide range of other issues as well, however. The 1MDB issue, described as “the mother of the mother of the mother of all scandals” by Democratic Action Party MP Tony Pua in an Asia Sentinel article on December 8, has become the vehicle with which the octogenarian hopes to skewer the Prime Minister.

It has gained additional momentum because of allegations that Jho Low Taek, a hard-partying young friend of the Najib family, may have used Malaysian government guarantees to back the making of The Wolf of Wall Street, a hit movie starring Leonardo di Caprio, and to fund his attempt to take over three of London’s most prestigious hotels.Najib is the chairman of the 1MBD advisory board and the motivating force, apparently on the advice of Jho Low, as he is known, a putative whiz kid who is alleged to have steered the fund first into a disastrous alliance on oil exploration on the advice of a Saudi prince he went to school with in London.

When the exploration failed, opposition figures alleged, the money was invested in forex trades in yen. The trades were not successful and, opposition lawmakers alleged, the money disappeared. That was the first of a long string of financial disasters that put 1MDB deep in the red without adequate capital to meet obligations

Ending a decade of rule that critics said had become increasingly authoritarian and marred by nepotism and corruption.                                                                          

ollowing Khairuddin’s filing of the complaint last Friday, alleging “questionable” business, investment and fund-raising transactions and decisions, A. Kadir Jasin, the former Editor in Chief of the New Straits Times and one of Mahathir’s closest allies, wrote on his blog that an additional report may be filed with the Malaysian Anti-Corruption Commission, a notoriously political body – ostensibly modeled on Hong Kong’s vaunted Independent Commission Against Corruption —  that tends to shovel corruption complaints under the carpet unless there is a political motivation to push them along.

The MACC, as it is known, has a long record of refusing reports of corruption or finding no cause of action after reports have actually been filed. If the MACC takes up the report filed by Mahathir’s allies, it raises very interesting questions.

1MDB, in a statement, said “We are aware that a police report concerning 1MDB was filed by a politician in Penang. We have not seen any documentation related to this, so are unaware of the nature of the complaint. However, we are confident that it will have no legal basis. We welcome any investigation into our affairs and the opportunity to rebut malicious allegations.”

 Beware of C4 . . . Be afraid, very afraid

Khairuddin Abu Hassan, who is facing a 'firing squad' from his own Umno members for a police report lodged against the 1Malaysia Development Berhad (1MDB), is shocked that his condomimium has been put up for sale without his knowledge.

With the filing of a police report late last week by a member of Prime Minister Najib Tun Razak’s own political party, the long knives have appeared in Malaysia, seeking the premier’s scalp over the scandal-ridden state investment fund 1Malaysia Development Bhd.

1MDB is said to be seeking permission for an extension from Bank Negara, the country’s central bank, on nonperforming loans from the country’s Tier 1 banks out a concern that if no extension is granted, the banks could be forced to make major provisions.

Although he has made only oblique comments publicly, the man behind the move to oust Najib is former Prime Minister Mahathir Mohamad, who publicly withdrew his support for the Prime Minister via his blog, Che Det, in August.

Khairuddin Abu Hassan, a Penang-based United Malays National Organization Deputy District Chief, filed the request for a “detailed and comprehensive” investigation including the interrogation of 1MDB’s board of directors and representatives of any companies that might be implicated.

how did Najib, despite being surrounded by advisors, managed to blunder so big time? Hardly five years at the helm as Prime Minister and Finance Minister he managed to rake up a cool RM42billion in debts and RM49billion in liabilities with 1MDB? Are his Economic Advisors sleeping?

The increasing calls for him to resign the Finance Ministry’s post were ignored, with him hugging the post with both arms. At one time, he even took on the role of Women’s Minister much to the amusement of Malaysians.

Najib’s PMship is at risk, not because he didn’t do anything concrete for the country, but for his uncanny ability to get himself into all kinds of trouble. RM42billion is not exactly chicken feed. You can literally buy a small country somewhere in Africa for that kind of money.

Even our ex PM Tun Mahathir commented that our national sovereign fund Khazanah’s performance is nothing to shout about, so why the need to create another white elephant?. In each case the aim was either to glorify some parts of the past or to be sceptical about them with scant regard for analytical rigour. 

Ending a decade of rule that critics said had become increasingly authoritarian and marred by nepotism and corruption.Malaysians are like in their attitude towards say, corruption? Malaysians are generally against corruption until they themselves are beneficiaries of corruption. Then they will embrace corruption

The failure of Malaysia’s ill-starred state run investment fund 1Malaysia Development Bhd to meet a RMB 2 billion (US$563 million) repayment to domestic banks spells bad news for Prime Minister Najib Tun Razak, the chief advisor to and ostensible brains behind the fund.

Reuters reported on January 6 that 1MDB, as the fund is known, had missed a December. 31 payment and is exploring ways to settle with lenders, primarily RHB Bank and Maybank, two of the country’s biggest banks, by the end of January. It is the second time 1MDB has missed a payment. It previously asked Bank Negara Malaysia, the country’s central bank, for a three-month extension on its loan obligations.

The performance of the fund, which has borrowings of RM42.2billion, has become intricately bound up with the attempt to bring down Najib that is being waged by forces allied with former Prime Minister Mahathir Mohamad. In recent days the campaign to force out the Prime Minister has sprung into the open, partly over the fact that he was invited to play golf in Hawaii with President Barack Obama at a time when the east coast of the country was inundated with some of the worst floods in decades.

“It is a watershed and an ominous one when the rakyat (the people), through the blogs, the independent news portal and the social media outlets, discovered that the PM was golfing in Hawaii while a quarter million people were flooded out of their homes,” wrote A. Kadir Jasin, the former editor of the Straits Times and Mahathir’s chief spear carrier, on his blog. “They asked, ‘does the PM care?’”

When Najib belatedly rushed home to visit the flooded area, he caught an infection from e.coli bacteria in the polluted waters, opening him to ridicule from his critics. He also left behind in the United States Perdana 2, the luxurious government-owned Airbus ACJ320 executive jet.

Blogs, especially those aligned with Mahathir, erupted in criticism, saying the plane had been left behind to make stops in Los Angeles, Indianapolis, Los Angeles, New York, London, Dubai and back to South East Asia, carrying the Prime Minister’s wife, Rosmah Mansor, whose taste for extravagant shopping and overseas travel have made her a lightning rod for criticism.

Muhyiddin Yassin, the current Deputy Prime Minister, has in recentweeks stepped up his oblique criticism of the way the government is run, saying the ruling Barisan Nasional could lose the next election, due in 2018, if changes are not made. Criticism has been growing among the rank and file as well, with one UMNO member filing a complaint with the Malaysian Anti-Corruption Commission in December over the operation of 1MDB before he was told to knock it off.

The disastrous performance of the fund has been complicated by the circumstances of its 2009 inception. It was proposed to Najib by Jho Low Taek, then a 27-year-old investment advisor with a lot of Middle Eastern friends and a reputation as a playboy who made the papers of New York tabloids, partying with the likes of Nicole Ritchie and Paris Hilton as well as the prime minister’s wife, Rosmah Mansor.

Arul Kanda Kandasamy, formerly Executive Vice-President, Head of Investment Banking Group and Head of Corporate Finance for the Abu Dhabi Commercial Bank, was brought in last week to take over from former COO Mohamad Hazem Abdul Raman, who quit suddenly. Kandasamy told reporters he is confident the problems the fund faces can be overcome.

“I genuinely believe that the majority of the allegations that have been directed at the company have more to do with a misunderstanding of the business, or are raised for purposes that aren’t necessarily business related, as compared to any real issues that exist within 1MDB,” he said

Nonetheless, 1MDB has been struggling vainly for months to get away a US$3 billion IPO of its power assets, which critics contend were purchased at vastly inflated prices in an attempt to generate cash flow after much of its initial funding disappeared into a middle eastern oil exploration company called PetroSaudi.

Instead of repaying the RMB7 billion loan, PetroSaudi converted the money into an 11 year loan, to be repaid at 8.5 percent annual interest. The money was invested through the Cayman Islands, a notoriously unregulated banking haven. To criticism, 1MB replied that the fund is regulated by authorities in the Caymans, Switzerland and Hong Kong, which critics said means almost no regulation at all.

It was Jho Low, as he is known, who steered the RMB7 billion loan to PetroSaudi. According to records in London, he also used a letter from the fund to back a failed bid to take over three prestigious London hotels and there is considerable suspicion that he also used the fund’s credit standing to help guarantee funding for the production of The Wolf of Wall Street, a phenomenally successful movie co-produced by Reza Aziz, Rosmah’s son.

In recent months, the government, in an attempt to build up 1MDB so that its power assets can be listed, has strong-armed at least three no-bid contracts to build coal-fired and solar power plants to supplement the fund’s assets. One of those power plants, in Port Dickson near Malacca, was awarded to 1MDB despite a lower bid from a joint venture of YTL International Bhd and SIPP, partly owned by the Sultan of Johor, who is said to have been enraged by the snub and is demanding privately that SIPP be given its own no-bid contract for another plant. The government has also given another plant a 10-year extension to its production agreement, which was supposed to end in 2016 but has been extended to 2026.

Powertek, 1MDB’s fund’s wholly owned subsidiary, also has operations in five emerging markets in addition to Malaysia. They are Egypt, Bangladesh, the United Arab Republic, Sri Lanka and Pakistan.

“1MDB has invested the proceeds with regulated and licensed international fund managers, the fund said in a prepared statement early last year. “These fund managers adopt an absolute return strategy of which the primary investment objective is to achieve long-term capital appreciation and/or steady income through investments in listed and/or unlisted companies.”

The opposition has been cudgeling Najib for months on the fund, which appears to be in growing jeopardy to the point where major defaults could send a serious shock through the domestic banking system. The fund has twice missed deadlines for filing its annual reports and its auditors have quit twice. But when Mahathir unlimbered his criticism, the allegations picked up serious steam. In particular, they have been percolating through the UMNO rank and file, probably Najib’s most dangerous trouble spot, given that the opposition is regarded as disorganized and toothless.

One ominous harbinger, according to well-informed sources in KualaLumpur, is that Khairy Jamaluddin, the son-in-law of former Prime Minister Abdullah Ahmad Badawi, is said to have moved into Mahathir’s camp. Khairy abandoned the Badawi wing of the party after Mahathir and Muhyiddin pushed Badawi aside and joined Mahathir’s van.