Sarawak Report Expose on 1MDB


1mdb-01

(A 42 billion time bomb that had already exploded on everyone’s face but a lot of people in this country are not aware of the blast – no thanks to a sneaky fat guy and a clueless PM. Until today, I am lost why they put billions of taxpayers money in Cayman Island unless it is meant for some shady deal. Infographic source: http://poskod.my/cheat-sheets/10-things-know-1mdb/)

In a country where the police chief can take action based on tweets and Facebook postings, there is only eerie silence by the police, MACC, Bank Negara and the pro-Government politicians on the largest scandal expose by Sarawak Report on the 1MDB

And if you have missed the story, the crux of the expose has been this:-

Together with London’s Sunday Times newspaper, Sarawak Report has completed an in-depth investigation into the trail of the missing billions at the heart of Malaysia’s 1MDB (One Malaysia Development Berhad) financial scandal.

We have obtained access to thousands of documents and emails relating to transactions by 1MDB, including its initial joint venture with the little known oil company PetroSaudi International from 2009.

What the documents establish is that, in spite of copious official denials, the entire joint venture project was conceived, managed and driven through by the Prime Minister’s associate and family friend the party-loving billionaire tycoon, Jho Low.

The documents also prove that the USD$700 million so-called “loan” that was supposedly repaid to PetroSaudi as part of the joint venture agreement, was in fact directed into the Swiss bank account of a company called Good Star, which is controlled by Jho Low.

That money was then partly used to buy out Taib Mahmud’s UBG bank in Sarawak at a very advantageous price for the chief minister and his family, who had been failing to get a deal on the open market.

PetroSaudi had agreed to act as “a front” for Jho Low on such deals, according to the documents, and it was a subsidiary of PetroSaudi International registered in the Seychelles, which bought UBG, using money siphoned from 1MDB.

(Source)

USD700 million of taxpayers went to someone’s personal pockets and 1MDB continues to bleed. And it did not stop there. Then almost on the same day, The Edge had this story on 1MDB:-

From 2009 to 2014, 1Malaysia Development Berhad’s (1MDB) initial US$1 billion was shuffled and swapped around, in an apparent bid to avoid scrutiny by its string of external auditors, The Edge Malaysia reported.

In its March 2-8 issue, the business weekly provides a timeline of how the government-owned strategic investment fund disguised the money trail of its initial US$1 billion for five years, raising the question of whether 1MDB is as profitable as it claims to be, or is merely rich on paper

By August 1, the money in the Caymans had grown to US$2.33 billion, and in November and December, 1MDB announced it had redeemed the entire amount.

However, instead of repatriating the money home, 1MDB president Arul Kanda Kandasamy said the December redemption of US$1.11 billion would be kept offshore as a currency hedge, while the first redemption would be “substantially utilised” for a separate settlement agreement on a different project.

“What can be surmised from the events of the last five years is that 1MDB kept entering into deftly structured transactions timed to avoid vigorous scrutiny by its external auditors about the money,” The Edge said.

(Source)

Whether it was a case of sheer recklessness or blatant corruption and fraud or simply a case of bad business decision, one thing that is clear – the allegations and evidence that has been presented by Sarawak Report cannot be taken lightly. There is overwhelming notion of fraud, corruption and mismanagement of public funds written all over it.

And already search for scapegoats have started:-

It appears that the Prime Minister’s Office (PMO) has begun the process of trying to wash PM Najib’s hands clean of what may turn out to be the biggest political and financial scandal in recent Malaysian history, according to analyst Shahbudin Husin.

Tied to that process may be a search for a scapegoat, he writes in a blog entry that indicates his belief that the 1MDB controversy is close to reaching a climax.

(Source)

Given the kind of damage that has made by Sarawak Report’s expose, it is apparent that Najib and his Government cannot remain silent. The more they remained silent, the more crystallize the allegations will be. And finally, probably given the pressure within his Government and outside, the PM has now directed the Auditor-General to vet the 1MDB’s accounts. He even goes on to say something interesting (and probably a concept that is rather alien in this country) – “If any wrongdoing is proven, the law will be enforced without exception”.

Let’s talk on Auditor-General’s reporting in the past. How effective it has been to 1. curtail and avoid similar incidents of wastage & abuse in future and 2. in booking the culprits of wastage and abuses? Since the PM is asking the AG to check 1MDB’s account, we also want to know if the Government would be serious in taking actions if there are some findings by the AG?

Back in 2014, Tan Sri Ramon Navaratnam wrote this:-

Unfortunately these management weaknesses and the consequent wastage of public funds continue to stubbornly persist. This is happening despite the Auditor General’s previous exhortations, to improve our standards of good governance.

In this first installment of the Report for 2013, it appears that 283 spending related issues were raised as for the first 4 months, which is well over the 256 spending issues raised by the AG, for the whole of 2012!

This trend is alarming and must be dealt with very seriously!

The Auditor General has to his credit now made 109 new recommendations for improvement in financial management. But the rakyat will ask what will be done with them? Will these recommendations be ignored and will mismanagement and financial wastage continue regardless?

Hence should not the PAC recommend tougher action and even name and shame these recalcitrant Ministries which are responsible for the loss of hard earned public funds?

(Source)

Transparency International Malaysia in 2013 said “It will also make a mockery of the Government, when the Auditor-General’s reports are not being taken seriously after it has identified the shortcomings within the administration” (Source)

And Tony Pua from Pakatan echoes the same:-

“While welcoming the investigation on 1MDB’s financials, Pua said the report should also include, but not be limited to the following:

• Auditing and identifying the redemption trail of the investments in Cayman Islands and the whereabout of its proceeds;

• Auditing and identifying the exact investment holding, true value and whereabouts of RM13.39 billion of “Level 3 Assets” identified in the March 2014 Financial Report;

• Confirming if 1MDB had attempted to borrow RM2 billion from local tycoon Ananda Krishnan to repay its debt and determine 1MDB’s cashflow shortage to meet its RM42 billion debt obligations as well as contract commitments which is likely to require a government bailout;

• Confirming if all historical emails in the 1MDB mail server were “wiped out” in December last year, as claimed by the Sarawak Report.

Pua said the Auditor-General should also conduct a forensic audit of 1MDB with the assistance of professional forensic auditors “to uncover any financial shenanigans in the company particularly in the light of (the) expose by the Sarawak Report and the mind-boggling PetroSaudi transactions from 2009 to 2012” and explained the same had been done in the RM12.5 billion Port Klang Free Zone (PKFZ) scandal in 2009.

(Source)

And thanks to the good people in Sarawak report, things have started to pick up pace despite it is not a new issue and the troubled 1MDB & the dubious way of handling the matter by people linked with 1MDB has been in the mainstream news for some time now.

And with the expose, the calls for accountability and transparency have not been louder, clearer and more direct to Najib:-

He notes that there have been reports that 1MDB will be wound up. “Oh, my God! For six years we’ve been told that everything was safe and fine. And now, suddenly, there’ll be a winding up?”

But Ariff says he figures it’ll take months before the Auditor-General can complete his task because of the mountains of documents involved. “What’s worse, much computer data have been destroyed.”

He notes that another Umno leader has alleged that there’s a political conspiracy behind the attacks on 1MDB and he discloses that the allegation came even as he was writing his article.

“If it were true that there’s a political agenda, it would be justifiable because the objective would be to expose a government that has made it possible for abuse and corruption to happen, in fact given a licence for them to happen.”

“In all these six years, it’s not public funds that the government has been protecting, but thieves and robbers.”

(Source)

Now there are talks of dismantling 1MDB and dissolve it thereafter. It may depends on the outcome of the AG report. The question is whether we will be calling the fat guy in for questioning and squeeze the truth from him on the shady USD700 million transfer? And since the PM is also the Finance Minister and this owns 1MDB, accountability and thereafter his resignation if wrongdoings are proven? Sarawak Report claims that all historical emails have been wiped out – so what is left to investigate if more evidence have been tampered with?

We do not want another PKFZ fiasco where the biggest losers at the end of the day is the taxpayers.

Advertisements

Hitting Palace’s Fan


Money is everywhere to spend but almost none for the taxpayers

(The current palace is already looking majestic and we have already spent millions on it but we went ahead to construct a new palace. We end up looking like dungus but what the heck, we been in that situation before. The new palace looks good on paper but the volume of abuse and mismanagement of funds to build it makes the whole affair end up looking too ugly. Image source: Tok Ey Ai)

Hong Kong based Asia Sentinel reports

….there is the matter of the cost of building a new national palace for the country’s sultans, which has doubled from RM400 million (US$124.2 million) to RM811 million since the contract was let – without bid — in 2006 under the premiership of Abdullah Ahmad Badawi, and may well triple, according to government insiders.

And whilst this has been happening, theStar reports:-

Many foreign workers hired to build the RM800mil Istana Negara claim that they have not received three months’ wages from some project sub-contractors. There are over 1,000 migrant workers hired by 130 sub-contractors working at the project site.

By using migrant workers, the contractors already maximising their profit margin. So, who been pocketing the money meant for the workers? But the increased cost of construction of the new palace was not a big surprise – especially in Malaysia. Certainly in time, the shit will hit the (palace’s) fan and the responsible people are going to wash their hands – just wait and see.

We have a very bad record of management of public funds – there are plenty leakages that is yet to be plugged by the government of the day. We already heard of paying above the market price for military hardware just because someone decided to make huge sum of money through “commissions” (in lay person term – bribery). Another example is PKFZ – that mess is yet to be entangled and it is likely that the public is going to made to pay for that mess (whilst the greedy ones escape with millions in their bank).

Anyway, that is not what disturbs me because unless we kick the Government of day into the wilderness, mismanagement of public funds is just going to continue (just look at the “rape” in Sarawak).

What disturbs me is this:-

“Syed Mokhtar got the original contract at RM400 million. Then the Raja of Perlis was given a gratuity and his brother, Syed Anwar Jamallulail, became Syed Mokhtar’s 30 percent partner and costs escalated,” said a source. “When the current king came in – the Sultan of Terengganu — he asked for a piece of the action and costs went up again.

It was brought up in cabinet in December by an MCA minister. [Mohamed Nazri Abdul Aziz, minister in the prime minister’s department for parliamentary affairs] replied: “So what? It’s the house of a Malay King, not a Chinese contractor.” Needless to say, no one has brought it up since.”

(Source Asia Sentinel)

First disturbing part – that our royalties been “accused” as being the factor for the increase of the construction cost. Are we going to keep quiet on this? If it is not true, then what we are doing to clear our names? But if it is true, then the question – are we going to investigate further?

Second disturbing part – If it is true, what Nazri is trying to say? That corruption and blatant increase of cost is acceptable just because the construction is being done for a Malay King? Isn’t that an insult to the King and Malaysians as whole? Nazri missed the whole point! It is nothing to do with constructing a new palace for the King, but the underlying reasons for the increase of the construction cost.

A reader in Malaysia Today rightfully commented:-

As I was just saying, in Sweden, recent royal wedding caused a massive public revolt over public footing half the bill (10 million kronor or RM4.25 million ringgit) while M’sians are constantly being FLEECED left right and centre for this palace, that palace and god knows what else.

Don’t get me wrong. I’m not against the institution, Raja-Raja Melayu and the rotating Agong BUT dead set against the blatant stealing that takes place. Already, cost overrun on this latest palace in Jln Duta and mind you all, the palace hasn’t been completed so we can’t ascertain the total ‘damage’ just yet but it would be more than current and revise estimate – that I’m sure.

If the escalation of cost was due to increase of cost of raw materials or major changes to the layout of the palace (perhaps new security and facilities) – we would have been more than happy to foot the bill. After all, Yang di-Pertuan Agong is the head of state and deserves the rightful respect and honour. And we would have been proud of the new palace.

But what is not acceptable is that the escalation of cost was due to someone wanted to make money for no valid reasons. Why should the taxpayers foot the extra money so that someone could go laughing all the way to the bank? Who are these people and what they done for the taxpayers? In developed countries, such act is known by many names – “daylight robbery”, “stealing”, “corruption”, “fraud”, “breach of trust”, etc. But in Malaysia, it is known simply as “escalation of construction cost”.

If this continues, forget about Malaysia being a developed country in the near future. Najib says 2020 but with wastages and mismanagement of public funds still riding high and fast, “developed by 2020” deadline is going to be a one steep hill to climb.

Read Also

The Perfect Scam?