1MDB, FOREX LOSSES – NEVER AGAIN!

By Kua Kia Soong, SUARAM Adviser, 4 July 2017

Just as I predicted in the first paragraph of my new book ‘GE14: The Big Issues’:

“Malaysia’s 14th general election will no doubt be fought between a Barisan Nasional coalition that boasts its sixty years of “stable rule” and a Pakatan Rakyat coalition calling on the electorate to “save Malaysia” from the BN’s kleptocracy. There will certainly be plenty of the usual mudslinging on both sides and Malaysian voters will likely be treated to tirades about current scandals including 1MDB, as well as past scandals such as the forex losses, now that the former Prime Minister has joined the Opposition…!”

It is great that Pakatan Harapan will be going around the country to expose the BN’s 1MDB scandal. The rakyat who do not already know about this scandal will get to know about how more than RM40 billion of our sovereign wealth has been squandered by the coalition that has run this country since Independence.

Equally wonderful is the fact that the Barisan Nasional will be going to town about the more than RM30 billion forex losses incurred by Mahathir’s government during the Nineties. The old man may even get a taste of what incarceration feels like if he is found to have misguided the Cabinet and Parliament in the Nineties and squandered so much of our valuable assets.

If Mahathir had not joined the Pakatan Harapan coalition, PH would only have been tainted with the corruption charges against the PH Chief Minister in Penang and the allegations of corruption by PH themselves against the former PH Menteri Besar of Selangor. Worse luck, thinking they had roped in a big fish to trawl for rural Malay votes, PH must now bear the cross for the former kleptocrat’s sins!

Karma chameleon

It never fails to amuse me that the laws of karma work in such a way that ensures that justice will always prevail, even in what too often appears to be so unjust a world. Who would have thought that two decades after the Mahathir administration had frittered away more than RM30 billion of Malaysian tax payers’ money in the forex losses, we would finally have a Royal Commission of Inquiry into this scandal which the Leader of the Opposition Lim Kit Siang described thus:

“Up to now, the government has failed to “come clean” on the colossal Bank Negara forex losses as a result of speculation in the international currency markets from 1992-1994, with the losses cited as ranging from RM10 billion to RM30 billion…The reasons which I had advanced in Parliament in 1994 for a Royal Commission of Inquiry into the colossal Bank Negara forex losses remain valid today, and should be the terms of reference of a White Paper… To determine the actual extent of the colossal forex losses suffered by Bank Negara 1992-1994; whether there had been any financial malpractices and abuses in view of the inconsistencies and conflicting explanations about the colossal forex losses; and establish how Bank Negara could incur such colossal losses.”

I imagine the leader of the Opposition must be so pleased that his call for an RCI in 1994 has finally come to pass. Now at least the Malaysian rakyat will be able to get to the bottom of this seemingly bottomless pit of financial squandering under the Mahathir regime.

When will we see a credible RCI on 1MDB?

Certainly, the rakyat also demands a credible RCI on the 1MDB scandal. Unfortunately, Mahathir was responsible for concentrating so many branches of power under the Executive branch of the Government that the independence of the AG chambers and the MACC have now been compromised under the Prime Minister’s Department. Likewise, the Judiciary has not fully recovered from its rude assault by Mahathir after Operation Lalang in 1988 when the Lord President and three Supreme Court judges were sacked. Will it be poetic justice that Mahathir might have to face the judiciary of his own making?

We will have to be patient and wait for the laws of karma to work in such a way that we will also have a credible RCI on the 1MDB scandal. Waiting might have to be until the present Prime Minister meets his UMNO nemesis and becomes the hare in the race. If he then joins the Opposition, I wonder if he will be forgiven by the Opposition for his 1MDB indiscretions? Since we have waited more than twenty years for the RCI on the forex losses, let us hope we do not have to wait that long for an RCI on 1MDB!

BN and PH’s unacceptable tolerance of corruption

By now, it must be clear to all Malaysians that there is a pattern of an unacceptable level of tolerance of corruption within both the BN and PH coalitions. If Dr Mahathir had quietly retired, we would definitely not be hearing about this RCI on the forex losses in the Nineties. But he has his own agenda and has chosen to challenge Najib, so he will have to face the consequences and bite the bullet while facing the assault from Najib.

Within PH, PKR Secretary-general Rafizi Ramli recently exposed corruption involving money and “women” for those wanting to deal with the Selangor government. He similarly made the standard proviso that he “MIGHT take action unless…” He said he had received the complaint from a “bona fide person that apart from money, now there are also requests for women when dealing with the state government”.

This is not the first time we have witnessed such a tolerance of corruption by Pakatan leaders in which the alleged corrupt person involved is given a CHOICE of following a course set out by the accusers in the coalition. We saw such a strategy at work during the gambit to get rid of the former Menteri Besar of Selangor Khalid Ibrahim when PKR leader Saifuddin Nasution waved a file of alleged corrupt practices over the Khalid’s head to force him to step down as MB. However, since the day Khalid did indeed step down as MB, we have heard nothing more of the alleged corruption scandals on which his removal was apparently based.

Does the former MB not have to face these allegations of corrupt practices anymore and does he not have to accept the consequences if found guilty? Did the tax payers of Selangor suffer any loss of their state revenue as a result of the alleged wrongdoing? If so, should he not have to pay these back to Selangor tax payers? On the other hand, if the alleged corrupt practices are found to be concocted and untenable, do the Pakatan leaders who were responsible for such irresponsible ruses (including the frivolous Kajang Move) not have to face the consequences of their actions?

After he stepped down as MB of Selangor, Khalid Ibrahim has insinuated that there are irregularities in the purchase of the water assets by the Selangor Government, namely one of the water concessionaires has been offered favourable terms through links to personalities in the Selangor state government. In the interest of Selangor rates payers, this deal should be investigated by an independent inquiry as well.

Urgent reforms in GE14:

1.       Zero tolerance of corruption

So, what does this tell us about the attitude by the Pakatan leadership to corruption? They have shown us that they are prepared to tolerate corrupt practices as long as the guilty ones follow the coalition’s wishes. This is totally unacceptable.

In the reformed Malaysia that Malaysians yearn for, there must be zero-tolerance of corruption. We expect every case of corruption to be reported to the relevant authorities including the police for prosecution and nothing less than that.

Corrupt leaders and civil servants have to be accountable to the people. Furthermore, they have to pay back what they have corruptly obtained from the people and atone for their indiscretion. And this is irrespective of whether the amount of money involved is 2.6 billion in your personal bank account or 2.6 million that you paid for a house.

2.       Public officials charged with corruption must step down until cleared

In addition, any public official charged with corruption must step down while the case is in the courts as a democratic principle and good governance. This principle is not subject to any populist campaign which claims that “the people say the CM need not resign”. Any guilt over corruption charges can only be decided in the courts and not by selected sections of the public.

If this rule is not followed and if MO#1 is finally charged for corruption, this will be a precedent that he can cite to justify staying on in his capacity as MO#1.

3.       Make our sovereign wealth fund and Bank Negara transparent and accountable

It is not enough for PH to tell us the details of the 1MDB scandal and for BN to expose the shenanigans of the Mahathir administration which led to the forex losses. The rakyat want to know how the BN or the PH will ensure these scandals never happen again by putting in place strict reforms to make our sovereign wealth funds and Bank Negara transparent and accountable.

Our sovereign wealth fund and foreign exchange reserves must be managed in a transparent manner for the benefit of Malaysian workers, especially their expectation of a respectable pension when they retire and investment for our future generations. Political objectives and capitalist greed must not influence their management.

We want a standard that ensures that international investments of our government, including foreign exchange reserves, sovereign wealth funds, and government-owned such as pension funds, are based on clearly stated policy objectives and investment strategies, transparent and accountable to the people. The opaque operations of the Malaysian governments in managing our international investments is what led to the forex and 1MDB scandals.

We say, ‘Never Again!’

If BN and PH want our votes, they must tell us in no uncertain terms how they will ensure that such scandals never happen again and what specific reforms they will put in place to achieve this – namely, how they will consolidate the rule of law and good governance and how they will step up the efforts against corruption and enhance our policy and regulatory frameworks.

CIVIL SOCIETY SAYS AYE TO RCIS ON 1MDB, BMF AND FOREX LOSSES

CIVIL SOCIETY SAYS AYE TO RCIS ON 1MDB, BMF AND FOREX LOSSES
Press statement by Kua Kia Soong, SUARAM Adviser, 9 Feb 2017

At last, the two political coalitions in the country have been forced through their grandstanding to call for Royal Commissions of Inquiry (RCIs) into three of the worst financial scandals in recent Malaysian history. Pakatan Harapan has of course been calling for an RCI into the most recent 1MDB scandal that has made international headlines. To get at the former Prime Minister and new member of Pakatan Harapan, Dr Mahathir, the BN Minister Datuk Seri Dr Salleh Said Keruak has called for an RCI to look into the Bumiputera Malaysia Finance Limited (BMF) and Bank Negara foreign exchange (forex) scandals as these equally big financial scandals have never been investigated by an RCI and charges imposed.

Malaysian civil society says Aye to both these calls since the government can never regain the trust of the people until these three multi-billion financial losses have been accounted for and the negligent and corrupt leaders have been brought to account.

1MDB

The first RCI should investigate the current financial scandal around 1MDB. 1Malaysia Development Bhd (1MDB), the state investment fund has come under investigation for alleged impropriety after reports emerged that investigators traced some US$700 million wired into Prime Minister Najib Razak’s bank accounts. 1MDB was 42 billion ringgit in debt at the time of the scandal. Investigations by the US Department of Justice has uncovered the fact that insiders siphoned off billions of dollars and treated themselves to penthouse apartments in New York, a luxury hotel in Beverly Hills and paintings by Monet and Van Gogh. An independent RCI can uncover who authorized these enormous sums of taxpayers’ money to be abused in this way and recommend appropriate convictions of the corrupt and negligent.

Forex losses in the 90s

There has also been no RCI into the colossal forex losses as a result of speculation by Bank Negara in the international currency markets from 1992-1994, with the losses cited as ranging from RM10 billion to RM30 billion. Such a RCI can determine the actual extent of the colossal forex losses and whether there had been any financial malpractices and abuses by then Prime Minister, Finance Minister and Bank Negara Governor in view of the inconsistencies and conflicting explanations about the colossal forex losses. The RCI should recommend the appropriate charges for those who abused their powers.

The BMF Scandal in the 80s

One of the first scandals soon after Mahathir came into office in the 80s was the RM2.5 billion scandal in Bumiputra Malaysia Finance, a Hong Kong based subsidiary of state-owned Bank Bumiputra Malaysia Berhad. Besides the wide range of shady dealings involving the Carrian Group, the sordid details included the murder of a BBMB auditor who had gone to Hong Kong to investigate the propriety of the loans. No RCI has thoroughly investigated this scandal to see who in Kuala Lumpur had authorized those shady deals and recommended the appropriate charges against those responsible for this massive financial scandal.

Other financial scandals of the 80s and 90s

There have been other financial scandals including the $600 million losses suffered by the country over the Maminco-Makuwasa tin caper on 19 Nov 1986, the “piratisation” of the North-South Highway in 1987, the bail out of Mirzan Mahathir’s Konsortium Perkapalan Bhd as well as Renong during the 1997 financial crisis, Perwaja Steel’s RM9 billion liabilities.

No trust if there is impunity

Malaysian civil society demands social justice, democracy and human rights and there is no place for impunity. Impunity is especially common in countries that do not respect the rule of law, that suffers from corruption and have entrenched systems of patronage, or where the judiciary is weak. The First Principle of the Protection and Promotion of Human Rights through Action to Combat Impunity, submitted to the United Nations Commission on Human Rights on 8 February 2005 states that:

“Impunity arises from a failure by States to meet their obligations to investigate violations; to take appropriate measures in respect of the perpetrators, particularly in the area of justice, by ensuring that those suspected of criminal responsibility are prosecuted, tried and duly punished; to provide victims with effective remedies and to ensure that they receive reparation for the injuries suffered; to ensure the inalienable right to know the truth about violations; and to take other necessary steps to prevent a recurrence of violations.”