Posted by: freeasian | 23 April 2015

Worth reading – Mahathir’s blog analysis of 1MDB

Mahathir1. The management of Government finances is governed by laws, rules, regulations and practices. Companies also have similar systems but Government manages huge sums of money, basically the people’s money and it is imperative that the managers follow the laws, rules and regulations.

2. Corruption prevails in almost all Governments. But usually they involve relatively small sums. The work of auditors are supplemented by special anti-corruption authorities to ensure that as little as possible of Government money is misused, abused or basically stolen by the people authorised to manage it.

3. Governments can lose money through bad investments. We would know where the money is lost. But when huge sums of money disappear, then those entrusted with its management must answer for the disappearance. Disappearance is different from just losing. Disappearance is about money lost which cannot be traced. This can be because of corruption or theft.

4. In Malaysia the PM and DPM usually hold one extra portfolio. Usually the Ministry of Home Affairs and Ministry of Defence alternate between the two. Occasionally while waiting for suitable candidate, the Ministry of Finance is held by the PM. Dato Sri Najib however prefers to keep the Ministry of Finance under him all the time. He has appointed a second Minister of Finance. This is his prerogative of course, but he must ultimately be responsible for what happens to the country’s finances.

5. The first requisite for the management of Government money is the yearly budget. Prepared by the Ministry of Finance from feedbacks by all ministries and departments, the budget is first presented to the Cabinet. If passed it is then presented to Parliament.

6. Government is expected to spend money according to the budget. If the yearly budget cannot meet an urgent need of the Government, a supplementary budget can be presented by Cabinet to Parliament. Drafts of the budgets are prepared by officers of the Ministry. Government raises money through taxes and fees of all kinds. Government may own special businesses such as Petronas, which may contribute to the budget.

7. In Malaysia there is also off-budget-funds which may not be presented to Parliament but are still subject to scrutiny and approval of the Cabinet.

8. Cabinet papers are secret of course. But in the case of 1MDB the presentation to the Cabinet and approval by it seems to be unclear. There seems to be attempts to hide behind official secrecy.

9. What we do know is that 1MDB has as its advisor the Prime Minister and Minister of Finance. It is inexcusable that the management which is appointed by the PM would reject his advice. So like the British Advisor of old, the advice of the Advisor is a directive.

10. Since then three CEOs of 1MDB have resigned without explanation. Could it be because they could not accept the advice!

11. The Government invested one million Ringgit in the 1MDB. According to known records 1MDB then borrowed from various sources 42 billion Ringgit.

12. A company with 1 million Ringgit capital with no assets cannot borrow 42,000 times its capital with no collaterals. That 1MDB is able to do so is because of Government guarantees.

13. In other words it is Government which is borrowing the money. If 1MDB loses money, the Government will bear the loss. Yet the operation of 1MDB is not overseen by Government officers responsible for the management of Government funds.

14. Why has the 1MDB become controversial? What is wrong with 1MDB?

15. From the beginning it was wrong. It started off as an off-budget and it was not put before the Parliament.

16. The money was borrowed. So it is not sovereign wealth but sovereign debt.

17. The bond raised by Goldman Sachs costs more than is usual for Government borrowings. The interest rate at 5.9% was too high. Government loans usually attract about 3% or below.

18. In addition 10% commission went to Goldman Sachs which means that 1MDB gets only 90% of the money borrowed yet has to pay interest on 100%, raising the interest rate to 6.6%. Averaging at 6%, yearly interest on 42 billion Ringgit is about RM 2.5 billion. Since 2009 there has been no income from all the assets. And 1MDB had to borrow RM2 billion to pay the interest. The loan is now RM42 billion.

19. Total initial borrowings amounted to 42,000,000,000 (42 billion Ringgit). As far as can be ascertained the investments are as follows:

a. Purchase of Tanjong Energy (now known as Powertek Energy Sdn Bhd) from Ananda Krishnan for RM 8.5 billion. This is higher than market price. The licence was about to expire.

b. Purchase of Genting Sanyen Power (now known as Kuala Langat Power Plant) for RM 2.3 billion. Again high above market price. The licence was abut to expire.

c. Purchase of Jimah Energy for RM 1.2 billion.

d. Purchase of 70 acres of land in Jalan Tun Razak for RM320 million i.e: RM64.00 psf. Land last sold in the area was at RM7,000 psf.

e. Purchase of 495 acres of land in the former Sungai Besi TUDM airport (now known as Bandar Malaysia) about RM 363.5 million i.e: at RM 91.00 psf. Estimated value RM1,000 psf.

f. Purchase of 234 acres land in Air Itam in Penang RM 1.38 billion i.e: at RM135.00 psf.

20. It should be noted that TRX land is close to land recently sold at RM7000.00 psf. Assuming the market price is RM3000.00 psf the true value of this land is 6 billion Ringgit. The Government has therefore lost 5 billion plus because 1MDB paid only RM320 million.

21. With regard to the Sungai Besi Airport land, 1MDB paid 363.5 million Ringgit for 495 acres – i.e at RM91 psf. Assuming market price for this land is RM1000 psf. the Government lost approximately 20 billion Ringgit.

22. The land in Penang is of poor quality and has more than 1000 squatters. Yet 1MDB paid RM1.3 billion i.e at RM 135 psf.

23. These are all the purchases that are known. They all add up to RM14.7 billion. So there is approximately 27 billion Ringgit left.

24. More than 1billion US Dollars were said to be paid to Petro Saudi without verification as to the value of this company or its assets.

25. Where is the rest of the money?

26. A certain amount was registered in the Cayman Islands. What was the money used for? What was brought back to Malaysia. What was brought back and deposited in a Swiss bank in Singapore. Why? Where was the money brought back from? Why is this money not used to pay the RM 2 billion interest. Why did Bank Negara allow the first tranche to be repatriated to Malaysia and not the second tranche. Now the Swiss bank has told the Singapore authorities that the document did not originate from them and does not represent a true account of the assets of 1MDB. So where is the money said to be registered in the Cayman Islands and is now brought back.

27. Clearly 1MDB is not getting any return from its investments. Not only is it losing money but the Government has lost money when 1MDB paid only RM683 million for TRX and Sungai Besi. Total loss incurred by the Government is approximately 25 billion Ringgit.

28. 1MDB revalued all its assets at 52 billion Ringgit. That is because Government land was brought at far below the market price. It can only use this money to repay loans if it succeeds in selling them off as land or after development. Progress on TRX is very slow and there is no work on Sungai Besi land. No money will be generated during development; only outflows.

29. It is this disappearance of a huge amount of borrowed money by 1MDB and the inability to answer questions regarding what happened to the funds that disqualifies Najib from being Prime Minister of Malaysia.

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After being questioned about the authenticity of a photograph that showed a large crowd at Prime Minister Najib Tun Razak’s residence during Hari Raya, Bernama, the Malaysian national news agency, denied any doctoring of the photograph to increase the size of the crowd. Its editor in chief, Datuk Yong Soo Heong, said the accusation was absurd, that “we do not have the time to indulge in irrational endeavours.” He also said, “One cannot deny that Datuk Seri Najib is a crowd-puller…”

Less than two weeks later, Bernama was caught red-handed by the internet community with a doctored photograph that sneakily increased the size of the crowd at Najib Tun Razak’s gathering in his Pekan constituency. Bernama had to admit the “flaw.” Bernama’s face-saving statement is that it now wishes to investigate whether there were elements of sabotage!

 

Malaysia’s UMNO-owned ‘newspaper’, Utusan Malaysia, is known for what many would classify as biased reporting against Malaysia’s opposition political parties. Now, finally, its Deputy Chief Editor, Mohd Zaini Hassan freely admits:

“Spin we can; no matter how we spin a certain ‘fact’ to be biased in our favour, that’s okay.”

Shouldn’t factual reporting be the basis for any decent mainstream newspaper? Obviously not in this case!

Posted by: freeasian | 27 June 2012

Inappropriate Malaysian politician quotes #2

UMNO MP for Sri Gading, Datuk Mohamad Aziz has called for the organizer of the Bersih rally, Datuk Ambiga Sreenevasan, to be hanged for treason just because she organized a rally to demand for free and fair elections in Malaysia.

Note the illogical situation – a Member of Parliament, supposedly elected by the people, publicly opposed to free and fair elections to such an extreme extent?  Only in Malaysia…

 

Posted by: freeasian | 26 April 2012

Amazing “Malaysia Boleh” moment

Image

Both the Chairman and the Deputy Chairman of the Malaysian Election Commission have sheepishly admitted that they are members of UMNO after being outed recently.  The Election Commission is supposed to ensure free and fair elections, but elections in Malaysia have been far from free and fair.  Hence the Bersih 3.0 rallies worldwide on Saturday April 28.

UMNO is the Malaysian political party that has been ruling Malaysia for over 50 years.

Now you know how UMNO has managed to become the longest ruling government party in the world!!

Posted by: freeasian | 21 April 2012

Funny Malaysian civil servant quotes #1

ImageDespite the numerous inconsistencies and likely fraudulent entries in its electoral roll, Malaysia’s Election Commission Chief, Abdul Aziz Mohammad Yusof, declared to journalists, without furnishing an ounce of proof, that:

“Malaysia has the cleanest electoral roll in the world.”

On the same day, an EC official was apparently caught in a video luring students to move their addresses to another constituent solely for the purpose of propping up the votes for that marginal constituent.

 

Posted by: freeasian | 20 April 2012

Funny non-Malaysian quote #1

ImageThe residents of the town of Fu*king in Austria are now contemplating changing the name of their town, for obvious reasons.  Its mayor, Franz Meindl, told reporters recently:

“The only problem is that we need all of the Fu*king residents to agree to the name change.”

Posted by: freeasian | 20 April 2012

Inappropriate Malaysian politician quotes #1

ImageInstead of condemning the acts of violence, Malaysian Higher Education minister Khaled Nordin commented on his Twitter account about the late night attack by an unruly mob (believed by some to be connected to UMNO, the ruling Malaysian party) on the students who camped at Dataran Merdeka as part of “Occupy Dataran”:

“No one told them to camp out at Dataran.  So when these things happen, don’t cry for pity.”

 

ImageNajib Tun Razak, Malaysian Prime Minister, on the move to repeal the Internal Security Act (ISA) which allowed detention without trial:

“It wasn’t easy for the government to repeal the ISA…. especially for the home minister but he did it nevertheless because that is what the rakyat wants.”

Since when did Hishammudin ever do something because the rakyat wants it?  Perhaps the real reason is that the general elections will be called soon. Anyway, the Security Offences Bill 2012, which allows detention without trial, was then hastily tabled to replace the ISA!

Datuk Mohd Ariff Sabri (right) commented on why he joined the Democratic Action Party (DAP):

“Bribery is very close to Umno’s heart. Umno cannot live without bribery, and bribery cannot flourish without Umno.”

Aspan Alias (centre) on why he quit his former party, UMNO, for DAP:

“Umno always practises slanderous politics; it is the biggest ‘slander factory’.”  “UMNO is different now (compared to 41 years ago). They are the enemies of the Malays and have no respect for the state’s legislative body.”

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