Lessons not learnt . . . The reasons for the 1MDB global financial scandal remain widely known in the public domain but so far there has been very little evidence that Malaysia has taken steps against history repeating itself!
Commentary And Analysis . . . The elephant in the room on the 1MDB Phenomenon — hereinafter global financial scandal — was no longer about the long list of mega thieves headed by fugitive fund manager Jho Low and “too big to fail” international rogue merchant bank Goldman Sachs (GS). It can only be about whether Malaysia has learnt any lessons from the 1MDB global financial scandal which had initial beginnings 15 years ago in Terengganu.
The reasons for the 1MDB Scandal remain widely known in the public domain. So far, there has been very little evidence that Malaysia has taken any steps against history repeating itself.
No doubt this may be the “mother and father of all reasons” for the plight of the RM in the forex market. The Opposition blames Prime Minister Datuk Seri Anwar Ibrahim for the ringgit steadily heading south. RM5 for US$1 may not be too far off given the differentials in interest rates and lack of policy announcements which will help arrest the decline in the Malaysian currency. The US$, being the international reserve currency, remains for cross trading purposes in working out exchange rates.
Worldwide Currencies
Of course there are any number of currencies worldwide against which the RM has held steady and this can be seen, for example, in prices in the supermarkets. Fruit juices from Cyprus, in citing one case, has been selling at RM6 per litre for months on end. Likewise, dates from Iran in plain wrapping sells at RM6 for 600gms. The same product from the US, in plain wrapping, sells at RM36 for 600gms. There are many more stories like these in the market.
It’s bad enough that 1MDB didn’t warrant a Royal Commission of Inquiry (RCI) even when GS came under regulatory scrutiny in 14 countries for its alleged role in the global financial scandal originating from Malaysia. There was no investigation against GS. It was GS which arranged the controversial 1MDB bond sales. More later on the no lessons learnt from 1MDB.
1MDB Assets Recovery
We have some figures from Finance Minister 11 Datuk Seri Amir Hamzah Azizan and MACC Chief Tan Sri Azam Baki on the 1MDB Scandal.
Azam Baki has been saying for months that 70 per cent of stolen 1MDB bond monies and assets — approximately RM28.93b — have been recovered. There have been media reports, quoting the MACC Chief, on the balance 30 per cent being with 20 people. It’s not known why it’s taking so long for the recovery of the remaining stolen funds. Former Prime Minister Datuk Seri Najib Tun Razak, for what it’s worth, wasn’t included in the MACC list of 20 people.
Jho Low, who allegedly still heads the remaining list of mega thieves, was last reported as being under house arrest in Shanghai, China. The CCP (Chinese Communist Party) may not have its hands clean on the 1MDB Scandal as seen in the moribund ECRL project, potential white elephant, going through “God forsaken country” in the east coast of Malaya (Peninsular Malaysia) in the heartland of the Islamic states.
Amir Hamzah, speaking in Parliament on 19 March, confirmed that RM48.06b of 1MDB debt had been paid. He added that RM5b sukuk will mature in 2039.
In 2020, based on out of court settlement, the government received US$2.5 billion from GS and guarantee for the return of assets totalling US$1.4b until 2025.
In October last year, GS filed case against Malaysia at the London International Court of Arbitration. The details aren’t clear.
Lessons
David Seth Jones, Policy and Management Consultant in the UK, has compiled an exhaustive list of references on the 1MDB Scandal at www.emeraldgrouppublishing.com/licensing/reprints.htm on the lessons which can be drawn from the global financial phenomenon.
Those interested can drop Jones line or two at dsjones1x@gmail.com Or contact Emerald for further details: permissions@emeraldinsight.com
Jones notes that one commentary in 2019 singled out Goldman Sachs, stating: “the reality is that Goldman Sachs allowed key internal compliance controls to be over-ridden or simply avoided and there was no manner to check on what were clearly red flags raised”.
The commentary continued: “there was a culture which supported doing business even if it was done illegally and others consciously looked the other way” (Fox, 2019).
These observations were supported by Tim Leissner’s testimony in guilty plea (US DOJ, 2018).
According to its own assessment, Goldman Sachs acknowledged: “the firm’s business culture, particularly in Southeast Asia, at times prioritized consummation of deals ahead of the proper operation of its compliance functions” (Goldman Sachs Group, 2018, p. 89).
Although it pointed the blame specifically at its leading employees in Southeast Asia, Tim Leissner and Roger Ng, for “repeatedly lying to control personnel and internal committees”, little seems to have been done to check the honesty of their reports (Goldman Sachs Group, 2018, pp. 88–89).
Much of this could have been said of other banks which were involved in raising loans for 1MDB and in handling illicit money transfers from embezzlement and bribery connected to 1MDB.
New Forms Of 1MDB Scandal
We resume on why Malaysia hasn’t learned any lessons from the 1MDB Scandal and may even repeat, at some future date, the phenomenon under new forms. The jury may no longer be out on whether Malaysia has any ability for learning from mistakes. We know from subject matter experts that intelligence remains the ability for learning from mistakes. New mistakes can be made as part of the learning process for increase in intelligence. If the same old mistakes are repeated, again and again, there’s no ability for learning. Anyway, let’s not go there too much, lest it risks the police turning up at the doorsteps for no rhyme or reason.
One cue that Malaysia risks new 1MDB Scandal comes from Prime Minister Anwar. He vowed that the government would defend Article 153 — read affirmative action programmes — in the Constitution. That implies that there’s such a thing as “free luncheon”.
Another cue comes from Najib who sits in jail as scapegoat for the 1MDB Scandal. He told the media, after GE14 on 9 May 2018, that “we all learnt from Mahathir (Tun). He was the Guru i.e. implicitly on making money, inflated government contracts, political donation and being party to illegalities on money laundering activities and retention of ‘secret profits’.”
Resident-General Sir Frank Swettenham laid the cornerstone for British colonial policy in Malaya based on the observation that “we must protect the Malay from himself. The Malay is an arrogant creature. He will not hesitate to harm anyone even if he suffers much greater harm. He can only think about the harm that he can do”.
In law, Article 8 in Malaysia, there can be no discrimination under the rule of law — the basis of the Constitution — save as provided by law i.e. there must be sunset clause with expiry date if there’s discrimination. The sunset clause cannot be removed before expiry date for indefinate discrimination, it cannot be extended after expiry. No one is above the law. All are equal under the law. The 15 year sunset clause in Article 153, expiring in 1972, was removed after the week long disturbances, beginning 13 May 1969, in the streets of Kuala Lumpur.
In law, Article 4 in Malaysia, invalid law in the book — read Article 153 — remains as long as not removed by the court of law and/or Parliament.
Therein the matter lies.
Perspective
In keeping things in perspective, on the 1MDB Scandal, the government did announce pre-emptive measures after GE14 viz. five-year plan to clamp down on corruption in government, called the National Anti-Corruption Plan (NACP) 2019–2023. The plan, launched by Prime Minister Tun Mahathir Mohamad, entails major changes on the appointment process for key posts, require MPs and ministers to publicly declare their assets, and ensure new laws to regulate political funding and lobbying.
“This sounds promising and was intended to prevent another major corruption scandal, but it remains to be seen how vigorously the plan will be implemented in practice and whether it will be also affected by political influence,” said Jones in taking the cue from the compilation of references. — NMH
Longtime Borneo watcher Joe Fernandez has been writing for many years on both sides of the Southeast Asia Sea. He should not be mistaken for a namesake formerly with the Daily Express in Kota Kinabalu. JF keeps a Blog under FernzTheGreat on the nature of human relationships.
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