UMNO’s Corporate Cornucopia

In the 1980s and 1990s, Halim Saad and Tajudin Ramli were two of Malaysia’s brightest stars, picked by former Prime Minister Mahathir Mohamad to lead the country’s ethnic Malays onto the national stage as exemplars of a new Bumiputera business culture that would catch up with the ethnic Chinese who had dominated commerce as long as Malaysia had been in existence.

When Mahathir took office, insiders say, his plan was to create a cadre of 100 super-rich bumis who in turn would help rural Malays into prosperity under a konsep payung, or umbrella concept routed through the United Malays National Organization, much the way he envisioned driving the country into industrialization through massive projects.

But greed intervened. Once the privileged got rich, there was little incentive to share it with the kampungs, the Malay rural villages. Many of the companies eventually collapsed and are being supported by government institutions such as Kazanah Nasional, the country’s sovereign investment fund, or the Employee Provident Fund.

Rise of the Umnoputeras

Although the Umno connection was widely assumed during Mahathir’s 22 year reign as prime minister, today a flock of explosive court documents filed in different Kuala Lumpur courts appear to be breaking open conclusively the open secret that Tajudin and Halim and others were essentially front men for Umno, the country’s biggest ethnic political party and part of a class of rentier businessmen who became known as Umnoputeras, a play on the word Bumiputera, or native Malaysians, predominantly ethnic Malays.

Nor were they alone. Others included Syed Mokhtar Al Bukhary, one of Malaysia’s richest men, as well as Yahaya Ahmad, who headed Mahathir’s national car project and who tragically was killed with his wife in a helicopter crash, and Samsuddin Abu Hassan, introduced by Mahathir to the government of Nelson Mandela but who had to flee South Africa after being accused of misappropriating millions and evading South African debts totaling about R50 million (US$7.233 million at current exchange rates). Samsuddin left behind his glamorous wife, Melleney Venessa Samsudin, along with a failed Durban bank, and returned to Malaysia.

Samsudin ultimately ended up on the board of directors of Mitrajaya Holdings Bhd., another Umno-linked company that has played a significant role in major national projects including the Kuala Lumpur International Airport, KL’s Light Rail Transit System, the CyberJaya Flagship Zone and numerous other projects.

23 companies vehicles for Umno

At least 23 of Malaysia’s biggest companies (see list below) appear to have been vehicles for Umno to siphon off vast amounts of money in government contracts as Mahathir’s plans went awry. The companies and the people who run them are so hard-wired into Umno, the government and its investment arms that de-linking them would probably destroy the party. That in effect makes a mockery of Prime Minister Najib Tun Razak’s widely publicized speech in July in which he promised to root corruption out of his party.

Much of the ownership appears to have been channeled through a mysterious company, Realmild, that emerged in 1993 to stage an RM800 million management buyout of a major chunk of Malaysia’s media including the New Straits Times Press (M) Bhd and TV3. Realmild already owned a controlling interest in Malaysian Resources Corporation Bhd, which got the contract to develop the massive Kuala Lumpur Sentral transport hub. It also acquired ownership of the Labuan and Sabah Shipyards, which supply the Malaysian Navy, as well as Redicare and Medivest, which were awarded lucrative contracts to supply medical supplies to government hospitals.

Thieves fall out, details emerge in court

In September, Syed Anwar Jamalullail, the brother to the Sultan of Perlis, and others testified in a tangled court battle in a Kuala Lumpur High Court that Daim Zainuddin, the prime minister’s close associate, often told Malay businessmen to act as nominees in the management of Malaysia’s top companies. The long-running suit was launched five years ago in2005 by Khalid Ahmad, a former Realmild director, who alleged he had been cheated out of a RM10 million payment for five percent of Realmild’s shares by Abdul Rahman, thought to be the beneficial owner.

According to the testimony, Abdul Rahman paid out the RM10 million but later reneged after he learned from Mahathir that the shares actually belonged to Umno. The trustees for Realmild in fact were Mahathir himself as well as former Berita Harian Group Editor Ahmad Nazri Abdullah, New Straits Times Group Editor Abdul Kadir Jasin and Mohd Noor Mutalib. Another witness, Ahmad Nazri, said in a deposition that he held the majority share of 80 percent in Realmild, although 70 percent of the shares were actually in trust for Mahathir.

The companies others ran included Faber Group Bhd, a member of the UEM Group, now involved in integrated facilities management and property solutions sectors; KUB Malaysia Bhd. A holding company dealing in information, communications & technology, property, engineering & construction and food related industries.

Companies mismanaged into state ownership

The companies have been involved a wide variety of activities including media, property development, construction, toll roads, hospital equipment, logistics and distribution, cellular telephony and other businesses. What they had in common was that most of them benefited from government contracts doled out by the Barisan Nasional, the ruling coalition that has controlled Malaysia since its inception as a country. The other thing they had in common was that at some point most of them were mismanaged into financial trouble of one kind or another and had to be bailed out or bought out by the government.

Realmild unloaded Malaysian Resources Corporation Bhd onto the Employee Provident Fund in late 2005 as part settlement for an outstanding Rm500 million loan. Putera Capital Bhd, is threatened with bankruptcy. It formerly owned the Putra World Trade Center, Umno’s headquarters, which rents out office space to businesses. UEM Builders Bhd, an offshoot of United Engineers Malaysia (UEM), along with UEM World Bhd, was dumped onto Kazanah Nasional, the investment holding arm of the government and the government’s strategic investment vehicle.

Kazanah Nasional now also owns PLUS, which held the tollway contract for the national north-south highway, as well as Pharmaniaga, a former UEM subsidiary dealing in hospital supply and other services. Court documents show that MAS, then the state-owned flag carrier, was taken over and privatized by Tajudin Ramli only to lose an estimated RM8 billion (US$2.77 billion at current exchange rate), with a major part of that being funneled into a Frankfurt, Germany cargo logistics company whose directors were closely connected to Tajudin.

According to the website Malaysia Today, Tajudin’s lawyers revealed that Tajudin had only been a front man for Umno and that Umno “not only has to protect him from prosecution but that they also had to ensure that the government bought back the shares at the same price that they were sold to him although the shares were only worth a portion of the real value.”

Overpriced government contracts provide a lifeline

Other depositions made available in recent weeks have listed a long series of documents detailing misdoings in UEM/Renong, once headed by Halim Saad, which has long been accused of looting the government treasury through vastly overpriced construction contracts. Halim told the press in September that he had left the UEM/Renong board in 2001, saying authorities wanted Kazanah to take it over “to prevent a systemic risk to the banking system in Malaysia and to enable a sustained restructuring of the group.”

UEM itself is still at it. The government-linked company was given the contract to build a second bridge from the mainland to the northern city of Penang at a price estimated in 2007 at Rm2.7 billion. It has since climbed to RM4.3 billion without figuring in a variety of ancillary costs including compensation for fishermen and project development costs of RM285 million, with the total now nearing RM5 billion.

Other documents show how completely the country’s press was in the thrall of UMNO. Media Prima Bhd, a listed company, apparently took over the ownership from Realmild of TV3, 8TV, ntv7 and TV9 as well as 90 percent of the equity in The New Straits Times Press (Malaysia) Bhd, which publishes three national newspapers; the New Straits Times, Berita Harian and Harian Metro. It also owns three radio networks, Fly FM, Hot FM and One FM. Other cross media interests of Media Prima include content creation; event and talent management.

It also owns outdoor advertising companies Big Tree Outdoor Sdn Bhd, UPD Sdn Bhd, Right Channel Sdn Bhd, Kurnia Outdoor Sdn Bhd and Jupiter Outdoor Network Sdn Bhd. It is online through a digital communications and broadcasting subsidiary, Alt Media, with the Lifestyle Portal gua.com.my and the newly launched TonTon, a cutting-edge video portal with HD-ready quality viewing experience that offers the individualism of customized content and interactivity of social networking.

The companies:

·       Faber Group Bhd

·       KUB Malaysia Bhd

·       Malaysian Resources Corp. Bhd

·       Media Prima Bhd

·       New Straits Times Press (M) Bhd

·       Putera Capital Bhd

·       UEM Builders Bhd

·       UEM World Bhd

·       PLUS

·       Pharmaniaga

·       Utusan Melayu (M) Bhd (partly owned by Syed Mokhtar Albukhary, another Mahathir crony and one of Malaysia’s 10 richest men according to the Forbes List

·       Renong Bhd

·       Realmild Sdn Bhd

·       Mahkota Technologies (Also a partnership with Syed Mokhtar Al Bukhary)

·       Malaysian Airlines

·       Celcom

·       Malaysian Helicopter Service

·       Temasek Padu Sdh Bhd

·       Sabah Shipyard

·       Labuan Shipyard

·       Redicare

·       Medivest

Return of the Cronies

On October 17, Halim Saad, the executive chairman of Renong Group, bid RM5.2 billion (US$1.24 billion) in an attempt to acquire the government investment company Khazanah International’s majority interest in PLUS Malaysia Bhd., the country’s biggest highway concessionaire. 

Although Halim’s bid was said to be the highest, apparently Prime Minister Mahathir Mohamad would like to steer the ownership to another Tan Sri, Abu Sahid Mohamad of the Maju Holdings Group, a close friend and lunch partner of the premier. In the meantime, Lim Guan Eng, who heads the Finance Ministry, which controls Kazanah and thus the 51 percent PLUS stake, is fighting “tooth and nail,” in the words of one source, to keep it in the government.

If there is anything that exemplifies the paralysis that has seized the putative reform government that Malaysia’s voters put in place in May of 2018 – more than 500 days ago – it is the fight over PLUS, which could have come directly out of a 1980s playbook, a distressing indication that little has changed despite the electoral earthquake. 

“The problem is that these guys can’t get their act together,” said a highly placed business source. “Every single problem they have, they turn back to practices put in place by the old regime. Mahathir, Daim, and Anwar were part of the old regime. Now they are running the new one.”

Strangely, the reformers who formed the backbone of the resistance to the old regime have gone utterly silent. Rafizi Ramli, the articulate chartered accountant who embarrassed the old regime with his exposes of affairs like the “Cowgate” scandal, has disappeared from view. Tony Pua, the technocrat who joined the Democratic Action Party and exposed much of the misdoings in the 1MDB scandal, is little heard from. Nurul Izzah, Anwar’s daughter and a major voice for reform, has also basically disappeared. Azmin Ali, a Mahathir ally who previously had outmaneuvered his rivals in the Parti Keadilan Rakyat headed by Anwar Ibrahim, has been sidelined by allegations of sexual deviancy.

Voters have become disillusioned with a government in which very little has changed except that it has ceased to even function as well as the corrupt coalition that preceded it, critics say. Many of those critics are within the Pakatan Harapan coalition itself.

Instead of the generation of young reformers who helped to drive the Barisan from power, the country looks to the 94-year old Mahathir, who again took up the prime ministership 18 months ago. He is being challenged for the country’s leadership by his erstwhile ally Anwar Ibrahim, 72, who was the finance minister and a Mahathir acolyte three decades ago. Mahathir is being advised by Daim Zainuddin, 81, his finance minister from the 1980s. 

It was these government-linked companies, or GLCs, that stultified the Barisan Nasional and were in part responsible for Malaysia slipping behind other countries in the region. They included more than 30 such crony-driven operations as Malaysian Resources, UEM, PLUS, Renong, Malaysian Airlines, and Realmild. Abu Sahid, seeking to take over PLUS, is now the owner of Perwaja Steel, a failed white elephant that cost the government an estimated US$2.4 billion. MAS mismanagement is believed to have cost US$2 billion, UEM more than US$1 billion. A complete list of the companies that had to be taken over by the government can be found here. 

The political situation is “tense,” according to a political analyst, with everybody waiting to see how long Mahathir will remain. Although he had promised prior to the election to be gone in two years, with seven months or so left to go, he shows little inclination that he might actually give up. His party, Parti Pribumi Bersatu Malaysia, and his policies are increasingly appearing to be throwbacks to his previous prime ministership. 

The economy is reacting to the situation. While manufacturing foreign direct investment is on the increase as foreign multinationals look for other bolt-holes for their supply chains because of the US trade war with China, domestic investment has declined sharply, by 21 percent, with palm oil prices weakening. 

Mahathir then jolted the country recently by publicly backing Pakistan over India’s takeover of the autonomous region of Jammu & Kashmir, causing India to threaten a boycott of Malaysian palm oil. He also jolted Malaysia’s Chinese community by saying Hong Kong Chief Executive Carrie Lam should step down in the face of months-long protests, adding that eventually, China would crush the protests. In a majority Muslim country, he has argued that China is “too powerful” to censure over the issue of Beijing’s treatment of Muslim Uyghurs, leading to concerns that Malaysia is engaging in selective humanitarian criticism. Growing segments of the country are concerned that these statements are unnecessary and causing controversy that Malaysia doesn’t need – and raising questions over Mahathir’s fitness at age 94. 

One investment bank report suggested that political bickering has paralyzed reform. The private sector remains confused as to the rules of engagement, with ministers unsure of their roles, and holdover businessmen fearing both tax arears and possible criminal charges. 

The civil service, as Asia Sentinel reported on October 23, remains basically hostile to the government, with Mukhriz Mahathir, the prime minister’s son and chief minister of Kedah state, charging a veritable “fifth column” with allegiance to the previous government remains in place.  

Leaders from decades ago remain in charge, following the policies that got the country off the rails in the first place. Halim Saad, the executive chairman of Renong Group and Abu Sahid Mohamad are fighting for an entity that was invented as a state-backed creation tasked with pouring a cornucopia of money into the United Malays National Organization, then the dominant political party in the Barisan Nasional, the national ruling coalition, then headed by Mahathir. 

“Mahathir’s allies don’t want him to give up, they don’t want to give up their perks, the cronies are circling,” a source said. “UMNO and PAS have aligned together and they look to take advantage of a government that is looking paralyzed. Lots of people want to tell Mahathir to hang up his boots. But the majority don’t trust Anwar.”

Khairy Jamaluddin, the former youth minister in UMNO looked on as the party’s hope, has been silenced because he was looked upon as arrogant and far too ambitious. There “will be no comeback for 10 years even if he plays his cards right. The reformers are underground,” a political analyst said. “It looks like Anwar is the last man standing.”

Asia Sentinel.com

Malaysia’s Reformers Stumble

The democratic revolution born in Malaysia with such promise on May 9, 2018 – wiping out a corrupt coalition that had ruled the country for 62 years — is in increasing danger, as demonstrated Sunday with the defeat of a ruling Pakatan Harapan candidate in a state constituency it had won just 10 months ago.

There has been some concrete progress. Former leaders including Premier Najib Razak, his wife Rosmah Mansor and the lawyer Mohammad Shafie Abdullah have been arrested. The Malaysian Anti-Corruption Commission has been removed from the prime minister’s jurisdiction along with the Election Commission. Judicial reform is moving slowly forward and the independent press has  been unleashed.

But generally the Pakatan Harapan coalition has presented a picture of stumbling from issue to issue, with infighting among the leaders as economic issues bite and with the ousted Barisan Nasional coalition doing its best to hamstring reform. The coalition has been blocked in parliament with doing away with a “fake news” bill pushed through at the last minute by Najib. Nor has it revoked the colonial-era sedition act – land in fact recently used against a former minister for questioning the appointment of non-Malays to top government positions, earning criticism from Amnesty International.

Voters hold their noses

Voter dissatisfaction was clear in the loss of the Selangor state constituency just a few kilometers from Kuala Lumpur, which fell to Zakaria Hanafi, a candidate for the United Malays National Organization by a 19,780 -17,866 margin, a swing of 11,000 votes away from the government in less than a year. The disgraced Najib campaigned energetically for Zakaria, excoriating the coalition on social media despite the fact that the former prime minister is under indictment in the massive US$4.8 billion 1Malaysia Development Bhd scandal.

It was the second loss to be suffered by the Pakatan Harapan coalition in recent weeks. On Jan. 26, again with Najib campaigning vigorously, a Barisan Nasional candidate, Ramli Mohd Nor, was elected to the national parliament, where the government coalition holds 125 of the 222 seats.

It is likely to not be the last loss. Another by-election is to be held next month in the rural constituency of Rantau, an UMNO stronghold southeast of the capital, and it will almost certainly be won by a Barisan Nasional candidate, which despite the composition of the district is likely to be psychologically damaging.

The 93-year-old Mahathir Mohamad appears to be having a difficult time holding his fractious coalition together. He and Anwar Ibrahim, who served as opposition leader during years of oppression including two extensive jail terms – one engineered by Mahathir – are plainly not getting along despite public shows of amity.  Anwar, who had pledged to take a two-year sabbatical from politics, shortly after the May election induced an allied Parti Keadilan Rakyat member of parliament to quit so that he could run for the seat, raising complaints that he was overly ambitious and impatient to take over.

Mahathir, having named Democratic Action Party Secretary General Lim Guan Eng finance minister, also named former Selangor chief minister Azmin Ali “minister of economic affairs,” setting up tensions over who is actually running the economics portfolio.  Nor does Azmin, now more closely aligned with Mahathir, get along with Anwar despite being a member of Anwar’s own party. Azmin is also at odds with Rafizi Ramli, the PKR secretary-general. Anwar’s daughter, Nurul Izzah, gave up her leadership position in the party over the slowing speed of reform.  Both she and Rafizi have largely been sidelined.

Unfilled pledges

The administration has run into heavy going over an unfulfilled pledge to reduce the cost of living as the economy slows. There have been policy missteps, with the government first announcing a RM1,150 (US$282.10) monthly minimum wage, then dropping the figure to RM1,000.

Pakatan Harapan had made the economy a major campaign issue and is paying for it. The World Bank projects slowing gross domestic product growth at 4.7 percent in 2019. Bank Islam Malaysia chief economist Mohd Afzanizam Abdul Rashid is warning that the economy could go into recession this year. 

Finance Minister Lim has belatedly lowered the cap on fuel prices and the administration is also seeking to replace the current high-cost highway toll regime – both campaign promises.  A campaign pledge to do away with an unpopular 6 percent goods and services tax has left the government scrambling for revenue. The consumer price index has started to rise again in the wake of a sharp fall after the GST was dropped.

Palm oil, a major export commodity, has fallen in price by 16 percent in the past year.  Crude prices have been trending down as well as US production has risen to more than 12 million bbl/day, taking a bigger share of the market and leaving small producers scrambling.

“The government, despite all of its promises, has failed to put food on the table for the majority of Malaysians,” said a local political analyst. “Not that things were improving under Najib, but that’s precisely the reason the voters threw out the Barisan, believing that Pakatan Harapan could change their lives.”

The Race CardThen there is the always-present concern over race and religion and Malay fear of loss of privilege. Ethnic Malays, all of whom are Muslims, and other indigenous peoples comprise 61.7 percent of the country’s 31 million people, the Chinese 20.8 percent with the remainder Indians and noncitizens. UMNO through its existence – egged on by the rural fundamentalist Parti Islam se-Malaysia – made its embrace of Islam and Malay welfare central to its governance, with government jobs and university positions all reserved for ethnic Malays. 

The Chinese-dominated Democratic Action Party is now a major leg of the four-party ruling coalition in a way that the largely subservient Malaysian Chinese Association never was, raising Malay suspicions that the Chinese will dominate politics the way they dominate economics.

Then there are the appointments that have traditionally gone to Malays. Lim Guan Eng, the secretary-general of the DAP, is now finance minister. Tommy Thomas, the attorney general, is an ethnic Indian. Richard Malanjum, 65, a Christian member of the Kadazandusun tribe in Sabah, has been made chief justice of the Federal Court, the country’s highest tribunal.

Najib and the Barisan have sought to exploit those appointments to show that Malays are being sidelined. There also has been a spate of incidents in which non-Malays have been accused of insulting Islam. There are also changing norms in government, with the armed forces, almost totally Malay, being opened to at least 10 percent non-Malays.

“The majority Malays feel that the new government hasn’t been sensitive to them,” said a source. “Like it or not, Muslims/Malays are the majority in the country and they guard their prerogatives jealously.”

Sham degrees

Then there is the issue of honesty in government. At least six Pakatan Harapan officials are under fire on allegations that they don’t possess real university degrees. Among them is Deputy Foreign Minister Marzuki Yahya, a member of Mahathir’s Parti Pribumi Bersatu, who claimed a Cambridge University degree. It turned out that the “degree” was from a diploma mill in the US called Cambridge international University. 

Mahathir is bringing along his own baggage with defectors from UMNO, which has earned the ire of the coalition partners. They include, among others, Hamzah Zainudin, a onetime Anwar acolyte who became a Najib loyalist, as well as Shabudin Yahaya, a former Najib aide who jumped ship when his boss was no longer in power.  They are members of an UMNO cadre who kept Najib in power allegedly through the force of outright bribes for years after he had been clearly identified by the US government as having allegedly stolen hundreds of millions of dollars from 1MDB.  

But beyond that, reformers say, race-based policies remain in place. Mahathir’s Parti Pribumi Bersatu – the united indigenous people’s party – makes no effort to disguise the fact that non-Malays need not apply. 

University Malaya Professor Terence Gomez, in a biting speech two weeks ago, charged that while Mahathir during the campaign, had promised to clean out rent-seeking, he was still allowing political appointments in government-linked companies.  He called attention to Mahathir’s embrace of onetime finance minister Daim Zainuddin, who during his tenure was widely believed to have enriched himself. The prime minister’s “council of elders” also includes, decides Daim, Zeti Akhtar Aziz, the former central bank governor, Hassan Marican, the former CEO of the national oil company Petronas, and Robert Kuok, the head of the Kuok group conglomerate. 

“Look at the political discourse,” Gomez was quoted in local media as saying. “Soon after they came to power, they said politicians will not be involved in business. But they reneged on that. They said no more race-based policies, but now we have the Bumiputera policy. It is a repeat of the discourse we have seen in the past.”  

“I think the voters decided to give these guys a kick in the groin,” said the KL-based political analyst about Sunday’s election. “I don’t think this is the end for PH. It’s a wakeup call. But if they continue screwing up as they have done the last 10 months, then it’s a matter of time before its curtains up for them.”

by AsiaSentinel.com

Malaysia’s Sub Scandal Resurfaces

What, until the US$4.5 billion 1MDB affair, had been Malaysia’s biggest scandal, has reappeared – the US$1.2 billion purchase of submarines under then-Defense Minister Najib Razak at the turn of the century, a lurid tangle of blackmail, bribery, murder, influence peddling, misuse of corporate assets and concealment.

Crusading French lawyer William Bourdon and his associate, Appoline Cagnat, are currently in Malaysia discussing the affair with Attorney General Tommy Thomas, according to local media. Bourdon and his associates compiled much of the evidence about the purchase at the turn of the decade for Suaram, the Malaysian good-government NGO, but he was kicked out of the country for attempting to follow up the case by Najib’s government.

The matter has remained in limbo since 2012 as the Najib government pulled out all the stops to keep it buried. Now, however, after the May 9, 2018 election that turned out the Barisan Nasional and brought the Pakatan Harapan coalition to power, the new government has shown considerable zeal in bringing long-buried scandals to the light.

The Scorpene submarines were purchased by Malaysia from subsidiaries of the state-owned weapons manufacturer DCN although there is no evidence that Malaysia ever needed submarines and in fact they had to be based in East Malaysia because the waters around Peninsular Malaysia were too shallow for them to operate efficiently.

According to evidence compiled by Asia Sentinel in a long series of articles that won the 2013 Award for Excellence in Investigative Reporting from the Society of Publishers in Asia – Asia’s version of the Pulitzer Prize – the transaction steered a €114.96 million (US$130.3 million at current exchange rates) kickback to the United Malays National Organization through a private company called Perimekar Sdn Bhd.

Perimekar was wholly owned by Abdul Razak Baginda and its principal shareholder was his wife, Mazlinda, a close friend of Najib’s wife Rosmah Mansor.  He was then the head of a Malaysian think tank called Malaysian Strategic Research.

DCN officials hinted that Perimekar had come into existence only to facilitate the kickback transaction. Documents note that “Perimekar was a limited liability company with a capital of MR5 million (€1.4 million) of which 1 million is available. It was created in August 1999 … it has no record of sales during 2000. Its ownership is in the process of restructuring.”

Razak Baginda was a close friend of Najib Razak, who went on to be Malaysia’s prime minister and would be booted out of office in disgrace over the 1MDB scandal, which later supplanted the Scorpene scandal by far.

Another €36 million was directed to an obscure company in Hong Kong named Terasasi Hong Kong Ltd., whose principal officers were listed as Razak Baginda and his father and which appeared to be nothing more than a name on an accounting firm’s wall. According to an August, 2017 story, Razak Baginda was charged by French prosecutors with “active and passive complicity in corruption.”

According to the documents made available to Asia Sentinel, some of the misdeeds appear to have taken place with the knowledge of top French government officials including then-foreign Minister Alain Juppe and with the consent of former – and current — Malaysian Prime Minister Mahathir Mohamad.

Top Thales officials been named in news stories in Paris as having suborned bribes in the matter. Najib was also named as the recipient.   However, given the involvement of such individuals as Juppe and others, it seems unlikely that the matter will be carried further in France despite a statement last July by French Ambassador to Malaysia Frédéric Laplanche that “Cooperation between France and Malaysia (on the investigation) is very good.”

As Asia Sentinel reported in 2012, the payment appears to have been in violation of the OECD Convention on Bribery, which France ratified on June 30, 2000. On Sep. 29, 2000, DCNI, a DCN subsidiary, “took corrective actions” after France joined the bribery convention. Contracts concluded after that date were to be routed to companies held by Jean-Marie Boivin, DCN’s former finance chief, headquartered in Luxembourg and Malta respectively.

Among the documents is one that shows Boivin paid to send Razak Baginda on a jaunt to Macau with his then-girlfriend, Altantuya Shaariibuu, a jet-setting Mongolian national who was later murdered by two of Najib’s bodyguards in gruesome fashion in October of 2006 and whose body was blown up with C4 explosives, possibly to destroy the fetus of the child she said she was carrying when she was killed.

In a handwritten note found in her hotel room after she had been murdered, Altantuya said she was blackmailing Razak Baginda for US$50,000, although she didn’t say why. However, according to the documents, she had considerable knowledge of the purchase of the submarines from her relationship with the defense analyst. And, although Najib has repeatedly denied it and sworn on the Quran that he had never met her, there is evidence that he had not only met her but had an affair with her before Razak Baginda.

Two of Najib’s bodyguards, Azilah Hadri and Sirul Azhar Umar, the latter of whom left the country when he was temporarily freed by an appeals court and remains in Australia, were tried and convicted of her murder in a long-running trial that appeared to be carefully orchestrated to make sure nobody above the two bodyguards was ever named despite the fact that one of them, in a sworn statement, said they were to be paid MYR50,000 to carry out the killing. Musa Safri, Najib’s aide de camp, was identified as the individual who designated Azilah and Sirul to pick up Altantuya. But there is no evidence he was ever questioned by the police about his involvement.

In June 2018, the then-newly appointed Inspector-General of Police Mohamad Fuzi Harun told reporters that an investigation into Altantuya’s death would be reopened, based on a new police report submitted by Altantuya’s father. So far there has been little public indication of progress

The story, which was considerably bigger than just the Scorpenes, in essence began when Najib was appointed defense minister in Mahathir’s cabinet in 1991 and embarked on a massive buildup of the country’s military, arranging for the purchase of tanks, Sukhoi jets, coastal patrol boats – and submarines, all of which appear to have been mired in corruption and kickbacks that enriched Najib and UMNO. French, German, Swedish, Russian and Dutch manufacturers in turn went looking for the most effective cronies of the Malaysian leadership to help them out.

“The major defense contracts in Malaysia as in other countries require substantial money transfers to individuals and/or [political] organizations,” according to documents taken from DCN’s files by French investigators. “In Malaysia, other than individuals, the ruling party [UMNO] is the largest beneficiary. Consultants [agents or companies] are often used as a political network to facilitate such transfers and receive commissions for their principals.”









by AsiaSentinel.com

In Malaysia, China Risks a Neocolonialist Tint

At the end of his Aug. 17-21 China visit, Malaysian Prime Minister Mahathir Mohamad announced that US$22 billion of Chinese-backed infrastructure projects in his country would be temporarily or permanently cancelled. The world will be watching China’s subsequent actions to see whether they will take on a neocolonialist tint.

The Belt and Road Initiative is Chinese President Xi Jinping’s grandiose plan to connect China with South, Central and Southeast Asia, the Middle East, Russia, Africa, Latin America and Europe through infrastructure projects including roads, ports, airports and railways.

The broad geographic reach of the BRI, as it has come to be known, has raised questions whether China intends to use this project for imperial expansion. As Asia Sentinel has previously reported, Sri Lanka, Cambodia and Pakistan have found themselves so deep in debt to the Chinese that there are fears political domination will follow. The risk is that Malaysia is on the same course.

The postponed Malaysian projects include an East Coast Rail Link and two energy pipelines.  Mahathir said told a Beijing press conference on Aug. 21 that the three would be “deferred until such time we can afford, and maybe we can reduce the cost also if we do it differently. It’s all about borrowing too much money which we can’t afford, can’t repay, and also we don’t need those projects for Malaysia at this moment.”

The vast majority of the funding for three — US$20 billion for the rail link and US$2 billion for the pipelines – has been supplied by the Export-Import Bank of China (Exim Bank), a state-owned policy lender. Chinese state-owned firms are the main contractors of these three projects, raising criticism that Malaysians are being denied jobs, as they have been in several countries where the belt and the road have reached.

At a press conference of China’s Ministry of Foreign Affairs on the same day, when asked about the cancellation of these projects, a Chinese foreign ministry spokesman said, “Of course, cooperation between any two countries may encounter some problems, and different views may emerge at different times. These problems should be properly resolved through friendly consultations without losing sight of the friendship enjoyed by the two countries and the long-term development of bilateral ties, which, I can assure you, is also an important consensus reached during Prime Minister Mahathir’s visit to China.”

Mahathir was tactful enough not to criticize China for these stalled projects, but to lay the blame on his predecessor Najib Razak, who had approved them projects while he was Malaysia’s premier. After being ousted in a shock defeat in the Malaysian elections on May 9, Najib is facing corruption charges over the hugely mismanaged and corrupt 1Malaysia Development Bhd, backed by the Ministry of Finance.

However, Mahathir warned China against being a neocolonialist. At a press conference in Beijing with Chinese Prime Minister Li Keqiang on Aug. 20, when asked by Li whether he supported free trade, Mahathir replied, “I agree free trade is the way to go, but, of course, free trade should also be fair trade. We do not want a situation where there is a new version of colonialism happening because poor countries are unable to compete with rich countries, therefore we need fair trade.”

Ironically, Chinese state propaganda expresses similar opposition to colonialism, in its messages conveyed in two Beijing museums, the National Museum and the China Railway Museum. As stated part of the reason for the Republican Revolution of 1911 was the Chinese people’s opposition to foreign domination of China’s railroads. By 1911, foreign powers, including Russia, Japan, Germany, Britain and France, controlled 93 percent of China’s railways, a display in the National Museum pointed out. The Qing government had to pay off huge debts to foreign banks which had bankrolled these railroads.

Around the turn of the 20th century, the Qing government nationalized railways owned by private Chinese businesses, then sold them to foreign interests. This sparked a rebellion, causing the Chinese imperial government to transfer troops from the Chinese city of Wuhan to quell a rail revolt in Sichuan province. As a result, the Wuhan garrison was undermanned, which enabled an uprising in Wuhan to succeed in October 1911, which in turn toppled the Qing dynasty.

Going forward, the Chinese government must avoid provoking resistance to Chinese-funded infrastructure projects in BRI countries whose governments and peoples fear dependency, just as China was reduced to a semi-colonial state by foreign dominance of its infrastructure. Currently, BRI projects are mostly financed by Chinese state-owned banks, just as foreign banks funded most of the railway in China during the Qing dynasty.

At the Aug. 20 press conference, Mahathir expressed his wish that Beijing will be sympathetic to Malaysia’s heavy debt and help resolve its fiscal problems. At the press conference on August 21, the 93-year old leader said, “I believe China itself does not want to see Malaysia become a bankrupt country.”

The Chinese government has a vested interest in ensuring Malaysia’s economy is not sunk by crushing debt if Beijing and Chinese state-owned firms wish to avoid a repeat of the derailment of a US$7.5 billion rail project in Venezuela.

On Apr. 11, 2013, the South China Morning Post reported that this 475 km railway, built by the state-owned China Railway Group, was delayed because the Venezuelan government was unable to pay the entire US$7.5 billion contract. The Venezuelan government owed China Railway US$400 million to US$500 million, Li Changjin, the chairman of China Railway, was quoted as saying. “The reason is the Venezuelan government has no money.”

Onsite media reports in 2016 showed China Railway’s facilities in its Venezuela project were apparently abandoned.

Since 2013, Venezuela’s economy has been in a dire state, with high inflation and difficulty repaying its debts. If Beijing wants the BRI to succeed in countries like Venezuela and Malaysia, it must ensure that costly infrastructure projects do not harm these countries’ economies. Otherwise, trade and investment between them and China will suffer.

During their Aug. 20 meeting, Xi told Mahathir their nations should have pragmatic cooperation, seeking innovative new models of cooperation. Xi must find viable models of cooperation over BRI if he wishes to avoid blowback against Chinese projects in Malaysia. Only then can Xi demonstrate that Belt and Road is not a Trojan Horse for Chinese imperialism, and convince nations to accept the vast infrastructure projects.










Toh Han Shih is a Singaporean writer in Hong Kong