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Monday, February 1, 2016
'Game Of Thrones' leaves banker fretting over Malaysia's future
'Game Of Thrones' leaves banker fretting over Malaysia's future
As Malaysia's government seeks to shut the door on one funding furor, another opens.
[KUALA LUMPUR] As Malaysia's government seeks to shut the door on one funding furor, another opens. Rolling scandals that have hit the country for seven months have the premier's brother, a senior banker, likening the climate to HBO's Game Of Thrones.
The future for Malaysia "terrifies" him, Nazir Razak wrote in an Instagram post on Saturday. That was a day after the Swiss Attorney General's office said a probe of debt-ridden government investment fund 1Malaysia Development Bhd revealed "serious indications" that about US$4 billion may have been misappropriated from state companies in the Southeast Asian nation.
Just last week, Malaysia's attorney general cleared Mr Nazir's elder brother, Prime Minister Najib Razak, of wrongdoing in receiving a US$681 million personal donation from the Saudi royal family in 2013, as well as funds from a company linked to 1MDB. Of the Saudi funds, US$620 million was later returned.
Malaysia will cooperate with Swiss authorities and review the findings before determining a course of action, Attorney General Mohamed Apandi Ali said on the weekend. 1MDB said it hasn't been contacted by any foreign legal authorities. Najib is "not one of the public officials under accusation," Andre Marty, a spokesman for the Swiss attorney general's office, said Monday in a statement.
The premier's office declined to comment on the matter or on Mr Nazir's comments. The prime minister said after his exoneration by Mr Apandi that the Saudi donations probe was an "unnecessary distraction" for Malaysia.
As some overseas probes continue into 1MDB - whose advisory board Najib chairs - questions have been raised by opposition lawmakers and Mr Najib's critics over the robustness of agencies overseeing Malaysia's governance. The imbroglios have led to calls for Mr Najib's ouster from the opposition and former premier Mahathir Mohamad, and recalled Malaysia's decades-long struggle with corruption and money politics.
"The parallels with Game of Thrones continue," wrote Mr Nazir, chairman of CIMB Group, one of the country's biggest lenders. "I just can't see how our institutions can recover, how our political atmosphere can become less toxic, how our international reputation can be repaired."
On Monday, Mr Nazir said he did not wish to comment further. Mr Nazir and Mr Najib have been seen interacting at public events and Nazir posts some of those pictures on his Instagram account.
The scandals come at a time growth and investment are slowing. Investments in manufacturing, services and primary sectors fell 15 per cent in the first nine months of 2015 compared with the year before. The government last week trimmed its growth expectations for 2016.
"With the economy flagging, inflation rising and markets losing ground, the policy challenges are growing, exacerbated by the latest falls in the oil price," Christine Shields, lead economist at Oxford Economics, said in a January report. "Despite strong policy discipline and good technocratic management, strains are emerging."
Perched on the lower end of peninsular Southeast Asia, Malaysia is a conduit for trade between Europe and Asian economic powers like Japan and China. Bigger in area than all but four US states, Malaysia is a net oil and gas exporter and the world's second-largest producer of palm oil.
Malaysia's score worsened in Transparency International's Corruption Perceptions Index for 2015 released last week, putting it on a ranking near Slovakia, Kuwait and Cuba. Issues related to 1MDB contributed to the nation's fall on the global list to 54th from 50th in 2014, according to the Malaysian head of Transparency International.
In November, Mr Nazir posted a picture on Instagram of his first investor roadshow in London in 1992, saying he had "been promoting Malaysia for a long time and it has never been tougher than now due to 1MDB and related issues."
Foreign investors pulled RM30.6 billion (S$10.4 billion) from stocks and bonds in 2015 and helped send the currency to a 17-year low.
Mr Najib has faced challenges before, including the campaign by Mahathir to get him out. In power since 2009, Mr Najib has removed detractors including his deputy premier and an attorney general who was part of a team investigating the funds that went into his personal accounts.
He silenced critics at a meeting of the ruling party in December and is wooing the ethnic Malay majority by bringing his United Malays National Organisation closer to the main opposition Islamic party.
"It's not uncommon to see changes in top positions in Malaysia," said Samsul Adabi Mamat, a political science lecturer at the National University of Malaysia. "It's a smart move for any leader to strengthen his leadership machinery, and when that is done, policy implementation will all be in the same direction."
1MDB has consistently denied wrongdoing, or transfers of funds to Mr Najib. It agreed in November to sell its power assets to a Chinese company in what many see as moving it a step closer to winding down operations.
In response to queries on 1MDB, Singapore said on Monday it had seized a "large number" of bank accounts in connection with possible money-laundering carried out in the country.
"Malaysia could come to be misunderstood despite its potential" as 1MDB pops up on international news headlines time and again, said Wellian Wiranto, an economist at Oversea-Chinese Banking Corp in Singapore.
Mr Nazir again called for the establishment of a National Consultative Council, similar to one his father set up as deputy prime minister after riots erupted between Muslim Malays and ethnic Chinese in Kuala Lumpur in 1969.
"I think we have to pause, fix our moral compass and deal with our structural problems holistically," Mr Nazir said.
In an October speech he had urged such a council made up of the "best and brightest" Malaysians to deliberate constitutional, electoral and economic reforms.
Mr Najib, who has the support of the bulk of UMNO divisional chiefs, has time to regain the trust of voters. But it's crucial for him to revive the economy, said Norshahril Saat, a fellow at the ISEAS-Yusof Ishak Institute in Singapore who has studied Malaysian politics for a decade.
"This is a test of how the government can communicate with the public effectively," he said. "Society constantly wants answers."