This I'm sharing from The Scribe A Kadir Jasin...
Bank Negara Wades In But Truth May Never Prevail
IN the June 9 posting entitled N2H: Arul Kanda Nor Dr Mahathir Who Spooked PM, in part, I wrote: “The Bank Negara Governor, Zeti Akhtar Aziz, is in danger of losing public confidence and respect for her extended silence on the 1MDB issue and her penchant for hiding behind banking secrecy and confidentiality.”
I contended that this is because Bank Negara Malaysia (BNM) had been openly dragged into the controversy by no less than the Prime Minster, Mohd Najib Abdul Razak, himself.
He had said openly cash 1MDB was bringing back from Cayman Islands could not be remitted directly to Malaysia due to BNM”s restrictions and had to be deposited in Singapore.
The cash, amounting to the US$1.103 billion (RM3.985 billion), had since metamorphosed into “asset certificates” and more recently, according to Finance Minister II, Ahmad Husni Hazadlah, had become “units”.
In an interview with TV3 on April 10, the Prime Minister said: “Time will determine but at a certain time, the money will be brought back to Malaysia.”
On May 26, Zeti confirmed that BNM Negara had received a report from its Singapore counterpart - Monetary Authority of Singapore (MAS) - on a complaint lodged by BSI about 1MDB’s account. BSI is the Swiss private bank where 1MDB deposited the Cayman Islands' proceeds.
Only after more than a week of receiving the MAS report that BNM, on June 3, announced that it has commenced a formal enquiry to examine if there are any contravention of financial rules and regulations with respect to matters surrounding 1MDB. It does not help to raise our confidence when BNM appears to be playing the games of catching up.
In the meantime, confidence in economy is waning despite assurances that our economic fundamentals are strong. Whether BNM admits it or not, the contagion effects of 1MDB are becoming more apparent.
Given the secrecy and confidentiality claims, we don’t know much about what BNM has been doing in the interim. Has it entered the currency market to prop up the ringgit? Maybe it has because the exchange rates of the local currency has stabilised after falling to a nine-year low against the dollar on June 8 and its reserves has fallen.
Zeti had indirectly alluded to the contagion effects of 1MDB when she said BNM would not allow any single entity to undermine the country’s financial system.
Bank Negara Finally Admits.
On June 18, in yet another admission that the contagion effects of 1MDB and the political development are becoming worse, the Central Bank did the unthinkable – it waded into the murky world of politics.
While saying that BNM would not be drawn into politics, it issued a statement urging “the country to resolve domestic issues that have affected the currency.”
It said it would not be drawn into any political agenda and would remain focused on maintaining monetary and financial stability.
So, after months of expounding the country’s strong economic fundamentals and blaming external factors for the weakness of the ringgit, the Central Bank finally acknowledged that “domestic issues” are equally to be blamed.
The national news agency, Bernama had described the BNM statement as attempt to “depoliticise the debate over the weakening ringgit.”
The Central Bank was responding to what it called “the recent inaccurate and misleading media reports” on the central bank and the ringgit’s volatility.
It statement came a day after Deputy Finance Minister Ahmad Maslan had said that Bank Negara’s information indicated Tun Dr Mahathir Mohamad’s criticism against Mohd Najib was one of the reasons for the weakness of the ringgit.
The comments was made in parliament and reported in local media. Ahmad Maslan, who became the butt of many Internet jokes for his outrageous statements on the economy in support of the Prime Minister – the latest being his GST-free fried rice - had emerged as Mohd Najib’s poster boy.
Ahmad Maslan was catapulted to that position following the growing reluctance of the more senior members of the Cabinet to come to the Prime Minister’s defense.
Instead “the roadside sources” said he faced considerable opposition from member of the Umno Supreme Council on 1MDB. The sources said the disagreement was so serious that there were the banging of the tables and raised voices at the sitting of the Council.
Despite Mohd Najib telling the press that the Council supported him, sources said some members told him point blank that 1MDB could kill Umno.
[Roadside sources was a term used by Mohd Najib’s spokesman, Encik Rizal Mansor (no relation to Rosmah Mansor the PM’s consort), to described sources of information of the independent bloggers.]
Cooking Up The Book
The process of dressing up 1MDB’s book via creative accounting is in full swing. We hear such jargons as enterprise value, prudence and propriety being used to trap the uninitiated.
The whole idea is to give the impression that everything is OK and above board.
But the people involved, including external auditors, must be reminded of recent events in the US, when accountants and auditors cooked up the books of such giants as Enron, Worldcom, Tyco, Freddie Mac and American Insurance Group. The frauds were almost all accounting-related.
As for the investigations into possible criminal deeds, except one by the Public Account Committee (PAC) of the Parliament, the rest could very well be getting nowhere.
That is to be expected. For as long as Mohd Najib remains the Prime Minister, the investigators would have to abide by the protocol. Be it the police, the MACC or the Auditor General, their boss is the PM. We cannot expect them to go against their boss.
So the public should not place too much hope that the guilty parties would be exposed and punished. Maybe one or two will be made scapegoats and be given a light slap on the wrist and removed from the board and management.
The truth may not prevail instead the crusaders will be burnt at the stake.
Business as Usual
In the meantime Mohd Najib continues to do what he does best – gives handouts. A few days after chairing the pre-budget dialogue and telling the people to “remain vigilant in the face of economic uncertainties” he announced a special Raya Bonus for the civil servants.
Mohd Najib believes “money is king” and favours could be bought.
He acknowledged that household debt remained high - at 87.6% of gross domestic product - while commodity prices, particularly crude oil, liquefied natural gas and palm oil, were anticipated to remain soft.
Yet he continues to play Santa Clause to prop up his popularity.
He admitted that the GST is dampening private consumption, which he said saw some moderation due to the one-off inflationary pressures of the new tax.
May inflation rose to 2.1 per cent year-on-year (y-o-y) but analysts expect the overall inflation rate to slow to 2.3 per cent for the whole year due to lower consumption.
In the meantime businesses are suffering, corporate results are dismal and foreign investors are leaving in droves. We are suffering a massive confidence deficit.
According to MIDF Research head, Zulkifli Hamzah, as of the middle of this month, foreign investors had been net sellers on Bursa Malaysia for seven consecutive weeks. In his weekly fund flow report dated June 15, Zulkifli said for the third week running, the amount offloaded by foreign funds was more than RM850 million a week. That’s a whopping RM2.55 billion.
So where is Mohd Najib as Finance Minister going to get the additional revenue to pay the civil servants and to meet his lavish off-budget expenditures?
Already his Idris Jala-inspired transformational programmes have seen RM25 billion of EPF money – the life savings of private sector workers – had been channelled to Pembinaan PFI.
Like 1MDB, Pembinaan PFI belongs to Finance Ministry and is also heavily indebted. It is one those things that Mohd Najib called Private Financing Initiative (PFI).
What is so private when the company belongs to Finance Ministry and the money comes from EPF?
This could be another time bomb and the deceit continues. Even Tabung Haji had to lie about the so-called buyers lining up to buy its 1MDB land. Its sales deadline had long past and no transaction in sight. Some BN members of Parliament had tried to come to its rescue by saying it should keep the land. But the sale order was made by Mohd Najib himself!
So, like a clumsy overfed kitten, Mohd Najib is spinning yarn around himself, and in the process is causing us to trip. This cannot be good. But being a Bugis Warrior Mohd Najib would rather sink in the stormy sea than taking the ship back to harbour. The Malay saying “sesat di hujung jalan kembali ke pangkal jalan” does not apply to a blueblood Bugis Warrior.
How juicy can Malaysia's political and financial story can be....can't wait for more.
And can't wait for the D-day Najib and his konco fall down to the ground.