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Sakmongkol ak 47

Monday 14 December 2009

Who is minding the Store?

Who is minding the store?

We haven't heard of the 1 Malaysia Development Fund nowadays. Yes, I am referring to the RM5 billion that is managed by the 1 Malaysia Development Board 1MDB. Yes, it's that Fund formerly known as Terengganu Sovereign Wealth Fund. Just who came up with the idea is uncertain. Rumors have it, that it was a young man called Mr. Low from Penang. Mr Joe Low.

Creative ideas are most welcome. PM Najib has said that creativity will be a main element in his coming economic model. Anyway, the Fund started with RM 1 billion. It later became RM 5 billion obtained through the issue of bonds guaranteed by the government. Normally an entity is allowed to issue bonds if it is rated highly by some credit evaluating bodies. Like Moody's Investor Services for example. The accreditation body is satisfied the bond issuing entity can repay the bonds when they mature.

There are cases too, when the bond issue is underwritten by GOD- government of the day. Governments of course can never go bankrupt. The 1 Malaysia Development Fund- just call it the 1 Malaysia Fund will get additional RM 6 billion when the oil royalties due to Terengganu will also be directed into it. This means it will have RM 11 billion war chest to play around with.

Just who are controlling the 1 Malaysia Fund? We know it reports directly to the PM. Although 1MDB reports directly to the Prime Minister, the sovereign fund will still have an eight-member board of advisors and a five-member board of directors.8 + 5= 13 members.

But will they be given a free hand to manage the fund? Or are they there just to grace the window? These people are drawn mainly from statutory bodies such as LTAT, Tabung Haji, FELDA etc. I have been informed some have already resigned from the board because they cannot stand excessive meddling.

But you retort- why should we tell you what we are doing? Especially to busy bodies like you people? Then we answer you- because we have been dismayed so many times when public money is treated as a private property. We have PKFZ which is the subject of intensive forensic investigation now and has become a public scandal. We are also disturbed by the customary practice of keeping everything very quiet until it becomes bad and blows off the lid. Most importantly we believed that public disclosure is the best form of accountability. Let it out in the raw and let the people judge. Some of the busybodies out there are pretty smart and perceptive.

The sovereign fund is said to be thought of by a character called Low. He is known among financial circles as Joe Low. He comes from Penang. He takes over where Patrick Lim left. I can imagine him say over a glass of Martini- hi, my name is Low. Joe Low. I prefer my drink shaken, not stirred.

He brought the idea of creating a sovereign wealth fund. It was probably meant as a solution to prevent the dissipation of Terengganu's Oil Royalties.

Now, this is another issue. Why did the TSWF- Terengganu Sovereign Wealth Fund suddenly become 1Malaysia Fund? HM The King seemed to have given his consent to the renamed entity. This federal wealth fund now takes over the money raised by KTIA headed by Shahrol Halmi. HM The King was very much interested when the TSWF was set up as he was royally chagrined over the usage of oil royalties due to Terengganu.

Because I think it's not safe to have the money parked in Terengganu. Warring factions in Terengganu will be fighting all over the place to gain control over the Fund. He must have realized that the previous state government spent the money frivolously. A lot too went missing and unaccountable. Even if the monies are placed under KTIA- meddling politicians can still make life for the managers miserable. And also perhaps, it is wiser to have the money under a federal entity because Mr. Low thinks; BN will not be the next state government.

Anyway- some other states may be thinking to set up their own SWF. Then they will ask the government to guarantee them. If you can do it to Terengganu, you most certainly can and must do for other states.

PM says, if these jokers come up with these equally creative ideas, his government will have nothing to do but issue guarantees and commit resources to ensure the fund is managed properly. He can't afford to, because the majority of his officers in the Treasury are more at home at eating kuacis ( eagle brand preferred) and chewing on chips at meetings. No way Jose, he says- let's have a Federal Sovereign wealth fund. And it's not Jose- its Joe. Joe Low that is.

We are not sure where this Low brought the idea to. To the PM or to his Majesty the King.

He probably brought the idea to both. As both his majesty and the PM are concern about the application of the oil royalties, it is logical that Low brought the idea to both. He goes over to the PM and tells PM, the King has sent him. He then goes over to see the King and says, PM sends him. Nice. Very nice.

I mean, it's not every day, HM the King calls up- Yo DSN, did you send Low over to me to speak on this and that? It's not every day PM calls up the King to say- A thousand pardons Your Majesty- did Your Majesty sent this sinkeh over?

This brings us to the interesting question- just who the heck is this Joe Low? Is he our Warren Buffet? The main stream media says he is a low key person. Well, after he splashed USD170k to fete the PM and his entourage in New York recently, he is not low-key any longer. He is a Big Key now. Which doors is he opening? And last week, he gave a private birthday party to the PM's wife at a leading hotel in Kuala Lumpur.

Much has been written about the merits of a SWF as a concept. I shall not repeat the observations made by many commentators. For example the Blogger Analyst at Large has written something noteworthy about this. Forget the fact that he doubles up as economic advisor for the DAP. He has raised cogent criticisms which deserve notice.

I am more concern about the shadowy group of young boys moving behind the scenes and appear to exert considerable influence on the PM. Most prominent is this Joe Low character.

We have seen the debilitating effects such intrusion and meddling on the morale of the officers and the damage caused to the previous PM. He was criticized by being overly compliant with the investment advice of one Patrick Lim. And the treasury people and even ministers were run over roughshod by a group of young highly educated boys infamously known as the 4th Floor boys.

Now and here, we have another shadowy group. Maybe it's not formal. But not less significant. Among them are Joe Low, one young Indian, and the son of a prominent Chinese tycoon. All of them are young and are said to be have unhindered access to the PM's wife.

They are said to have even attended briefings by treasury and Bank Officials. We need to recognize the dangers from the experience of the previous administration.

Obtrusive and incessant meddling into the running and management of the Funds can see our money being dissipated. Already at the inception of the 1 Malaysian Fund, RM 300 million has already leaked. For what purpose? To where?

If credible investments have not been made on account of meddling, we shall have to incur the payment of interest. That means our borrowed capital has not work to earn revenue from which to service interests let alone earn a conservative return of 5%. (That was what Sharol Halmi said) and I hope, this conservative expectation on returns is still adopted by the board members.

Some board members have left or resigned. They say this fund is too hot to handle. It could actually be, they saw the writings on the wall and could see where the Fund could end up. So, rather than being held accountable for something that will eventually be bad, better relinquish the honor of serving in that Fund.

The other cause of concern is why is the PM hesitant to exercise full control over the Fund? I mean, not personally but investing the board with total and unfettered discretion. Let the fund be answerable to Parliament.


Anonymous,  14 December 2009 at 12:45  

Here we go again now this chinese boy who has shaken up the night life in nyc entrusted with billions,well let the party begin at our expense only in BODOHLAND.

walla 14 December 2009 at 12:55  

If the reason to federate the fund was to move it out of the orbit of group conflicts within the state, then letting it now be externally guided will only deepen the perception that wherever funds are umnofied they will be swallowed wholesale.

To avoid such shenanigans, just make everything transparent. Let's say a fund is federated and the centralizers want to tap new ideas on how to grow and use it. Let's also assume the motivation is to lift up the state to which the fund is assigned, in particular to create jobs for the people and to add value to state activities which can translate to future earnings.

Just do an open tender with broad remits along the lines of the above para. Then more than just one vested party can provide their ideas which may end up even more investible than those submitted in enclosed settings. If this is not tried, how are the rakyat let alone a government to know there aren't better ideas out there?

So doing will put a stop to politicking for carta blanche favours that reek of kleptocratic practices which have sunk bigger governments elsewhere.

After the deadline, post the details on the web. Then after due process preferably with independent monitoring, make the decision with reasons provided.

If this is not done, people will think it's the same rigmarole of creating personal opportunities at high opportunity cost expenses of the rakyat. There has been too many such cases in the past. The olive in the stirred not shaken martini would have shriveled by the time we finish tabulating even half of them.

Always remember what someone had said when asked whether he had fueled cronyism. His reply? "How can i award contracts to people i can't trust?"

That reply cost this country mega-billions.

This post, for the dear old makcik selling goreng pisang by the roadside in Besut.

Anonymous,  14 December 2009 at 17:46  

malaysia under the three spendthrift prime ministers have
wasted the oppurtunity to make our country as great as
our neighbour down south, which inescapbly will always
be the yardstick by which the progress of the country
and the achievement of our leadership must be measured.

For 22 years under tdm we were pursuing 'development'
agenda which appeared grandiose and visible at the outset
but in my view wanting in substance. KLCC, putrajaya and
some mega projects are all that we have to show
for something like RM 400 billions of oil money?

The relevant social engineering questions that we need to
ask would include?

> have we met the objectives of RMP 4,5, and subsequent rmp 's.
I believe the gomen have skipped asking whether such objectives
were ever met? Now we are in 9th mp without realising the effectiveness
the 6th,7th, 9th malaysia plans. Can we say that we have less poor people
in this country compared to the 1980's?

Statistics indicate that out annual incomes improved tremendously.
But would this translate into a meaningful lives of ordinary people
who make up 80 per cent of the population? From the terrible
state of 'uncollected municipal rubbish ' in Terengganu I would
imagine people in oil -rich Terengganu are among the hard core poor of this

>Has the ministry of housing met the housing need of the population?
We do not know what the declared objectives? But comparing the
standards and quantity of housing with our neighbour's surely is like
comparing the pumpkin and the small wild berry found wild.
Not having funds cannot be an excuse because we could afford a new
airport, a F1 track and fancy putra jaya!

>So far we have build all the grand infrastructure projects with
foreign labour. Now can we build future buildings and infrastructures
with our local expertise from our youth? Our social engineering in the
youth sector is emphasized with lots of songs/videos on the rakan theme
with no visible success in any area. A few years ago menteri
Azalina reported that there were a million drug addicts , and probably
90 per cent of them were Malays. The story that a deceased top
police officer left a legacy of rm 47 million fuelled the
rumours that the assets could be ill gotten -the result of a
failure in drug enforcement!

Why in the world did the top leadership spend money for the monsoon
cup? An investment in goodwill as I cannot see any viable finacial
returns. Spending rm 800 million over 10 years to get a
couple of millions a year for the local economy?
Is the local politico thick in the head or plain unashamedly corrupt
like the deceased police chief who left a rm 47 million legacy?
Building silly stadiums [which collapsed embarassingly] and
fancy cristal mosque where there is no population to use the facilty
are the worst crime committed by tun dollah and his high
faluting level 4 morons .

The present pm najib is investing in a Formula 1 which I think is
extravagant considering the state of the economy today. It cost Sterling 40 million
to participate and another 40 million to run at the lowest level
in a year. This is big money for the whole country.
Is the investment going to bring in rm 10million in tourist
dollars in a year? Possible but a poor strategy for resource allocation. . There are
other pressing needs that need to be addressed. Employment ,crime
which are related to the lack of employment need urgent attention.

The free wheeling financial exuberance policies of tdm in the 90's
cost all malaysians dearly even today . A sialan that parents who
have childrens overseas have to lived with. No thanks to tdm
the exchange rate for the usd have risen from the wonderful rm 2.20
to the 3.60 that we are suffereing now. Why ? We want to sell
more protons? Is selling 30 000 protons or even less with falling
exports the reason why parents whose children are studying overseas
must suffer the extra cost of exchange rate?


Non-partisan,  14 December 2009 at 17:50  

Well written and I hope someone in the corridors of power does listen.

I have heard of similar 'rumours' within the Chinese corporate circle and they are not happy.

Similarly many within UMNO will not be happy too once it is exposed and proven that the Chinese guy Joe Low is given the carte blanche to operate such huge fund. It is the rakyat's money.

It doesn't augur well for UMNO/BN.

Anonymous,  14 December 2009 at 20:19  

Singapore put their money into GIC and Temasek which invests their money... to generate more money for generations.

We used it to build buildings (that need maintenance) and for pockets and dig more oil for more oil.

Now you know we do not know how to run a country?

Peter Chen 14 December 2009 at 20:35  
This comment has been removed by the author.
telur dua 14 December 2009 at 21:03  

'A fool and his money is soon parted.' But not quite like the Red Sea.

The fool being the Rakyat. They voted in this Government, didn't they? The 4th Floor boys most probably moved up to the 14th. They can make a hasty exit through the windows if the situation warrants it.

Bye bye Ringgit, Hello poverty.

Anonymous,  14 December 2009 at 23:12

Anonymous,  19 December 2009 at 12:11  

we should follow China on this: shoot the freaking corrupts. there will be less Joes around splashing USD170k for a party and the poor rakyat like me is indirectly paying for it.

Anonymous,  13 January 2010 at 15:48  

you guys should just stop spewing shit outta your asses. get your facts right before blaming others and jumping to conclusions. you bunch sound like a group of makciks in the kampung gossiping about their neighbouts.

taek jho is my personal childhood friend and a hardworking on at that. so ive seen him since he was in school. he doesnt need to explain to you where the money comes from or goes, because neither of you are shareholders nor his clients. he has a strong grip with investors and thats where the money comes from.

and if you so love to question his personal assets and expenditure, what makes you think this guy doesnt make money while working?
You think he's just gonna do everything for free? Obviously there's a commission or a mark up. You all must be a daft bunch to assume that he's spending "other ppl's money".

Dude, just get it in your small brains that some people are just born rich and with the right smarts and skills, they become EVEN RICHER.

If any of you can be a Wharton Graduate, pull in major billion dollar investors from the middle east and are clever enough to advise agong, and at the same time, be nonchalant and humble to your old friends from penang, then you're allowed to talk and criticize.
if not, then shut the hell up and be happy that this is a good success story.

Anonymous,  13 January 2010 at 15:56  

oh and what do you smart asses know his expenses? bear in mind, The New York Post is a TABLOID. If you read and believe that, you might as well read and believe everything you do on HARIAN METRO. Oh wait, maybe you already do? hahahhaha

To the first person who commented, what's with the term "chinese boy" ? do you think the money will be better spent if an "indian boy" or god forbid, "a malay boy" ?

and to the last moron who commented before me, what makes you think his NYC bills (if true at all) came from your so called money?
you think he doesn't have any of his own izzit? are you stupid or what? try not to make your jealousy so obvious, it's very unbecoming of an adult and a shameful display of behaviour.

and the explanation "people dont spend that kinda money if its theirs" is flat out LAME.
that's YOU GUYS, because you probably don't even have anything close to that amount in your banks. I don't see American citizens complaining about their businessmen spending lotsa cash to entertain their clients? Of course it has to be fucking malaysian morons with an even worse mentality to come up with shit like this.

instead of sitting around in front of the computer jacking off and searching for gossip to believe and attack on, you guys should all just get outta the house and make yourselves useful.

Anonymous,  25 August 2010 at 21:57  

Fantastic blog, I hadn't noticed before during my searches!
Continue the fantastic work!

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