Look at the
amount of borrowings by 1MDB. It is now RM 42 billion. That was at end March
2014. By now, maybe more. Maybe 1MDB has borrowed some more we don’t know. We
know it just borrowed RM2 billion from Ananda Krishnan. Unless Anada gave a
free gift, the loan is RM42 billion. You dig another hole to cover an existing
hole. The number of holes remain the same.
The most recent
statements put as RM51.4 bilion in assets and a debt of RM49.97. It has a net loss of RM665.million.
What do we
actually call 1MDB? We have been calling it a SWF thus far. Tan Sri Wok Lodin comes
along and says- everyone doesn’t understand. 1MDB is not a SWF- it a strategic development
company investing in strategic industries. Here there and everywhere.
I don’t understand
–that is ok. Maybe I have not been keeping update with current economics
literature. Dr Mahathir also doesn’t understand. He is in the same position as
when Anwar didn’t understand currency problems.
We don’t have a
SWF actually if by definition SWF is a company with government funds that
invests its windfall gains in industries OUTSIDE the country. Khazanah invests
inside and outside. It’s just another company. That was why the de facto business
advisor to Najib- one man by the name of JJ said in parliament, that 1MDB does
not use public money.
The best term
that comes to my mind now is 1MDB is a public interest company- in the sense
that whatever it does, interests the public, more so the public spirited individuals
and groups. It cannot escape accountability because it is a government owned company,
wholly owned by MOF. It was given RM1 million as seed capital and from there it
went on borrowing money and issuing bonds like nobody’s business. IT IS our business
to see that this government is duty bound to protect us from duplicitous and
even corrupt dealings.
1MDB has lied to
us. It is not a responsible borrower anymore. It says it has fully redeemed
money from the Cayman Islands. It it did, why must it borrow from Ananda? We don’t know what were the terms of the loan-
Did it come with promises that Ananda will be the bigger owner of the soon to
be listed energy company?
That means, originally, 1MDB made a big splash
announcing that it bought Tanjung Energy with its 13 IPPs strewn all around the
world already with some provisions of converting debt to equity. Now, with its failure
to pay the short term loan of RM2 billion, it borrows another RM2 billion to
pay off that loan, Ananda Krishnan will eventually be owning not only the 13
IPPs but more. Ananda is the other TNB for Malaysia.
What do we have here?
A government headed by Najib which seemingly works for the benefit of the
country, regulating businesses undertaken by a government agency supposedly working
for the interest of us the public, ending actually working for the interests of
a small clique of business elite. It’s the bloody 1% of the business elite of
this country leveraging on political capture.
So what has 1MDB
become? It has become just another sophisticated means for the rich to become super-richer.
The recent Davos Economic Forum which the PM did not attend talked about the trends
in political capture and economic inequality. The governments of the world are
working hand in hand with the business elites to ensure wealth of the world is captured
by the top 1% and the rest being shared by 99%.
1MDB may just
point to that insidious tip of the iceberg. That this government, despite all
its pompous declarations and plans has lied to the people, is in fact working
to secure political capture to secure wealth for the e1% in this country.
As an OXFAM
working paper said:
Economic inequality is
rapidly increasing in the majority of countries. The wealth of the world is
divided in two: almost half going to the richest one percent; the other half to
the remaining 99 percent. The World economic Forum has identified this as a
major risk to human progress. Extreme economic inequality and political capture
are too often interdependent. Left unchecked, political institutions become
undermined and governments overwhelmingly serve the interests of economic
elites to the detriment of ordinary people.
The PM of course
did not attend the Davos Economic Summit so he would not be able to listen
directly. His people make reports about the issues discussed. But with
miserable English translation, the message is lost.
A central theme among the leaders of the world
is regaining trust from the people. The people of Malaysia no longer trust this
government especially the PM.
Notwithstanding
the assessment by the Economist, Najib will be most vulnerable. If we cannot
identify who is qualified to replace Najib as PM that is because he or even she
is not among the present cabinet members. If we look only into the cabinet,
then, its true there is no one , respectable and esteemed enough to replace
Najib.
Extracts of Martin Luther's ‘How long, not long’ speech, he said this:
ReplyDelete“How long? Not long, because no lie can live forever.
“How long? Not long, because you shall reap what you sow.
“How long? Not long, because the arc of the moral universe is long, but it bends toward justice.”
Go to the internet you can read his whole speech there.
Dato,
ReplyDeleteA lie begets a lie begets another lie and another and another until the whole house of cards falls down. Seems like this is how 1MDB is courting disaster. Figures do not lie unfortunately they are misinterpreted. So how gullible do the general public want to be?
Malaysia terlalu lama berada Dlm keadaan Selesa & mewah. Soal adil,korapsi bolih.tolak tepi dulu asalkan dapat makan dan hidup. Siapa PM sama Aja .Tunngu bila keadaan hidup menjadi sengsara!
ReplyDeleteFrom the outset, one already knew 1MDB was trouble. If you would recall, it was started with the objective of creating a KL financial hub.
ReplyDeleteIf you had stood at the site which was just a corner off Jalan Tun Razak, it wasn't that big a place to warrant the mega-billions mentioned to be invested.
Even before that forgettable piece of land was cleared, there was murmur of yet another project under its wing along that road. Probably because there was already a private hospital there, the second vision was to have a medical hub.
Next thing you know 1MDB's focus had moved from financial to medical hub and now it suddenly owns equity in power plants.
In short, its objective moved from finance to healthcare to energy even before its crew had warmed their seats.
As i had earlier commented, you can't just create a financial hub from civil works construction.
It's not infrastructure of buildings alone. It's also the human resource and work culture ecosystem and one must have pretty compelling soft factors to attract investors to move their people and funds in and park their brands in order to generate businesses that are basically nano-second touch-screen operations.
These days a financial hub is no longer about brick-and-mortar banks or people in ties and with briefcases; it's also about integrity of regulatory systems and the right cultural living-work space that impinges on individuality, comfort zones, urban lifestyles and security. Plenty of choices elsewhere in the world so why here?
If you care to use the same analogy, you can ask how many of the foreign consulates had moved to Putrajaya. Answer?
Moreover we don't have a critical mass of english-educated and results-oriented professionals who can handle the technicalities of what is essentially a global cross-border instantaneous optimization network primed only for wealth creation that is the mandate of a financial hub which in any case is supposed to be based on big-bang - and not the consolidation fever that has been local policy.
What we are therefore seeing now is the same pattern of grasping one straw after another. Because it could not succeed with the original objective of creating a financial hub, it skirted next over to creating a medical hub and when that didn't get anywhere, it then grabbed the opportunity caused by the expiry of IPP concessions.
2/2
ReplyDeleteThat's the same pattern you now see in chasing one loan to offset another which has matured. Like a compressing accordion, it will soon enough come to a screeching stop.
In other words, without even laying the first brick, you get a house of cards.
That's like something meant for a fixed project becoming in the twinkling of the eye an umbrella organization with anything-goes investment objectives.
How does one then write the prospectus of such an entity? For hard-nosed financiers, wishy-washy comes to mind. How would a Wahid, for instance, draft one?
You know when two ceo's and three auditors relief themselves and funds get surreptitiously parked in offshore havens, something can't be right.
Just as it is wrong for Pemandu and Treasury to be so quiet about Permata.
And why is all this crucial to the rakyat, their economy and the country (or what's left of it, anyway)?
It is because when a government uses its power to indulge in business that is none of its business, it annihilates wealth meant for the people of the country.
We are talking about big billions here, not the kacang putih amounts that traders try to earn in order to safeguard their puny businesses against the onslaught of an inflationary regime brought to the boil by the same handiwork of the same political sources.
These sources say the funds are not from the rakyat. When meltdown occurs, who will be left holding the baby whose certificate of birth says 'Government of Malaysia guarantees the bond issued, the loan taken, the promissory note made'? Is that government going to renege, or print more notes to save its skin first? If it does either, what will be the effect on the national and state economies?
For answers, direct those questions, point-blank, on the likes of Sabri, Ibrahim, Zaik, Zahid, Hadi and the others. Indubitably, they will give you the most blindingly brilliant answers of all time.
Or raise some hecklers just to show how heroic they are beneath their humble veneer.
Right, M?
Dear Datuk Sak,the people dont trust Najib n Malaysian govt? You are joking lah.I just balik kampung.The people over there are happy.They said minyak sudah turun.due to PM Najib concern for the humble kampung folks.
ReplyDeleteIn the first instance 1MDB was never set up for the interest of the rakyat. It was just a vehicle to suck our money and channel it into their own pockets. What we have heard and seen so far are just the tip of the iceberg. If we were able to delve into it, we will find a can of rotten worms with Umno fingerprints all over them. It's another Scorprene saga except that the amount of money involved are much more.
ReplyDeleteDato,
ReplyDeleteWalla's posts here:
"....when a government uses its power to indulge in business that is none of its business, it annihilates wealth meant for the people of the country"
Exactly, precisely and succinctly!!!
This is what a former diplomat had to say regarding Martin Luther King:
" King talked about how the white elites of the South used racist rhetoric and laws not only to keep the blacks down, but just as important, to also "bamboozle" and confuse the poorer whites into voting for them.
The corrupt white elites wanted their poorer cousins to believe that their rule and laws would improve the lot of the white race. The white elites needed to spew their racist rhetoric to get votes and keep themselves in power - so they could keep themselves and their friends and cronies rich.
As for the poor, less educated, rural whites, they believed what the white elites had to say. Their lives were not getting that much better, so they needed a reason why. They saw the black man and his DEMANDS for equality as a threat, because the elite told them it was. "
Recognise the familiarity?
Great observations!
DeleteSo the poor, less educated rural Southern Whites needed to be told the real story of how the elite whites were misleading them before they could get out of their ('em poor Southern Whites) plight.
What about the Pak Ciks, Mak Ciks, Saudaras and orang ramai-s of the Malay rural communities? Unless they are told the truth, this sad train of Malaysia in decline will just chug along towards the fiscal/communal cliff.
If you study the balance sheet carefully, there is another $2.3 billion derivative debt which is the new name for what was once called junk bonds, issued by corporations, supported by nothing more than a corporate gurantee. Who was the borrower(s).
ReplyDeleteOnly a company that wants to hide sordid details will fail to put up its full audited at its website.
The reality is, as any auditor will tell you, 1MDB is insolvent and should be qualified by a "going concern" audit certificate!
Reason? Without revaluing the Sg Besi land, and thereby conning the unwary, 1MDB would have posted operating losses of some $4 billion to-date. When you remove this revaluation surplus, 1MDB debts ill certainly exceed its liabilities, and in a fire sale, the ageing IPP's can only be sold at a whopping loss to predators like AK and that Goh family interests.
It is clear that its operations have been unable to generate sufficient cashflow to service annual debt interest, let alone repay capital, of $2.6 billion.
Thus the sojourn with begging bowl in hand to AK who will do no favours for 1MDB, having already fleeced it to the tune of some $2billion earlier.
This is the '70's Argentina con again - retiring old debt by creating new debt with higher and higher interest cost.
The entire fiasco is PM Najib's fault for trying to knockout the TIA and replace with $ 1million capital and $42 billion debt!
What a recipe for disaster for a soveriegn fund!
Dpp
we are all of 1 Race (except the grossmajib looters), the Human Race
1/2
ReplyDeleteWalla, truly first rate!
Your remark trenchantly noted, “It's also the human resource and work culture ecosystem”
Never read anything so well put to describe how ‘Look East’ failed so miserably — alas it is but a failure of the work culture ecosystem — the futility of transplanting a cultural ethos from the frigid north to the humid tropics by mere affirmation of a sentimental catch-phrase. Many years ago I asked a Japanese colleague for his view on why Malaysia wasn’t that quite successful as we had hoped despite looking East for so long. Typically Japanese — blessed or cursed by the sheer inability to say ‘no’ when that is all that is required — his furtive, split second glance at his watch was enough to reveal plenty, not least — we suffer from a very faulty work culture ecosystem, to wit, our inability to be punctual and our predisposition to skive, to play hooky at every single available opportunity, and believe it or not, we still cry in disbelief that the Japanese are producing the best cars, cameras, ceramics and even cosmetics. As if this is not enough to show why ecosystems are culture-specific, the many cases of Japanese business executives presenting themselves in the offices of their Malaysian associates well before the appointed time, not once but every time a meeting of the minds had to take place. I have it from the mouth of a senior executive that the Japanese guests explained to him the reason they could arrive on time, or well before, was that they took the trouble to get the hotel staff to advise them the time to start their journey factoring in traffic jams! How many meetings don’t start on time in a Malaysian office? How much time is lost having elaborate tea breaks, twice in a day if it stretches till afternoon?
So, Walla is smack on about a desirable work culture eco-system, and we just DON’T have it!
2/2
ReplyDeleteWalla: “Government of Malaysia guarantees the bond issued, the loan taken, the promissory note made,” and Dato’s: “…public interest company- in the sense that whatever it does, interests the public, more so the public spirited individuals and groups. It cannot escape accountability because it is a government owned company, wholly owned by MOF”, here’s another perspective:
“And what about scams involving the public sector? So much money is collected and spent by governments that from time immemorial, having its fingers in the public purse has been mankind’s scourge. In fact, these scams are worse than those in the private sector. When an individual is cheated , he is unlikely to keep quiet. He is bound to lodge reports and complain to his neighbours and leaders. Public scams, however, can be covered up for LONG PERIODS, forever even, since BOTH parties — the business man and the public official — are unlikely to complain. They are usually party to a conspiracy involving THEMSELVES and OTHERS. ¶ Public scams can take many forms. In the classic and still most common cases, government procurements and construction are overcharged. Then, there are the more exotic, including:
• Privatisation. This is not a scam per se, but it is a mechanism used to transfer project evaluation, costing and decision-making from the government to a selected private company. The overcharging then set in as it OUTSIDE THE PURVIEW of government technical and financial supervisors.
• Public-private partnerships. Logically, there can be no such thing as a public-private partnership because on the public side, only “public officials” are involved. So, the deals made are exclusively within the purview of public officials and businessmen. Again, we will have similar or even more OVERCHARGING since the private parties selected for public-private partnerships are usually NOT as well established as those in privatisation schemes.
• Assorted schemes and special-purpose vehicles (SPVs) with ILL-DEFINED objectives and FAT budgets. We already have far too many ministries, departments and agencies, so there is LITTLE need to established new SPVs and agencies. These bodies provide FERTILE ground for FURTHER abuse of the public purse.
Having examined the SCAMMING of taxpayers, I have come to TWO conclusions. FIRST, much abuse and wastage can be avoided if government officers go back to basics in budgeting for and doing the costing of major items in a project — the number of bricks, cement bags, lengths of steel…and so on. ¶ To do this, you need to get accurate estimates of quantities involved…We now have far more quantity surveyors, engineers…than during the colonial days. Surely, we can and should do a better job with input prices and quality? ¶ SECOND, the Malaysian public and leaders alike are prone to fall for buzzwords, ‘canggih’ words and catchy phrases. Many suspend all reasoning and analysis when confronted with terms like ‘public-private partnership’, ‘special-purpose vehicle’ and ‘win-win situation’…¶ I similarly came across an explanation given for adopting a public-private partnership — the government does NOT have to put in any money and at the end of the day, all the buildings and equipment will be ours. Can this be true? How is the private party repaid for his investment? Is the private party’s financial rating better than the government’s so that he can borrow at CHEAPER rates than the government? ¶ In truth, the private party is only able to borrow LARGE sums because of the IRON-CLAD, ONE-SIDED CONTRACT agreed to by the government, in effect giving an IMPLICIT FINANCIAL GUARANTEE for the WHOLE PROJECT. ¶ That was a slice of 2012. Let us hope we will have FEWER SCAMS in 2013. But one thing is for SURE, scammers will NOT utilise the same modus operandi. Variations will be introduced and NEW concepts coined to FOOL INDIVIDUALS and TAXPAYERS alike.” From “Of Ponzi schemes and public scam
First, there was a ‘hanging’ sentence in the first part!
ReplyDeleteSecond, the last statement should read: From “Of Ponzi schemes and public scams” by RADZUAN HALIM, pg 81 of TheEdge Malaysia, 24 Dec 2012.
Skiving here should not be read as being exclusive to Malaysia — certainly not — although I suspect it is quite common here, especially our back offices; the exception is our front-line counter staff who deserve every ringgit they receive while bearing brick bats from the public on a bad day. Skiving, in short, is a part of the sewage that flows within an eco-system, all over the world — here it is uncharacteristically NOT culture specific! Readers may want to be entertained, or, alarmed by Schumpeter’s “A guide to skiving” [Oct 25th 2014 The Economist]: http://www.economist.com/news/business/21627649-how-thrive-work-minimum-effort-guide-skiving.
A taster: “In 2009 the Swedish Civil Aviation Administration discovered that some of its employees had spent three-quarters of their working hours watching internet pornography. In 2012 a German civil servant wrote a farewell message to his colleagues, on his retirement, confessing that he hadn’t done a stroke of work for the past 14 years.”
Senior officers in the public sector start setting the example by moving your ass, PLEASE! Your subordinates will take the cue easily.
Point: RADZUAN HALIM wrote, “In truth, the private party is only able to borrow LARGE sums because of the IRON-CLAD, ONE-SIDED CONTRACT agreed to by the government, in effect giving an IMPLICIT FINANCIAL GUARANTEE for the WHOLE PROJECT.”
ReplyDeleteCounter point: PAS MP Khalid Samad asks, “Why pay RM1b over abortive AES?” — by PATHMA SUBRAMANIAM [malaymail online of 5 February 2015 07:00 PM]. The link: Link: http://www.themalaymailonline.com/malaysia/article/why-pay-rm1b-over-abortive-aed-asks-pas-mp
[N.B: AES is Automated Enforcement System].
Scamming of taxpayers, again?