The Bank Negara Governor fools no one claiming the RM2 billion land acquisition from the Federal Government was an arms length transaction.

Yesterday, Bank Negara (BNM) Governor Tan Sri Muhamad Ibrahim tried to provide a justification for the central bank’s outrageous purchase of 55.79 acres of land for approximately RM2 billion from the Federal Government. On the 4th of January, BNM announced that is had acquired the land for the development of a new financial education hub.

Tan Sri Muhamad Ibrahim said that the Bank wasn’t forced to buy the land by the government and instead it was BNM that requested the government to sell the land to them. Tan Sri Muhamad said that the deal between BNM and government was an “arm’s length agreement”, which is to say that both parties were acting in their own interest without any pressure by the other party.

As reported by the Edge Weekly in January, following Bank Negara’s announcement of the deal, many industry observers had found the purchase puzzling because it was rare for a government agency to buy land from the government more so at a market price. This is especially so when the land is intended to be used for the development of an education hub, rather than a commercial property. Land acquired for public universities are usually transferred at a nominal rate, while the land purchased by BNM works out to approximately RM823 psf.

The question must hence be asked?  Why did the Governor not apply for the land at nominal rate?  This is especially since the education hub is not a commercial venture?  Even 1MDB for example, secured more than 500 acres of land at nominal or heavily discounted value from the Federal Government for commercial purposes.

Hence Malaysians cannot be blamed for suspecting that the entire transaction is a blatant attempt by the Federal Government to raid the Bank Negara coffers.

It also does not escape notice that the timing of the transaction and payment coincided with time 1MDB had to make it US$600 million second instalment payment to IPIC at the end of last year.

Despite questions being asked by the media, analysts, critics and even Members of Parliament, both 1MDB and the Ministry of Finance (MoF) have refused to clarify the source of funds for the above payments by 1MDB.  The question is very important because we all know that 1MDB is effectively insolvent and Malaysians have the right to know if the MoF utilised tax-payers’ funds to further bail out 1MDB.

Hence, the Bank Negara Governor Muhamad Ibrahim “keep an arms length” nonsense is completely not credible and fools no one.  Why should it be arms length in the first place when the land was not intended for Bank Negara to make a profit?  Until these questions are properly answered, Malaysians certainly cannot be blamed for believing that Bank Negara allowed itself to be raided by the MoF in order to bail out 1MDB.

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Why is the Cabinet adamant in ignoring Bank Negara's policy prescriptions on the property market imbalance?

Putrajaya’s constant u-turns over its announced luxury property ban are yet another example of the government’s absurd tendency to ignore expert policy advice in favour of ill thought out knee-jerk reactions.

Bank Negara (BNM) had reported last month on the substantial supply and demand imbalance within the country’s property market. The report found that new property launches were skewed towards the high-end sector of the market priced above RM250,000.

The government then immediately issued a poorly thought out directive halting approvals for all new high-end property developments priced above RM1 million per unit.

When the blanket freeze was first announced on November 17, I had already warned that the ban was not going to resolve any of the issues highlighted by Bank Negara. Sure enough, the government has now made a near-complete U-turn its ban in less than a month.

Based on the latest announcements by the Housing and Local Government Minister, Dato’ Seri Noh Omar and the Second Finance Minister, Dato' Seri Johari Abdul Ghani, earlier this week, property developers can now appeal to Ministers for high-end project approvals on a case-by-case basis.  Basically, the Ministers have now granted themselves full discretionary powers to approve projects for developers who can sweet talk way to win the hearts of the Ministers.

The arbitrary nature of this new policy with have serious consequences to short and longer term investments by both foreign and domestic investors in Malaysia.

The thing is, BNM’s report had outlined six different policy recommendations to dealing with specific issues in the property market.   Hence, why doesn’t the government just adopt the advice already given to them by BNM?

To address the high level of unsold residential properties, the report suggested increasing encouragement for the rental market. On affordable housing, it was recommended that the government increase its efficiency in providing and allocating affordable homes. These policies are targeted and are designed to address the specific issues in the residential market.

The government’s halting of new approvals for high-rise residential developments over RM1 million does nothing to address these issues. According to the Edge Weekly’s in-depth report published last weekend, units at that price point and high-rise residences only make up 12.06% and 11.48% of unsold properties respectively.

BNM also suggested better management to address the large incoming supply of commercial properties. This includes ensuring the commercial viability of the project is thoroughly assessed and for developers to be cognisant of demand conditions. However, the government’s blanket ban lacked any mechanism that would allow an objective assessment of each development.

In addition, to alleviate the problem of high office vacancy rates and low rental rates in existing buildings, the report recommended the repurposing of vacant commercial buildings as well as increasing demand for existing space through either rental rebates or greater efforts to attract foreign business.

Unlike these policies, the government’s knee-jerk ban would only halt the approvals for future high-end developments without managing the already severe level of oversupply. It is difficult to understand why the government has chosen to ignore Bank Negara’s relatively sound advice to address these problems.

We call upon the government to take heed of Bank Negara’s recommendations immediately.  It should also conduct a thorough study with all stakeholders and think-tanks to design and implement consistent, constructive and incentivised policies to ensure continued growth and sustainability for the property sector and correspondingly, our economy.

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Our Cabinet has some of the best back-flip acrobats in the world with the unbelievable twists and turns over high-end property development freeze

Second Finance Minister Datuk Seri Johari Abdul Ghani announced on November 17 that the government had sent a directive to halt all approvals for high-end residences, shopping complexes and office buildings priced over RM1 million.

The freeze came after Bank Negara’s report on the substantial supply and demand imbalance within the country’s property market. The report found that new property launches were skewed towards the high-end sector of the market.

The Second Finance Minister subsequently reaffirmed the blanket ban after his fellow Cabinet colleague, Works Minister Datuk Fadillah Yusof said that developments would be reviewed on a case by case basis.

The ‘blanket ban’ had smacked of being a ‘hare-brained’ policy prescription as the Government started granting exemptions to projects which the Government had a vested interested.  In particular, the Minister of Federal Territories, Dato’ Seri Tengku Adnan Tengku Mansor said the 1MDB-linked projects – Tun Razak Exchange and Bandar Malaysia were “pre-approved”, and are hence exempted.

The fact that Bandar Malaysia has not even found a developer with a plan appears immaterial to the ban exemption.

The biased exemption of such projects by Government-linked companies (GLCs) created an uproar among the private sector, who then lobbied hard to ease the ban.

Yesterday, the Government did another double-twist somersault on its ‘blanket ban’. Two statements by Urban Wellbeing and Local Government Minister Tan Sri Noh Omar and Datuk Seri Johari, suggested that the Government will now allow developers to appeal the ban on a case by case basis.

For luxury residential properties, Tan Sri Noh Omar announced that a four-minister committee to review the project applications comprising of Datuk Seri Johari, Datuk Fadillah, Minister in the Prime Minister’s Department Datuk Abdul Rahman Dahlan and himself. The committee would apparently subject its approvals to criteria including the existing housing condition, the number of houses in that location and those priced above RM1 million, as well as the number of unsold houses.

Separately, Datuk Johari said that developers of office spaces and shopping malls could appeal to the relevant ministers if they find locations that lack those properties and can justify their developments. He even went on to say that “anyone can build an office provided you know how to market it”.

Does the Minister actually think that developers are going to build an office block or a mall that they are not confident in selling?

I was among the first who had criticised that the blanket ban would not do much to remedy the property market imbalance.  However, now the Ministers have granted themselves full discretionary powers to grant approval to any developers who can sweet talk way to win the hearts of the Ministers.

Have we now become a communist regime where the Government dictates how many left shoes to manufacture?  Two big mistakes here certainly don’t make a right.

The multiple twists and turns worthy of a world-class acrobatic act only goes to prove that the Najib administration is completely clueless in policy-making.  How does the above, for example, even address the main issue of the lack of affordable housing in the country and the largest oversupply of residential properties were reported at the RM500 000 to RM1 million segment?

The worst type of Government for any investor, foreign or domestic, is the absolutely lack of predictability and consistency in its policies.  The current fiasco will certainly have major short to long term negative implications for Malaysia’s economy.  The Cabinet must remedy its knee-jerk policy-making mechanism and instead, conduct a thorough study with all stakeholders, Bank Negara and think-tanks to design a consistent, constructive and incentivised policies to ensure continued growth and sustainability for the property sector and our economy.

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The biggest culprits to the supply-demand imbalances in the property market in Malaysia are none other than Government-linked Companies

The Cabinet has imposed a “temporary ban” approvals for shopping complexes, offices, serviced apartments and luxury condominiums priced over RM1 million effective November 1.

The freeze came after Bank Negara’s report on the substantial supply and demand imbalance within the country’s property market. Bank Negara stated that the oversupply of properties in the country has been persistent over the past few years. Bank Negara themselves had raised the issue in their 2015 annual report.

In the Klang Valley, the report found that office vacancy rates had increased from 20.9% in Q1 2015 to 23.6% in Q1 2017. The situation is only set to get worse as there is an incoming supply of 38 million square feet of office space.

However, what Bank Negara and the Cabinet did not say was that among the biggest culprits causing the supply-demand imbalances in the property market are the Government-linked Companies (GLCs) and Government-linked Investment Companies (GLICs).

A report by The Star on April 6 this year highlighted the increasing involvement of GLICs in the property both directly and indirectly. EPF has been directly involved developing the new Kwasa Damansara township, which has a massive size of 2,300 acres and RM50 billion in gross development value (GDV).

Pemodalan Nasional Bhd (PNB) on the other hand, is developing the 118-storey Menara Warisan project next to the historic Stadium Merdeka. It will offer 4.3 million square feet of residential, hotel and commercial space.

PNB is also the single biggest shareholder of S P Setia, one of the largest, if not the largest property developer in Malaysia.  S P Setia is renown for some of the biggest luxury developments in the Klang Valley, including a 25-acres KL Eco-City, Setia Sky Seputeh and many others.

In addition, EPF and PNB jointly owns 63% of Sime Darby Bhd, whose property arm is another one of the largest property developers in the country.  The company has only recently launched its RM8 billion GDV AYLA Kuala Lumpur project which covers an area of 360 acres.

There is also the Bukit Bintang City Centre (BBCC) which sprawls over 19.4 acres with a GDV of RM8.7 billion. The project is spearheaded by UDA, a wholly-owned subsidiary of the Ministry of Finance.

No listing of high-end property projects in Kuala Lumpur will be complete without also mentioning the 76-acres RM20 billion GDV KL Metropolis project.  While on paper, it is developed by a private company, Naza TTDI, the project is in effect a controversial land-for-building deal with the Ministry of International Trade and Industry (MITI).

Elsewhere, Khazanah-owned UEM Sunrise also specialises in the high-end residential market in prestige locations such as Mont Kiara. In Johor, which was highlighted as having the largest share or 27% of all unsold properties in the country, UEM Land is developing 14 new projects which are all listed as high-end developments.

All of the above do not yet include the two mega-property developments linked to the scandalised 1Malaysia Development Bhd (1MDB) – the 70-acre Tun Razak Exchange (TRX) and the 486-acre Bandar Malaysia.

The issue here is two-fold. First, it is clear that GLCs contribute overwhelmingly to the glut which is threatening our property space in the country today.  No policy prescription without recognising and reviewing the role of the government, GLCs and GLICs has played in our “imbalanced” property development sector will be effective or successful.

The second more important economic question is, will the Government also be granting ‘ban’ exemptions to all these GLCs’ projects as it has done for TRX and Bandar Malaysia?  What then, will be the implication for the private sector in Malaysia?  Should they all just pack they bags and take their money to other countries to invest?

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Why are 1MDB-related projects given special exemptions despite Cabinet blanket ban on luxury property projects above RM1 million in unit values?

Last week, Dato’ Seri Johari Abdul Ghani announced the Cabinet decision on a “temporary ban” approvals for shopping complexes, offices, serviced apartments and luxury condominiums priced over RM1 million effective November 1.

The freeze came after Bank Negara’s report on the substantial supply and demand imbalance within the country’s property market. The report found that new property launches were skewed towards the high-end sector of the market.

Particularly in the Klang Valley, the report found that office vacancy rates had increased from 20.9% in Q1 2015 to 23.6% in Q1 2017. The situation is only set to get worse as there is an incoming supply of 38 million square feet of office space.

It has also been confirmed in various news reports that the Kuala Lumpur City Hall (DBKL) has received the above directive.

However, we are not sure if we should be shocked that the Mayor, Tan Sri Mohd Amin Nordin Abd Aziz announced yesterday that the prospective single largest high-end property development project ever in Malaysia – Bandar Malaysia is exempted from the ban.

Malaysiakini reported that although the Kuala Lumpur City Hall (DBKL) had yet to receive any application regarding the project, Mohd Amin said the freeze on approvals for condominiums, serviced apartments, offices and shopping complexes priced at RM1 million and above is not a blanket ban.

“We haven’t received any application from Bandar Malaysia. No, because it is not a blanket (ban). On certain developments, it can be approved,” he told Malaysiakini.

At the same time, it was announced yesterday that IJM would be building a new RM500 million office tower at Tun Razak Exchange after acquiring TRX City subsidiary Fairview Valley Sdn Bhd. Will this new tower, which will have a gross floor area of 560,000 square feet also be exempted from the ban?

Due to the size of these 1MDB-related projects, they will certainly exacerbate the property over-supply situation in the Klang Valley and effectively blunt the effectiveness of the Cabinet decision to ban high-end development projects.

More critically, if the 486 acres Bandar Malaysia and the 70 acres Tun Razak Exchange projects receive automatic exemptions from the ban – how is that fair to the rest of the property development industry in the country?

Clearly the “temporary ban” is a hare-brained which will fail to actually solve the “supply-demand imbalances” in our property sector. Worse, the investment and business community will only see the inconsistency and unfair policies imposed by the Government.  Can they be blamed if both the domestic and foreign investors take their money and invest in other countries?

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Is the high-end property ‘freeze’ a case of a hare-brained attempt to hose down a fire which has already burnt to ashes, or worse, cause a flood and further add to the woes?

On 17 November, Bank Negara Malaysia (BNM) produced a report highlighting the mismatch in supply and demand of property developments in Malaysia.

The BNM Governor, Tan Sri Muhammad Ibrahim pointed out that the supply-demand imbalances in the property market has increased since 2015, pointing to the decade-high of unsold residential properties. There were 130,690 unsold units at the end of March this year, with 83% priced at above RM250,000.

The knee-jerk reaction to the alarming report was the announcement two days later by Second Finance Minister, Datuk Johari Abdul Ghani that the government had issued a directive temporarily stopping developments of shopping malls, commercial complexes and condominiums valued about RM1 million from November 1.

One can tell that it was a hare-brained policy attempt because the day after, the Works Minister, Datuk Fadillah Yusof said that the directive was not a blanket freeze and that approvals would be evaluated on a case by case basis.

Datuk Johari then added, on November 21, that the freeze would only affect projects that had not been approved and the length of the freeze would depend on a continued assessment of the situation.

The question is, how did the Government allow the situation to develop to such a state of gross mismatch in the first place?

Actually, the issue of imbalances in the property market was already highlighted by BNM in its 2015 annual report. And the oversupply in the housing market has since then almost doubled between 2015 and 2017.  In fact, Bank Negara’s figures for the property supply and demand come from the National Property Information Centre (NAPIC) located under the Ministry of Finance (MoF).

As the BNM Governor opined, “we have raised these issues for more than a year. Exposure of financial sector within this area is within a comfortable level. But if we're not careful, the oversupply could have a negative impact on the economy.”

Hence the question now is, given the fact that the milk is already spilled, will the seemingly drastic knee-jerk ban on luxury condominiums, shopping malls and commercial complexes solve the problem or trigger even more problems?

Investors, both domestic and foreign, will tell you that what they fear and hate more than bad policies are inconsistent, uncertain and ad-hoc policy-making.  The latter results in constant unanticipated changes and frequent policy U-turns which makes it impossible for business to plan their investments and measure their expected returns.

In this case, there are so many unanswered questions based on the Cabinet's hasty policy decision.

Has MoF asked the real estate sector – why is it that despite the excess supply of “luxury condominium”, developers continue to build them at that price?  Are Malaysian developers really that stupid to invest in projects which cannot sell?

Has MoF conducted a study to determine if a ban on the “luxury” sector will reallocate investments into the “affordable” property sector?  If it doesn’t, will the ban merely stop property and construction activities and consequently trigger an economic slowdown and lower employment opportunities?

One of the biggest questions that needs to be asked is, what is considered a “luxury” project?  The Bank Negara report used RM250,000 as the benchmark.  However, the Government’s own affordable housing agency PR1MA have properties priced between RM100,000 and RM400,000, although prices tend to be skewed more to the higher-end.  On the other hand, the latest MoF ban appears to apply to only properties priced above RM1 million.  Hence, are we prescribing medication to the wrong patient?

Worst, the blanket ban does not take into account of regional factors and imbalances.  The BNM Governor clearly stated that Johor is poised to have the highest number of unsold residential properties and potentially the largest excess supply of retail space. Hence is a nationwide ban of any kind the right prescription or will it instead cause economic distortions in other states and regions?

We call upon the Minister of Finance to provide not only clarity to the hare-brained “temporary ban” decision but also to justify how such a ban will actually solve the “supply-demand imbalances” in our property sector.  He should also take in cognizance of the fact that BNM’s 6-policy prescription to resolving the problem did not involve an outright ban on types of development.  Otherwise, the unintended consequences of such a crude policy prescription would worsen the effects on our already fragile economy.

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The Malaysian Anti-Corruption Commission needs to grow a spine and really stand up to corruption.

I had asked in Parliament why the MACC had announced in June that it would not be carrying out investigations regarding the misappropriation of funds and abuse of power in the 1MDB scandal.

Tony Pua meminta Perdana Menteri menyatakan apakah sebabnya Ketua Pesuruhjaya Suruhanjaya Pencegah Rasuah Malaysia (SPRM) mengumumkan pada bulan Jun 2017 bahawa pihak SPRM tidak akan menjalankan siasatan ke atas ke penyelewengan dan penyalahgunaan kuasa dalam skandal 1MDB?

The Minister in the Prime Minister’s Department in-charge of Integrity, Datuk Paul Low replied on 1 November that “investigations weren’t carried out because of existing investigations being done by the Public Accounts Committee (PAC), Bank Negara and the Police.”

There could not be a more shameless and irresponsible reply from the Minister and the Government.

The PAC – which barely scratched the surface of the 1MDB scandal, has no prosecutorial powers.  Bank Negara Malaysia, on the other hand, was investigating 1MDB purely from the Financial Services Act and certainly did not deal with the parties who had profited from the scandal. 

At the same time, while the Police may have been investigating the criminal elements in 1MDB, the MACC has powers, laws and jurisdictions which are completely different from the Police to tackle corruption cases.

That was the whole point of the Parliament passing the MACC Act in the first place, so that there is a dedicated and independent commission to tackle the scourge of corruption and not let the burden be shouldered by the Royal Malaysian Police. What type “independent commission” worth its salt is MACC, if it leaves investigations, especially a scandal of such scale to other agencies?

In January this year, MACC commissioner Datuk Dzulkifly Ahmad warned corrupt politicians to “be careful”. He said he wasn’t afraid of protected individuals and would launch investigations without fear or favour. “Just you wait,” he had warned politicians.

Why is the MACC and Datuk Dzulkifly Ahmad, after all its showboating, so afraid of investigating the country’s biggest and most blatant corruption scandal?

Malaysians have been waiting long for MACC to launch its investigations into 1MDB especially after similar investigations have already begun in the US, Switzerland and Singapore. Just this weekend, even 1MDB-linked Prince Turki of Saudi Arabia was hauled up as part of an anti-corruption sweep in his own Kingdom.

In Malaysia, multiple reports have been lodged with the MACC regarding the 1MDB scandal. These included reports filed in December 2014 by then UMNO Batu Kawan Division Deputy Chief Datuk Khairuddin Abu Hassan and more recently, a Pakatan Harapan Youth-linked NGO in July this year.   Hence it is a serious breach of MACC’s duty for failing to look into complaints of corruption.

These submitted reports were to be evaluated before the Commission’s Information Evaluation Committee to determine whether there were elements of corruption or not. If elements of corruption are found, it is imperative that an MACC investigation is opened before being referred to the AG for legal prosecution.

Was the above process conveniently ignored in MACC’s special treatment for 1MDB?  Was this a condition for Datuk Dzulkifly Ahmad to be rapidly promoted to be appointed, less than 2 years ago, to be the Chief Commissioner in the first place?

It is preposterous for an independent commission like MACC to pass on its investigation to other agencies. Each authority has a different mandate to investigate, so it is entirely cowardly for MACC to turn a blind eye and let other agencies look into it.

Until the MACC finally grows a spine and properly considers reports against 1MDB, the commissioner's boastful warnings will remain in Malaysians’ eyes as baseless rhetoric.

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Dato’ Seri Najib Razak is clutching at straws arguing that the ringgit has performed well this year when it has barely recovered a fraction of its losses since 2013

Dato’ Seri Najib Razak wants Malaysians to believe that “the ringgit had performed better than the currencies of many other large commodity exporter countries, and forecasters had predicted that it will regain its strength”.

Is the Prime Minister trying to convince us that the 5.9% appreciation of the ringgit from RM4.49 to the dollar on 1 January 2017 to RM4.24 today is an achievement worthy of a standing ovation from Malaysians?

Does he need reminding that when he became the Prime Minister on 9 April 2009, the exchange rate was RM3.58 to the dollar or 18% higher than what it is today?  As a matter of fact, since the 2013 general election, the ringgit has tanked significantly on an annual basis.

In 2014, the ringgit slumped 6.3% from 3.281 on 1 January to 3.502 a dollar on 31 December.

The Prime Minister had then told us in January 2015 that the Ringgit will bounce back from the then five-year low versus the US dollar as “Malaysia's financial market is sufficiently robust”.  Believe it or not, the Ringgit was then trading at 3.50 to the Dollar, which now seemed like a parallel universe away.

Instead, in 2015, the ringgit collapsed 18.5% to 4.303 a dollar on 31 December.

Even then, despite continued re-assurance from the Government and Bank Negara that our currency was undervalued and unjustifiably depreciated for those 2 years, the ringgit tanked a further 9.6% in 2016.

If we had all trusted Dato’ Seri Najib Razak and invested based on his financial advice, some of us would be bordering on suicidal tendencies today.

The thing is, if every other currency had declined at the same rate against the Dollar, it wouldn’t have felt so bad.  What is particularly galling is that the Ringgit performance is the worst among all the major regional currencies over the past few years.  We have weakened significantly against the Hong Kong and Singapore dollar, the Thai baht, the Indonesian rupiah, the Chinese yuan and many more.  Hence the Prime Minister’s call for a celebration for a marginal improvement in the exchange rates this year is a serious case of clutching at straws.

It appears that everyone knows the real cause of the ringgit’s terrible performance except our clueless or pretend-to-be-clueless Prime Minister and his merry men. The fundamental cause is because of the complete collapse in confidence in our currency and economy ever since we have been outed as a major global kleptocracy and the failure of the Malaysian authorities and Government to take any action against those responsible.

The direct consequence of a badly depreciated ringgit is not only significantly higher travel cost overseas, it is the much higher cost of imports which translates into the highest inflation rates Malaysia is facing since the last global financial subprime crisis.

We cannot let Najib’s focus on the Ringgit’s short-term improvements distract us from the bigger picture. In order for the Ringgit to recover to RM3 to the dollar, the only way will be to rid the country of a kleptocratic administration and implement clean, transparent and competitive economic policies to bring back the confidence of local and foreign investors in Malaysia.

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Dato’ Seri Johari Abdul Ghani must prove that the Auditor-General (AG) couldn’t find specifically what went wrong with 1MDB by seeking declassification of the AG’s Report on 1MDB

Last week, the Second Finance Minister Dato’ Seri Johari Abdul Ghani told an audience of the investment community at a luncheon organised by the Malaysian Industrial Development Finance Bhd (MIDF) that the Government “can’t press charges on 1MDB without a full picture”.

He argued that "even the PAC (Public Accounts Committee) and AG (Auditor-General) were unable to specifically tell what went wrong”.

Dato’ Seri Johari must prove to Malaysians that he has not become a big liar defending a kleptocratic administration by demanding that the Cabinet declassify the Auditor-General’s Report immediately.

How can the Second Finance Minister expect Malaysians to believe him that the AG could not anything specifically wrong with 1MDB when the Najib administration has classified the AG’s Report under the Official Secrets Act (OSA) since its publication in February 2016?

Even the then Auditor-General, Tan Sri Ambrin Buang has emphasised that the intent of the OSA classification was only for the purpose of the PAC to complete its own report without unnecessary leaks.  He has stated clearly that there was no need for the AG’s Report to be classified after the PAC Report has been completed and left it to the discretion of the Government to declassify the document.

Can Dato’ Seri Johari tell us why the the AG’s Report remains classified?

Is it because even the ‘sanitised’ PAC Report itself has hinted at a whole lot of shenanigans discovered by the AG, if further exposed, would make life difficult for the Barisan Nasional Government?

For example, the PAC found that the 1MDB’s multi-billion dollar investments in Petrosaudi and other funds were carried out without any proper study or due diligence.  For that matter, the PAC and the AG found that 1MDB decided to invest a total of US$1 billion in a joint venture with Petrosaudi International Limited within just 8 days.

We have also since discovered with corroborating evidence from Bank Negara as well as court cases in the United States and Singapore, that US$700 million of that sum was siphoned to Good Star Limited, a company owned by the flamboyant Jho Low.

The PAC and the AG also found that 1MDB’s management executed multiple multi-billion dollar transactions without the approval of the 1MDB Board of Directors.  The PAC and AG also concluded that the top management had provided false information to the Board of Directors on multiple occassions.  Worse, the top management was found to have acted in defiance of decisions made by the Board of Directors.

The PAC and AG’s Reports were very specific in these allegations.

It true that the PAC and AG’s report were not sufficiently comprehensive. The PAC and AG could not investigate the US$731 million of funds originating from 1MDB which were deposited into the Prime Minister, Dato’ Seri Najib Razak’s personal bank account because 1MDB refused to supply its overseas banking documents.

However, there are already sufficient instances of criminal wrong-doings and negligence by the top management highlighted by both the AG and the PAC in their reports.  This was also the reason why the PAC had recommended that the authorities carry out investigations against Datuk Shahrol Halmi and other management officers who were involved.

Hence the question that the Second Finance Minister must answer is – why haven’t investigations into the shenanigans in 1MDB, especially by Datuk Shahrol Halmi been completed after more than a year?  Why is Datuk Shahrol still a Director at the PEMANDU agency in the Prime Minister’s Department?

Is it because he is ‘untouchable’ and protected by the Prime Minister himself, so as to avoid even more damning truths surfacing on how tens of billions of ringgit were misappropriated by 1MDB, of which a substantial portion of it was channelled to Dato’ Seri Najib Razak?

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Be it “Parker Randall” or “Afrizan Tarmili Khairul Azhar”, will new 1MDB auditors act as “independent auditors” in an objective, professional and timely manner?

Scandal-ridden 1MDB has finally appointed new auditors to replace Deloitte Malaysia who resigned since the middle of last year.  Deloitte is the 3rd audit firm which have resigned in 6 years, following Ernst & Young and KPMG.  The new 1MDB chairman, who is also the Treasurer-General, announced that “Parker Randall” appointed to the task two days ago.

A little storm was created as “Parker Randall” in Malaysia is essentially Malaysian audit firm, “Afrizan Tarmili Khairul Azhar” (aftaas) with 4 partners, based in Sri Rampai, Kuala Lumpur.

As the corporate profile downloaded from the firm’s website stated, aftaas is “a member of Parker Randall International” which is an “international association of independent audit and accounting firms”.

As highlighted by Malaysiakini, each member firm of Parker Randall in each country is a separate and independent legal entity. Malaysiakini also pointed out that the 2011 ranking on the largest law and accounting firm networks ranked Parker Randall at 56 among 60.  Parker Randall also did not make the list for accountancy publication Accountancy Age's 'Top 100' survey for 2016.

However, what is ultimately most important for Malaysians isn’t the question of whether it is Parker Randall or Afrizan Tarmili Khairul Azhar carrying out the 1MDB audit.  What is of utmost importance is whether the newly appointed firm will carry out their responsibilities as “independent auditors”, and I emphasize “independent”, in an objective, professional and timely manner.

For a start, this is the perfect opportunity for aftaas to prove that they can do a better job than global giants, KPMG and Deloitte who have failed miserably in their audit of 1MDB by signing off financial statements which were at best misleading, at worst completely fraudulent.

Both KPMG and Deloitte failed to detect even a single dollar of misappropriation from 1MDB in the five financial years ending March 2010 to 2014.  We have since discovered, with confirmation from both Bank Negara Malaysia, the Switzerland Attorney-General as well as the Department of Justice of the United States that at least US$5 billion has been siphoned from 1MDB into private off-shore firms owned by Low Taek Jho, fraudulent entities masquerading as legitimate Abu Dhabi companies as well as dodgy investment funds which acted as money laundering conduits.

The Parliamentary Public Accounts Committee has also similarly provided evidence of the complicity of the 1MDB top management who signed dubious agreements and provided false information to the Board of Directors as well as the regulating agencies.

The previous auditors were so badly and disgracefully duped that Deloitte found it necessary to announce the withdrawal of their recognition of 1MDB’s March 2013 and 2014 audited accounts which they had previously signed off without any qualification.  Deloitte said that the above accounts “should no longer be relied upon”.

Hence, regardless of what the 1MDB directors and management might think, it is important for Parker Randall and/or aftaas to carry out a thorough audit of all the questionable transactions of the past where billions of dollars have been misappropriated.

Therefore, the first task by aftaas is simply to review and restate 1MDB’s 2013 and 2014 financial statements which have been withdrawn by Deloitte.  The Companies Act requires the annual submission of financial statements endorsed by an appointed external auditor to the Registrar of Companies.  It is the statutory requirement for the independent auditor to carry out the above task and Directors who fail to ensure that the above are duly completed in a timely matter may be punishable by up to 5 years’ jail or thirty thousand ringgit.

Following that, with the “right” opening balance determined, then aftaas can proceed to conduct the audit for March 2015 and 2016 which are both already overdue.

If aftaas fails to perform the above review and audit, they can be assured that not only their market reputation will be left in tatters in Malaysia, their international affiliation, Parker Randall – whose credibility 1MDB is banking on – will be similarly disgraced internationally and dragged through the mud.

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While blinkered Treasury-General Tan Sri Irwan Serigar continues to praise the Emperor’s new clothes, little hope of seeing meaningful changes to Malaysia’s drifting economy

The dreadful performance of the Malaysian ringgit and a listless economy under-performing its potential are not merely depressing news but have caused Malaysians plenty of pain.

And yet, the most senior civil servant in the Ministry of Finance, arguably a most powerful one, the Treasury-General insisted that all is well, and what is wrong is only “a matter of perception”.

"I go to restaurants and supermarkets, who are there? People are buying and travelling.  Some group of people are making noise as though the whole country is in trouble,” Tan Sri Irwan Serigar quipped at a press conference yesterday.

We are stunned that the Treasury-General thinks that just because there are people in restaurants and people are still visiting the supermarkets for the daily needs, everything’s fine and dandy with the economy.

Does he expect all Malaysians to be jobless and living in the streets begging for food before he would recognise that the economy is in trouble?

According to him, the plummeting of the ringgit was a short-term phenomenon that would recover in the middle-term following the measures taken by Bank Negara Malaysia (BNM).

However, isn’t that exactly what the Ministers and BNM have been telling Malaysians annually over the past 4 years as the ringgit lost more than 40% of its value against the dollar?  How can it still be a short-term problem when we are consistently the worst performer among the major regional currencies for each of the past few years?

Worse, the latest Nikkei Malaysia Purchasing Manager’s Index (PMI) clearly cited that our manufacturing production has been shrinking for 21 consecutive months, with no signs of improvement.

The PMI is derived from indicators for new orders, output, employment, suppliers’ delivery times and stocks of purchases.

How can Tan Sri Irwan continue to insist that all is well when our manufacturing performance is so pathetic despite the fact that our substantially depreciated currency should have made our goods so much cheaper and competitive?

The biggest shocker from the press conference however, is the fact that he believed that all the negative perception arising from the problems with the economy will be righted and vanished immediately once the media publish his “all is well and good” assurance.

He told the media to contribute to the ringgit appreciation through positive reports about the currency and economy.  "Hopefully, when you publish today's briefing, the ringgit will be strengthened," said Tan Sri Irwan.

How we Malaysians can renew our hopes on the economy when we have such a hopeless Treasury-General is beyond me.

Tan Sri Irwan Serigar’s refusal to address and resolve the issues surrounding the tens of billions of ringgit which have been siphoned from the Ministry of Finance subsidiaries, 1MDB and SRC International, which made Malaysia an infamous kleptocratic capital of the world is one thing.  After all, he is not the first person you would accuse of “cari makan”.

However, his woeful attempt to wave away our economic misery with his magic wand without recognising the problems we face and without offering any concrete measures to remedy the situation proved beyond doubt that the Najib administration is completely bankrupt of ideas.

In order to have any chance of reviving our currency and economy, the Najib administration must be replaced and there is no better time than the impending general election.

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2017 – Relief and recovery for the Ringgit, or more pain and punishment?

While 1MDB and the Prime Minister Dato’ Seri Najib Razak’s kleptocratic scandals were unquestionably the most talked about topic for 2016, it is the Ringgit’s relentless depreciation which would have caused the most pain for ordinary Malaysians.

Over Christmas, I managed to take my family for a week’s holiday in Chiang Mai – our first since I was banned from overseas travel for allegedly taking part in “activities detrimental to parliamentary democracy” in July 2015.

One would have assumed that travelling to the “backwaters” like rural Thailand would have been easy on the pocket.  Well, in the past, trips to Thailand did make me feel “richer”.  When you walked the colourful and rambunctious street markets, you needed to exercise maximum self-restraint to prevent oneself from having to purchase additional luggage space from AirAsia because everything was “cheaper”. 

Not anymore. Now, the Baht-Ringgit exchange rate will automatically keep you disciplined.

As late as August 2014, the currencies were trading at 10 Baht to the Ringgit. Today, it’s 8 to 1. And to rub salt on the wound, the Ringgit ain’t particularly welcomed by our neighbours. 

Needless to say, if a trip to Thailand could make you feel kinda poor, a journey south to Singapore would make you feel like a destitute.  Think about it, a budget Hotel 81 room in the fringe of the city would cost you just about S$100, or RM310 per night.

Ringgit déjà vu?

So, will we get to see some desperately yearned for relief and recovery of the Ringgit this year?

Most pundits are telling us that the Ringgit is undervalued and will recover by the second half of this year.  PublicInvest Research said the Ringgit will recover to average between 4.10 and 4.15 for 2015 against the US Dollar, which is currently trading at 4.48.

Dato’ Seri Najib Razak would similarly like you to believe that the ringgit will recover.

“With the recent changes and developments, we are confident the ringgit will recover.  It is due to speculation by outsiders and the uncertainties in the United States that the ringgit dropped, and not because the ringgit is weak,” he said in December when the Ringgit traded at 4.42 to the Dollar.

But didn’t they all say the same thing last year?  Or for that matter, the year before?

The Prime Minister told us way back in January 2015 that the Ringgit will bounce back from the then five-year low versus the US dollar as “Malaysia's financial market is sufficiently robust”.  Believe it or not, the Ringgit was then trading at 3.60 to the Dollar, which now seemed like a parallel universe away.

If we had all trusted our Ministers and invested based on his financial advice, some of us would be bordering suicidal tendencies today.  2016 was the Ringgit’s 4th consecutive year of decline against the US Dollar.

The thing is, if everyone else had declined at the same rate against the Dollar, it wouldn’t have felt so bad.  What is particularly galling is that the Ringgit performance is the worst among all the major regional currencies.

In 2015, the excuse given was straightforward – the Ringgit suffered more because we were an oil-exporting nation.  As the price of global crude collapsed from US$102.10 in January 2014 to US$60.70 (Dec 2014) to US$36.57 (Dec 2015), it is almost understandable that the Ringgit would be disproportionately pummelled. 

The pundits had predicted that the Ringgit would recover with the recovery of oil prices last year.  They were indeed spot on in their prediction of higher oil prices with the Brent crude trading at US$55 a barrel by December 2016.  Unfortunately, despite the oil price reversal, the Ringgit value worsened significantly.

How was that even possible?

No more an export powerhouse

Back in November 2015, the then Bank Negara Governor, Tan Sri Zeti Aziz told an international audience that the Ringgit was “significantly undervalued” as our “export growth remains fairly strong”.

Except it wasn’t.

Conventional economic theory tells us that as our currency gets depreciated, our goods become cheaper and consequently the demand for them increases.  A robust increase of the export of our goods and services would in turn increase the demand for our currency and hence provide a strong platform for the recovery of our ringgit and economy.

Well, the Ringgit was massacred in 2015 when it depreciated by nearly 20%.  On paper, that makes our exports dirt cheap in 2016.  And given that we have always prided ourselves as an export-oriented economy, our goods should definitely be flying off the shelves as they became extremely competitive.

But the Government’s own statistics tell us that our exports barely eked out a gain.  The 2016/2017 Economic Report published in October 2016 tells us that our Gross Exports for January to August 2016 grew by only 1.1%, compared to 1.6% in 2015.

More specifically, the electrical and electronics exports, the pride of our manufacturing industry, grew by only 2.2%, a substantial decline from 7.4% in 2015.  While 2.2% might have been just about acceptable under normal economic circumstances, the number is pathetic given the depreciation the Ringgit suffered.

Worse news followed since the above report, when the Department of Statistics disclosed last month that our exports declined 3.0% and 8.6% for the months of September and October respectively.

Separately, the latest Nikkei Malaysia Manufacturing Purchasing Managers' Index, or PMI which measures manufacturing activities shows that the sector “in contraction territory for 21 consecutive months”.

The headline PMI posted for December was 47.1 signalling continued deterioration.  A score above 50.0 signals improvement in manufacturing conditions, and Malaysia has not reached a score of 50.0 since early 2015.

Living and La-La Land

There is no question that our economy is suffering from something chronic which needs immediate treatment.  Alarm bells should have been blaring deafeningly in Putrajaya but all we get is Ministers with their heads in the sand. 

Prime Minister Najib Razak welcomed 2017 by boasting that Malaysia has achieved a growth rate the Western world can only “dream of”.

“Our estimated growth rate of 4.3 to 4.5 percent for this year is one that developed countries in Europe and North America can only dream of.  Malaysians should be proud of the growth we are achieving.”

A statement from the Barisan Nasional strategic communications team earlier in December also boasted that “Malaysia’s economic growth is less volatile and more robust than Singapore’s as a result of the Najib administration’s shift towards the domestic economy.”

Of course the fact that developed countries have a different growth trajectory compared to developing ones was irrelevant.  What was more important to the ruling leadership was the continued thumping of the chest to praise and glorify the Emperor in the eyes of seemingly gullible Malaysians, even if the Emperor is really naked.

So what’s really happening?

A loss of confidence

The anticipated explosive growth in exports and manufacturing activity as a result of persistent depreciation of the Ringgit never materialised. Either no one wants to buy more Malaysian products even though they are significantly cheaper or more plausibly, businesses and investors are not investing in additional production capacity in Malaysia.

They are at best adopting the “wait and see” strategy or at worst, have decided in investing their money in other countries.  There could be many reasons for this, including perhaps a increasingly limited supply of skilled and quality labour, a weakening education system or the bureaucratic and corruption cost of doing business. 

However, anecdotal evidence would tell you that one of the key factors is the fact that they have lost confidence in the country.  A country led by a Prime Minister who has been indicted as one of the worlds biggest kleptocrat would and could never inspire confidence in genuine investors.

The complete failure of the institutional authorities to take enforcement actions against blatant and brazen corruption has destroyed whatever that’s left of Malaysia’s long-standing reputation as a country they could do business in.

Bank Negara saves the day?

Bank Negara Malaysia is now forced to implement increasingly desperate measures to stem to tide against the Ringgit.  They now include the restricting the off-shore trade of the Ringgit via non-deliverable forward contracts, and more controversially, the move to compel exporters to convert 75% of their proceeds into Ringgit.

The Central Bank is claiming success for its policies, stating that the measures are starting to bear fruit, following lower volatility in the ringgit.  Sure, such short term measures will provide immediate support for the Ringgit as it mops up whatever excess liquidity existing today. 

However, as explained earlier, Malaysia being an “export-oriented country” is heavily dependent on continued investments in our export sectors, manufacturing or otherwise.  If the use of your future export proceeds are restricted and the hidden cost of doing business in Malaysia increases, then who would want to invest in new or additional production capacity in the country?

Current exporters would not have a choice in the repatriation of export proceeds as demanded the authorities.  But they and future investors – both local or foreign – have a choice in where they choose to invest in the future.  With alternative competing investment destinations aplenty today, such short-term Bank Negara measures will only further dampen the medium and longer term demand for the Ringgit, jeopardising any eventual recovery.

A new normal

We used to pride ourselves as an export and manufacturing powerhouse.  We are used to being described as an “economically resilient” country, even if it was somewhat a function of striking oil lottery, especially during the decade of high oil prices.

Unfortunately, the hard statistics are becoming hard to refute.

I would be foolish to give a specific prediction of how the Ringgit will perform over the next 3, 6 or 12 months even as it hit 4.50 to the Dollar yesterday, a new record low since the Asian Financial Crisis.  However, it would be more than fair to say that the downside risks significantly outweigh the upside prospects given the reasons explained above.

For Malaysians, perhaps its time to accept the new normal.  We have lost more than 40% of our wealth in US Dollar terms over the past 3 years. The lost of wealth will be reflected in higher prices of goods and services – including the higher price of petrol as oil is traded internationally in Dollars.

Although it is not impossible, this new normal will be extremely difficult to reverse.  In fact, it more than likely to get worse given the utter inability by the Najib administration to rectify the failures of the economy.

I would be foolish to give a specific prediction of how the Ringgit will perform over the next 3, 6 or 12 months.  However, it would be more than fair to say that the downside risks significantly outweigh the upside prospects given the reasons explained above.

The only way Malaysians can hope for “the good old days” to return is to see a change of regime.  The new regime needs to cleanse the country of its kleptocratic reputation and wipe out the scourge of grand corruption from the Government.  It needs a new, intelligent economic team which isn’t encumbered by sacred cows decreed by those who are desperate to stay in power at all costs.  It really isn’t rocket science.

Then perhaps, we will see a meaningful, significant and sustained recovery of the Ringgit, and our wealth over the longer term.

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Bank Negara’s inaction and reticence, in stark contrast with Singaporean authorities' actions to protect the integrity of their banking system, abets the indictment of Malaysia as a global kleptocracy

I had on 31 October asked the Minister of Finance to state the actions taken by Bank Negara over the conduct of Ambank bankers, Joanne Yu and Cheah Tek Kuang for covering up money laundering transactions relating to the 1MDB.

The question was raised because The Wall Street Journal (WSJ) had on 6 September 2016 made very specific allegations against Ambank Malaysia and its officials of facilitating and abetting money-laundering when billions of ringgit was transferred into the bank accounts of Dato’ Seri Najib Razak.

In making the allegations, the prestigious financial paper substantiated the claims with private conversations between senior Ambank officials with Low Taek Jho, who was carrying out the transactions on behalf of the Prime Minister.

The Prime Minister had given Low access to his accounts, according to investigative documents sighted by WSJ. His primary contact at AmBank was Joanna Yu, the banker he had warned via BlackBerry to communicate discreetly. Cheah Tek Kuang, a senior AmBank executive and adviser to the bank’s chairman, handled the account personally, the BlackBerry messages indicate.

According to WSJ, Low sent hampers of food to Yu and lunched with her at noodle shops, according to the phone messages. He kept reinforcing the need for secrecy: “v v important no one should know in ambank besides u or cheah or get hold of statement,” one message said. “Cause if it gets on internet where funds were from then headache.”

Yu even made recommendations on which US correspondent bank – Wells Fargo or JP Morgan will raise less questions involving the transfers.

These messages clearly indicated a conspiracy by the above parties to at best, hide the transactions from scrutiny, and at worst, blatant masking of the illicit transactions as legitimate ones.

In his written reply, Dato’ Seri Najib Razak appeared to confirm the above allegations when he said that “Bank Negara has undertaken investigations on financial institutions relating to 1MDB under Financial Services Act 2013, Islamic Financial Services Act 2013, and Anti Money Laundering Act 2001… Based on the investigation results, enforcement actions have been duly executed by Bank Negara with the power provided to it under the law.”

However, we were never informed of what actions have been taken against Ambank or the bankers who have facilitated these illicit transactions.  In fact, as far as we are aware, both Joanne Yu and Cheah Tek Kuang are free men.

Cheah Tek Kuang who was the Group Managing Director of Ambank until his retirement in 2012 remains an advisor to the Chairman’s Office the Bank according to publicly available records.  He is also the Chairman of Berjaya Sports Toto and an Independent Director at IOI Group.

If Bank Negara has indeed taken action against him for abetting money laundering offences, can he still be Chairman and Director of publicly listed companies?

Bank Negara’s absence of any visible actions against Banks and its officers who were complicit in money laundering offences is in stark contrast with the actions taken by the Singapore authorities to defend the integrity of their banking system.

Former private banker Yak Yew Chee, who dealt with Jho Low and 1MDB has been jailed 18 weeks and fined S$24,000 for forging reference letters vouching for the Low family and for failing to report suspicious transactions involving tens of millions of dollars coursing through BSI bank in Singapore.  Yak will also surrender S$7.5 million to the State “to demonstrate his genuine contrition”.

Another former private banker with the Swiss BSI Bank, Yeo Jiawei is currently on trial over four charges for perverting the course of justice and another seven counts for money laundering, cheating and forgery over the same Jho Low and 1MDB-related scandal.

Unfortunately, the new Governor of Bank Negara Malaysia, Datuk Muhammad Ibrahim’s silence and reticence in tackling the above money laundering scandal will only serve to enhance Malaysia’s reputation as global kleptocracy.

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The Royal Malaysian Police and Bank Negara must investigate latest allegations that Ambank officials actively conspired with Jho Low to launder funds into Dato’ Seri Najib Razak's personal bank accounts

The Wall Street Journal (WSJ) had on 6 September 2016 made very specific allegations against Ambank Malaysia and its officials of facilitating and abetting money-laundering when billions of ringgit was transferred into the bank accounts of Dato’ Seri Najib Razak.

In making the allegations, the prestigious financial paper substantiated the claims with private conversations between senior Ambank officials with Low Taek Jho, who was carrying out the transactions on behalf of the Prime Minister.

The Prime Minister gave Low access to his accounts, according to investigative documents sighted by WSJ. His primary contact at AmBank was Joanna Yu, the banker he had warned via BlackBerry to communicate discreetly. Cheah Tek Kuang, a senior AmBank executive and adviser to the bank’s chairman, handled the account personally, the BlackBerry messages indicate.

On the assumption that the messages were genuine, they clearly indicated a conspiracy by the above parties to at best hide the transactions from scrutiny, and at worst, blatant masking of the illicit transactions as legitimate ones.

According to WSJ, Low sent hampers of food to Yu and lunched with her at noodle shops, according to the phone messages. He kept reinforcing the need for secrecy: “v v important no one should know in ambank besides u or cheah or get hold of statement,” one message said. “Cause if it gets on internet where funds were from then headache.”

Yu even made recommendations on which US correspondent bank will raise less questions involving the transfers.  They discussed whether to use Wells Fargo & Co. or J.P. Morgan Chase & Co.

“Can do JP, but may raise ques too…suspect better keep to wachovia,” Ms. Yu wrote, referring to a unit of Wells Fargo.

“Okay, wachovia then,” he replied. The transfer went through the Wells Fargo unit.

The above conversations raises major concerns of a high-level conspiracy to enable the money-laundering transactions to take place without being questioned or detected.

As the parties responsible for Anti-Money Laundering and Counter Financing of Terrorism Act (AMLA), the Royal Malaysian Police and particularly, Bank Negara must take immediate actions to investigate the above very serious allegations.

They must be investigated, and if found true, concrete actions must be taken to protect the integrity of our banking institutions and financial system.  Otherwise, the hard-earned reputation of Bank Negara and Malaysia will take a severe beating.

Instead, Malaysia may become an infamous haven for the rich and powerful criminals to abuse our banking institutions to hide and launder their ill-gotten wealth.

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Did Datuk Mohammad Ibrahim cut a deal not to investigate Dato’ Seri Najib Razak for money-laundering offences to secure his appointment as the new Bank Negara Governor?

New Bank Negara Malaysia (BNM) Governor, Datuk Muhammad Ibrahim announced yesterday that there would be no reopening of investigations on 1MDB despite the spate of new evidence disclosed by United States Department of Justice (DOJ). He said that the central bank has already taken all necessary action against 1MDB.

"We have completed our investigations into 1MDB based on the information and investigation papers. We have imposed a penalty on the company. We have taken all necessary action entrusted on us by the law and we have closed the investigation," Muhammad said at a press conference in Kuala Lumpur.

This single announcement has in one swift blow, destroyed all the credibility BNM has painstakingly accumulated over the past 2 decades.  The international financial community and government authorities will only laugh with incredulity how 1MDB was slapped on the wrist with an undisclosed administrative penalty when the DOJ charges that 1MDB and Malaysian officials have colluded to scam and launder more than USD3.5 billion from the company.

The Anti-Money Laundering and Anti-Terrorism Financing (Amendment) Act 2013 (“AMLA”) states that any person is deemed to have committed an offence if he or she “acquires, receives, possesses, disguises, transfers, converts, exchanges, carries, disposes of or uses proceeds of an unlawful activity” or “removes from or brings into Malaysia, proceeds of an unlawful activity”.

Bank Negara Malaysia, as the competent authority under the AMLA, must hence not abdicate from its responsibility to commence investigations into the above highly suspicious transactions for all relevant offences under the Act.

Worst, the DOJ specified that a significant part of the laundered funds found its way into the Malaysian banking system.  In particular, the charges established that USD731 million was deposited into the personal bank account of a “Malaysian Official One” (MO1) between 2011 and 2013. And the Minister in the Prime Minister’s Department, Dato’ Seri Rahman Dahlan acknowledged that only an idiot would not know that MO1 refers to Dato’ Seri Najib Razak.

In addition, it is also an offence when one “conceals, disguises or impedes the establishment of the true nature, origin, location, movement, disposition, title of, rights with respect to, or ownership of, proceeds of an unlawful activity”.

Dato’ Seri Najib Razak has not only received the illicit funds, he had tried to conceal the transfers by pretending that it is a “donation” from some mysterious unnamed Arab donor, which has now proven to be a complete lie.

The question for the Bank Negara Governor is very simple - has Dato’ Seri Najib Razak been investigated for multi-billion ringgit money laundering scam which has been highlighted by the US DOJ?

As far as we are aware, based on public announcements by BNM, 1MDB has only been investigated for improper disclosure to the central bank for its fund transfers overseas.  The elements of a money laundering conspiracy involving top 1MDB officials and the Prime Minister has never been carried out.

Why is Dato’ Seri Najib Razak immune to money laundering investigations by BNM?  Why is Datuk Mohammad Ibrahim failing to restore the integrity and protect the sanctity of our financial system from money laundering activities aggressively like other jurisdictions?

The Rakyat are now asking if this is because the newly appointed Governor has struck a secret deal with the Prime Minister to secure his appointment?

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1MDB, a simple yes or no will do: have billions of dollars of 1MDB's money been “misappropriated” and “embezzled”?

1MDB must not evade the factual allegations laid out by the US Department of Justice but answer the simple question if billions of dollars of its money have been “misappropriated” and “embezzled”.

In the face of allegations by the United States (US) Department of Justice (DOJ) that US$3.5 billion or more have been misappropriated and embezzled from 1MDB, the state-owned investment fund provided the world with the most ludicrous response.

1MDB merely responded that “it is not a party to the civil suit, does not have any assets in the United States of America, nor has it benefited from the various transactions described in the civil suit”.

The outstanding management led by Arul Kanda at 1MDB must surely realise that the DOJ never made 1MDB “party to the civil suit”. Neither did they accuse 1MDB of having “assets in the United States of America”.

The US DOJ has laid out the entire scam claiming 1MDB was a victim of a multi-billion-dollar international fraud.

Hence the question 1MDB must respond to is whether it finally accept that it is a victim of a treasonous fraud in the light of the lorry-load of hard evidence presented.

Or is Arul Kanda and his team still oblivious to the entire scam where multi-billion dollars have been lost?  How difficult is it for these super-clever to executives to figure out if the money is missing or otherwise?

For example, the BSI Bank Singapore has been shut down, but where is the US$940 million which was purportedly parked in the bank?  Did it vanish into thin air as well?

Or the purported US$1.56 billion of “investments” in the dodgy investments funds identified by the US DOJ – Devonshire, Enterprise and Cistenique – are they still in existence?

Or the fact that the US DOJ, like Bank Negara Malaysia, has established clearly that Good Star Limited, which received US$1.03 billion directly from 1MDB, is indeed owned by Low Taek Jho, and not by Petrosaudi International Limited as claimed – is 1MDB still in denial?

Or, more plausibly, Arul Kanda and his team are conniving conspirators in the entire scam. Is he is doing his utmost to cover up the scam which involved the Malaysian Prime Minister himself embezzling more than US$700 million into his personal account?

We call upon the newly appointed Board of Directors of 1MDB, led by its new Chairman, the Treasury-General, Tan Sri Irwan Serigar to not repeat the disgraceful failures of the previous Board.  He must, as the country’s top financial civil servant, act without fear or favour in the interest of the Malaysian tax-payers.

If the President of 1MDB, Arul Kanda is not acting in the interest of the shareholder, then fiduciary duty demands that Tan Sri Irwan Serigar sack the entire 1MDB top management with immediate effect. The Chairman must state openly, if 1MDB has indeed been a victim of fraud and seek the return of the pilfered proceeds back to the country.

In the light of the size and scale of the scandal, the Board of Directors must also place 1MDB under temporary management by the remaining Big Four audit firm which has not been tainted by the scandal, PriceWaterhouse Coopers.

If Tan Sri Irwan Serigar fails to act in the interest of Malaysian tax-payers, then he himself will be guilty of conspiring with the evil wrong-doers which committed the mult-billion dollar heist of the century.  Pakatan Harapan leaders will then demand for the Treasury-General to be sacked in disgrace.

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What has happened to the complaint filed with the Malaysian Institute of Accountants against KPMG and Deloitte which were filed more than a year ago?

I have filed complaints against the auditors of 1Malaysia Development Bhd (1MDB) against KPMG and Deloitte Malaysia, their partners Ahmad Nasri Abdul Wahab and Ng Yee Hong, in March and June 2015 respectively with the Malaysian Institute of Accountants (MIA).

I had alleged that both firms intentionally and/or negligently failed to conduct sufficient and necessary due diligence and audit of 1MDB which have resulted in the filing of fraudulent 1MDB annual financial statements.

My complaint against KPMG was for its failure to take into consideration the material disclosures of the transactions which took place in 1MDB’s then US$1 billion investment to form an aborted joint venture with Petrosaudi International Limited in 2009-2010.

Of the above sum, Bank Negara Malaysia (BNM) has confirmed to the Public Accounts Committee (PAC) that US$700 million was siphoned to an unrelated company, Good Star Limited whose ultimate beneficiary was Low Taek Jho, or more popularly known as Jho Low.

In fact, KPMG performed the arguably record-breaking feat of signing off the March 2010 financial audit within 3 weeks after being appointed in September 2010, after the original auditors Ernst & Young (EY) were sacked. EY had refused to sign off 1MDB’s financial statement due to irregularities in the transactions with Petrosaudi.

Most crucially, KPMG also intentionally and/or negligently failed report the fact that 1MDB’s sale of its shares in the joint venture with Petrosaudi and their conversion into a loan took place after the March 2010 financial year.  As a result, 1MDB was able to report artificially inflated profits and failed to disclose the key transactions which were highly dubious within 1MDB Petrosaudi Limited.

Deloitte Malaysia had taken over from KPMG after the latter was sacked by 1MDB in December 2013.  KPMG had refused to sign off the March 2013 accounts because it was unable to verify the authenticity of 1MDB’s US$2.318 billion investment in a dodgy investment fund parked in Cayman Islands.

I had accused Deloitte Malaysia of intentionally and/or negligently failing to conduct sufficient and necessary due diligence and audit of the cash flow and liquidity risk 1MDB.   Deloitte endorsed 1MDB as a going concern on 5 November 2014, after which 1MDB immediately failed to repay a RM2 billion loan at the end of November 2014.

This was because Deloitte Malaysia has failed to perform a thorough authentication and verification of 1MDB’s investment in the Cayman Islands, which turned out to be fraudulent.  Of the US$2.318 billion investment, US$1.15 billion has "disappeared" into the now exposed fake Aabar Investment PJS Limited which was incorporated in the British Virgin Islands.

The balance of US$940 million was supposedly kept in BSI Bank, Singapore.  However, the sum appears to have disappeared altogether after the Singapore authorities shut down the bank for facilitating money laundering.

In addition, Deloitte Malaysia has failed in its audit of 1MDB’s financial statements for March 2013 and 2014 when it failed to properly expense the stock options which 1MDB had granted to Aabar.  The failure to account for the stock options granted, worth at least US$993 million (RM4 billion) meant 1MDB reported over reported profits of RM778 million in 2013 and under reported loss of only RM669 million in 2014.

As of today, 1MDB has yet to file its accounts for March 2015 while Deloitte remains their auditors.

It is now 16 and 14 months since I’ve filed the respective complaints with the MIA.  The MIA is the statutory body established the Accountants Act, 1967 to regulate and develop the accountancy profession in Malaysia.

However, I have not heard from MIA in more than a year.  No action seems to have taken place.  Investigations, if any, appears not to have achieve any outcomes.

I call upon the MIA Council led by its President, Dato Mohd Faiz Mohd Azmi to explain the snail’s pace of dealing with the above complaints, despite their severity and scale, as well as the involvement of high profile public interest.

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Who is Datuk Hasan Arifin trying to protect when he works so hard to hide the fact that Good Star Limited belongs to Jho Low?

The Malaysian public can now see for themselves the types of challenges the opposition members of the Public Accounts Committee (PAC) faced when dealing with a Chairman the likes of Datuk Hasan Arifin.

Despite the overwhelming evidence to the contrary, Datuk Hasan Arifin made the outright denial that Good Star Limited belonged to Low Taek Jho, or better known as Jho Low.  Good Star Limited has received US$1.03 billion of direct payments from 1MDB from 2009 to 2011.

“Selaku Pengerusi PAC saya ingin menafikan bahawa pemilik Good Star Limited adalah Low Taek Jho seperti yang dinyatakan oleh akhbar Wall Street Journal dengan mengaitkan surat Bank Negara terhadap Jawatankuasa ini,” he said.

This outrageous denial was made despite the Bank Negara disclosed that 2 foreign regulatory authorities confirmed to Bank Negara that the sole beneficiary of Good Star Limited was Jho Low and the ownership status never changed since its inception in June 2009.

Instead, he chose to dismiss Bank Negara’s letter claiming that the information provided is of “intelligence grade” (bertaraf risikan).  Hence, since the PAC is not an “intelligence agency”, we are unable to verify the authenticity and truth of the information.

This must be the most gravity-defying acrobatic twist of logic from the Chairman who was only appointed to lead the committee in October last year.  An “intelligence grade” piece of information does not require an intelligence agency to make use of the intelligence reports.

On the contrary, the “intelligence grade” information should be taken as the likely truth unless otherwise proven because it was intelligence received from Bank Negara’s counterparts in foreign countries.

Furthermore, if “intelligence grade” information from Bank Negara cannot be believed, then why should the PAC Chairman accept at face value the letter from Petrosaudi acknowledging Good Star Limited as its subsidiary by mere assertion, unsupported by any documentary evidence? We don’t even know if the letter provided by 1MDB is genuine! Is he claiming that Bank Negara far less trustworthy than 1MDB, the very company the PAC is tasked to investigate?

Datuk Hasan Arifin then argued that because the letter was of “intelligence grade”, information contained in the letter cannot be included in any reports produced by the PAC.

However, he neglected to mention that Bank Negara specifically provided that the PAC can be allowed to use the information contained in its letter for PAC’s publications on the condition that “approval from the foreign regulatory authorities be obtained via Bank Negara in advance”. (Sekiranya PAC bercadang untuk menggunakan maklumat di dalam dokumen awam, kebenaran dari negara-negara terlibat melalui Bank perlu dipohon terlebih dahulu.)

What’s more, the letter would provide the necessary leads for the PAC to investigate further into the multi-billion dollar embezzlement which took place. For example, the PAC would then have the strong basis to summon Jho Low to testify to the Committee.

In addition, Datuk Hasan Arifin did not respond to the question as to why he refused to share the “intelligence grade” letter to the PAC members?  He claimed that the letter was addressed to him confidentially, but the contents of the Bank Negara letter repeatedly made reference to the information which was “provided to the PAC”. (pendedahan maklumat pendaftaran GSL adalah terhad kepada PAC…)

Therefore Datuk Hasan Arifin’s media response yesterday did not absolve him from his role in covering up the 1MDB scandal.  Instead it only confirmed that he is either a complete illiterate who could not read and understand basic Bahasa Malaysia, or more likely, he is abusing his position as the PAC Chairman to obstruct the investigations into the single largest financial scandal in the history of the country.

As such, Datuk Hasan Arifin’s response reinforced our calls for him to resign as the PAC Chairman because Malaysians can no longer trust him to carry out his role honestly, professionally and with integrity.

The top most question now which he must answer is, why is he going all out to hide Jho Low’s connections to Good Star and 1MDB, even at the cost of making him look like a complete idiot?  Is it because Jho Low will be the key to unlock the mystery of how billions of ringgit might have found its way to Dato’ Seri Najib Razak and his family’s personal wealth?

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The "cari makan" chairman of PAC must resign for lying to the committee, suppressing evidence and obstructing investigations into 1MDB!

The Public Accounts Committee members were baffled as to why Datuk Hasan Arifin had unilaterally deleted sentences from the finalised PAC Report on 1MDB which quoted Bank Negara who disclosed that the “ultimate beneficiary of Good Star Limited is an individual not related to Petrosaudi International Limited”.

We were further stumped by Datuk Hasan Arifin’s failure to disclose to PAC members another letter from Bank Negara dated 6 April 2016, a day before the final PAC report was tabled in Parliament. When we discovered the existence of the letter via a ministerial reply in Parliament on 17 May 2016, we had confronted the PAC Chairman at our meeting the very next day.

All PAC opposition members were left speechless when Datuk Hasan refused to share the contents of the Bank Negara letter with us. We could not understand Datuk Hasan’s claims of confidentiality when PAC members were even authorised to review the Auditor-General’s Report on 1MDB which was classified under the Official Secrets Act (OSA).  What could possibly be more confidential than OSA documents?

Datuk Hasan’s highly suspicious behaviour led us to believe that the Bank Negara letter responding to queries from the PAC must have contained some damning information on 1MDB. I had speculated two days ago that Bank Negara must have outed Low Taek Jho, better known as Jho Low as the sole beneficiary of Good Star Limited and demanded that the PAC Chairman confirm or deny my allegation.

Datuk Hasan Arifin refused to respond to the press despite repeated queries.

Malaysians are ashamed because we have to depend on the foreign media, The Wall Street Journal in this case, to expose the truth contained in the said letter.  The letter dated 6 April 2016 from Bank Negara to the PAC clearly stated that Good Star Limited is “beneficially owned by Low Taek Jho” and that there was never any change of ownership in the company.

This crucial piece of information opens up a whole Pandora’s Box and confirmed what critics like The Sarawak Report, The Edge publications and opposition Members of Parliament have accused 1MDB all along, that out of the US$1.83 billion investment 1MDB carried out with Petrosaudi International Limited, at least US$1.03 billion have been directly misappropriated to Good Star Limited, owned by Jho Low.

This incontrovertible evidence tears to shreds the pretense by Dato’ Seri Najib Razak and 1MDB’s top officials that Good Star Limited belongs to the Petrosaudi group, a claim which was not backed by any legally-admissible documentary evidence.

This vital evidence, if taken into consideration by the Auditor-General and the PAC, would have made the already damning PAC report even more devastating. Fraud, while previously suspected, would have been confirmed.

In fact, had Datuk Hasan Arifin shared the Bank Negara letter with the PAC members, a whole new front of investigations would have been opened, including summoning Jho Low to testify before the PAC. Instead, he lied to the PAC members claiming that the Bank Negara letter was intended for his eyes only. This was despite the letter clearly making reference to the information being provided to the PAC for deliberations.

Hence it cannot be clearer that Datuk Hasan Arifin has been nominated by Dato’ Seri Najib Razak and Barisan Nasional to hamper and cover up the investigations into 1MDB.  The PAC Chairman has denigrated his parliamentary position to become a tool to help the crooks who stole billions of dollars of Malaysian tax-payers’ money.

He has lied to and acted against the decisions of the PAC. He has suppressed crucial evidence to cover up shenanigans multi-billion ringgit fraud by the powers that be. He obstructed the parliamentary investigation into the single largest scandal in the history of Malaysia.

Datuk Hasan Arifin’s position as the PAC Chairman is no longer tenable because Malaysians can no longer trust him to carry out his role honestly, professionally and with integrity.  We now call upon Datuk Hasan Arifin to resign as the Chairman of the PAC because he has brought disrepute to the committee and disgraced the Parliament.

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Will BNM follow the footsteps of Swiss and Singaporean authorities in investigating the suspected money-laundering related to 1MDB and Dato' Seri Najib Razak?

Switzerland's Office of the Attorney General (OAG) has commenced criminal proceedings against BSI SA Bank for facilitating the offences of money laundering and bribery of foreign public officials in relation to 1MDB.

Simultaneously, the Monetary Authority of Singapore shut down BSI Bank operations in the island-state. The grounds provided include "serious breaches of anti-money laundering requirements, poor management oversight of the bank's operations and gross misconduct by some of the bank's staff".

In contrast, what has Bank Negara done to protect the integrity of our financial system? Despite the fact that Malaysia is being ridiculed globally and cited as an example of a rogue state run by kleptocrats, Bank Negara has barely bared its purportedly powerful fangs to indict those who have been responsible.

Despite being arguably the most “aggressive” regulatory agency to investigate 1MDB in Malaysia, Bank Negara barely scratched the surface of the entire scandal.

The central bank had made hue and cry over how 1MDB illegally transferred US$1.83 billion overseas, and the demands that 1MDB return the funds immediately.  But it all ended with a whimper when Bank Negara agreed to close the chapter by slapping 1MDB on the wrist with a compound. 1MDB proudly issued a statement that it has paid the fine yesterday.

To rub salt on Malaysians’ wounds, the quantum of the fine was undisclosed, so it could be a pitiful RM4,000 for all we know.

Hence instead of becoming the agency which acts without fear or favour that Malaysians are proud of, Bank Negara has blemished it’s much-vaulted reputation and brought shame to the country.

Instead today, Bank Negara allowed itself to be used by the alleged money-laundering suspects to acquit themselves.

Department of Special Affairs (Jasa) director-general and an UMNO warlord, Mohd Puad Zarkashi when explaining Dato’ Seri Najib Razak’s “donation” scandal, told students in Australia that the Prime Minister had discussed the matter with then Bank Negara governor Zeti Akthar Aziz and even received the central bank's approval to bring in the money.

Dato’ Seri Najib Razak has been accused of receiving more than US$1 billion (RM4.1 billion) in his personal account with AmBank Bhd, a sum which he had not denied.

Hence the question for Bank Negara is, did Dato’ Seri Najib Razak indeed obtained approval from Bank Negara and has the information on the source of funds been diligently verified since it has brought disrepute to the country?

Segambut Member of Parliament, Lim Lip Eng had already submitted a letter on 5 August 2015 asking the central bank to clarify if the transaction complied with the Anti-Money Laundering and Anti-Terrorism Financing Act 2013 (“AMLA”).

Under Section 4 of the Act, any person is deemed to have committed an offence if he or she:

a)  engages, directly or indirectly, in a transaction that involves proceeds of an unlawful activity or     instrumentalities of an offence;
b)  acquires, receives, possesses, disguises, transfers, converts, exchanges, carries, disposes of or uses proceeds of an unlawful activity or instrumentalities of an offence;
c)   removes from or brings into Malaysia, proceeds of an unlawful activity or instrumentalities of an offence; or
d)  conceals, disguises or impedes the establishment of the true nature, origin, location, movement, disposition, title of, rights with respect to, or ownership of, proceeds of an unlawful activity or instrumentalities of an offence,

Dato’ Seri Najib Razak and his UMNO cheerleaders have insisted that the incredibly large sums the Prime Minister received were “donations” from an unnamed Middle-Eastern individual.  However, that excuse, even if it were unbelievably true, does not absolve the Prime Minster from the purview of AMLA.  That is because even a “donation” could have originated from illegal and illicit sources via complex money-laundering mechanisms.

Bank Negara Malaysia, as the “competent authority” under the AMLA, must confirm if the Prime Minister has been investigated under the law and if he has been cleared.  Silence from Bank Negara is not an option.

The failure to investigate or confirm the above would only mean that the central bank has abdicated its powers and severely neglected its responsibility to protect the integrity of our financial system, especially when compared to the actions of foreign central banks to date.

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