مهاتير محمد's Blog, page 41

TAXES

1. One of the greatest achievements of Malaysia is in the collection of taxes. Malaysians willingly pay taxes. They fear legal action being taken against them. They fear more the raids on their businesses and residences by the income tax authorities. I know this because I was raided when I was expelled from the party and was working as a medical practitioner.

2. They got hold of my cheque stubs and nothing I said would convince them that the money in my account was not all mine. In the end I had to pay more than twice what they claimed I had not declared.

3. The income tax people are always on the lookout for people who live beyond their means. They would raid these people and would force them to pay additional tax should they feel that the culprit had not paid up fully on their wealth.

4. But of late we see some selectivity in the focus of the income tax people.

5. For example the step son of the Prime Minister is reported to have spent hundreds of millions of USD or Ringgit buying luxury residences in London, New York and Hollywood. He also expended many millions to finance the production of the film “The Wolf of Wall Street”.

6. When the Prime Minister’s Office claimed it was inherited money the brothers of Najib protested. Their father was not rich and did not leave hundreds of millions of Ringgit to the family. Even Najib had to admit that Tun Razak did not have such money to leave to his family. So where did this money come from?

7. It was claimed that the money was from business. If he made so much money from business he would have paid income tax. Has the income tax people investigated him regarding his business profits. How much tax had he paid. It is a secret of course. But I hope it is not a cover-up.

8. Then there is Jho Low. He bought a bank for 260 million US dollars. Where did he get the money. Is it borrowed? Did he sell the bank and paid taxes on the profit.

9. He also bought luxury flats in New York and Hollywood. Where did the hundreds of millions he paid for all these come from? Has he paid tax on them?

10. I believe executives of 1MDB and its subsidiaries are paid high salaries. Have they paid taxes on their earnings?

11. I understand that the Prime Minister as adviser to 1MDB is not paid anything. He is paid the Prime Minister’s salary, which I know is far smaller than what business executives get. But the Government pays allowances, the electricity and water bills, transportation, home, etc. So the salary can all be saved and spent.

12. But still the lavish lifestyle must cost a packet. It must be more than what I saved after 29 years in the Government.

13. It is a secret of course. But I just want to ask, has the income tax people investigated the source of the money and the tax paid.

14. We talk about equality before the law. In this country even the rulers are subject to certain laws. It is the essence of justice. We must be equal before the laws and we must be seen to be equal. Everyone who should be investigated by Government agencies must be investigated. There should be no discrimination.

VERSI BM

CUKAI

1. Salah satu pencapaian terbesar Malaysia adalah dalam kutipan cukai. Rakyat Malaysia dengan rela hati membayar cukai. Mereka takut tindakan undang-undang diambil terhadap mereka. Mereka lebih takut lagi jika serbuan dibuat ke atas perniagaan dan kediaman mereka oleh pihak berkuasa cukai pendapatan. Saya tahu ini kerana saya diserbu apabila saya dipecat daripada parti dan bekerja sebagai seorang pengamal perubatan.

2. Mereka dapatkan potongan buku cek saya dan tiada apa yang saya katakan dapat meyakinkan mereka bahawa wang dalam akaun saya bukan semuanya milik saya. Akhirnya saya terpaksa membayar lebih daripada dua kali ganda apa yang mereka mendakwa saya tidak isytiharkan.

3. Orang-orang cukai pendapatan sentiasa mencari-cari orang-orang yang hidup di luar kemampuan mereka. Mereka akan membuat penyerbuan atas orang-orang ini dan akan memaksa mereka membayar cukai tambahan jika sekiranya mereka rasakan bahawa pelakunya tidak membayar penuh mengikut kekayaan mereka.

4. Tetapi akhir-akhir ini kita lihat sikap memilih dalam tumpuan orang-orang cukai pendapatan.

5. Sebagai contoh, anak tiri Perdana Menteri dilaporkan telah membelanjakan beratus-ratus juta USD atau Ringgit membeli kediaman mewah di London, New York dan Hollywood. Beliau juga membelanjakan berjuta-juta membiayai pengeluaran filem “The Wall Street Wolf”.

6. Apabila Pejabat Perdana Menteri mendakwa inilah wang yang diwarisi, saudara-saudara Najib membantah. Bapa mereka tidak kaya dan tidak meninggalkan beratus-ratus juta Ringgit untuk keluarga. Malah Najib terpaksa mengakui bahawa Tun Razak tidak mempunyai wang sebanyak itu yang ditinggalkan kepada keluarganya. Jadi dari manakah wang ini datang?

7. Adalah didakwa bahawa wang itu adalah daripada perniagaan. Jika dia telah membuat begitu banyak wang daripada perniagaan pasti beliau akan membayar cukai pendapatan. Sudahkah orang-orang cukai pendapatan siasat beliau mengenai keuntungan perniagaannya? Berapa banyak cukai telah dia bayar? Sudah tentuIah ini adalah rahsia. Tetapi saya berharap ini bukan satu penyelindungan (cover-up).

8. Kemudian ada pula Jho Low. Dia membeli sebuah bank dengan harga US$260 juta. Dari mana beliau dapat wang ini? Adakah ia dipinjam? Adakah dia telah menjual bank ini dan membayar cukai ke atas keuntungan.

9. Beliau juga telah membeli rumah-rumah pangsa mewah di New York dan Hollywood. Dari mana datangnya beratus-ratus juta wang yang diguna untuk membayar semua ini? Adakah dia telah membayar cukai atas mereka?

10. Saya percaya eksekutif-eksekutif 1MDB dan anak-anak syarikatnya dibayar gaji yang tinggi. Ada mereka membayar cukai ke atas pendapatan mereka?

11. Saya difaham bahawa Perdana Menteri, sebagai penasihat kepada 1MDB, tidak dibayar apa-apa. Dia dibayar gaji Perdana Menteri, yang saya tahu adalah jauh lebih kecil daripada apa yang eksekutif perniagaan dapat. Tetapi Kerajaan membayar elaun-elaun, bil elektrik dan air, pengangkutan, tempat tinggal dan lain-lain. Oleh itu, gaji semua boleh disimpan dan dibelanjakan.

12. Masih, gaya hidup yang mewah pasti melibatkan kos yang tinggi. Pasti lebih daripada apa yang saya simpan selepas 29 tahun di dalam Kerajaan.

13. Sudah tentu ini adalah rahsia. Tetapi saya ingin bertanya, sudahkah orang-orang cukai pendapatan menyiasat sumber wang dan cukai yang dibayar?

14. Kita bercakap mengenai kesamarataan di sisi undang-undang. Di negara ini raja-raja pun tertakluk kepada undang-undang tertentu. Ia adalah intipati keadilan. Kita mesti sama rata di sisi undang-undang dan kita perlu dilihat sama rata. Setiap orang yang perlu disiasat oleh agensi-agensi Kerajaan mesti disiasat. Tidak boleh ada diskriminasi.

COMPETITION IS GOOD

1. Competition is good, says the CEO of the Malaysian Automotive Institute (The Edge Malaysia, June 22, 2015). It will benefit consumers and allow local industry players to explore export market.

2. It is therefore good that the Malaysian automotive industry should compete with cars imported from Japan, Korea, China and Germany. Incidentally these countries impose conditions and standards which prevent Malaysian cars from being imported into their countries to compete. So the consumers in Japan, Germany, Korea and China cannot enjoy the benefits of competition like their Malaysian counterparts

3. Some of us may have noticed that in sports for example competition is between people of the same category by age or in football by division. In golf handicaps are given so that the competition would be fair.

4. It is always the same in all competitions. We compare apple to apple and not apple to oranges.

5. Apparently in Malaysia some people may not have noticed it. They have not noticed that the Malaysian industrial capacity is not at the same level as Japan, Korea, China or Germany. We may win in a Quran competition but not, I think, in the automotive field. We do well in badminton and squash but not in football.

6. However if competing is what we have to do to benefit the consumers, we will do it. After all there are more consumers than people in the automotive industry.

7. If we lose we may have to close down. A hundred thousand or so workers, engineers and managers will lose their jobs. Their families will suffer. But that is alright because the consumers will get better cars at lower prices from foreign countries.

8. Of course a lot of Malaysia’s money would flow out to the rich countries and their workers will get higher incomes. But it is Government policy to support imports and we have to accept it.

9. So let us compete and let our consumers enjoy the benefit. The people who lose their job would not be able to consume. But that is a small price to pay.

VERSI BM

PERSAINGAN ADALAH BAIK

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1. Persaingan adalah baik, kata Ketua Pegawai Eksekutif Institut Automotif Malaysin (The Edge Malaysia, 22 Jun 2015). Ia akan memberi manfaat kepada pengguna dan membolehkan peserta industri tempatan untuk meneroka pasaran eksport.

2. Oleh itu, adalah baik bahawa industri automotif Malaysia bersaing dengan kereta-kereta import dari Jepun, Korea, China dan Jerman. Secara kebetulan negara-negara ini mengenakan syarat-syarat dan piawai yang menghalang kereta Malaysia diimport ke dalam negara mereka untuk bersaing. Jadi, pengguna di Jepun, Jerman, Korea dan China tidak dapat menikmati manfaat daripada persaingan seperti rakan-rakan mereka dari Malaysia

3. Sesetengah daripada kita mungkin sedar bahawa dalam sukan misalnya, pertandingan adalah antara orang-orang mengikut kategori yang sama berdasarkan umur atau dalam bola sepak mengikut bahagian. Dalam golf “handcap” diberi supaya pertandingan berlaku adil.

4. Ia adalah sentiasa sama dalam semua pertandingan. Kami membandingkan epal dengan epal dan tidak epal dengam oren.

5. Rupa-rupanya di Malaysia sesetengah orang mungkin tidak sedar perkara ini. Mereka tidak sedar bahawa kapasiti industri Malaysia tidak berada pada tahap yang sama seperti Jepun, Korea, China atau Jerman. Kami boleh menang dalam pertandingan Quran tetapi, saya fikir, tidak dalam bidang automotif. Kami cemerlang dalam badminton dan skuasy tetapi tidak dalam bola sepak.

6. Walau bagaimanapun jika bersaing adalah apa yang perlu kita lakukan untuk memberi manfaat kepada pengguna, maka kita akan melakukannya. Lagi pun terdapat lebih ramai pengguna daripada orang-orang dalam industri automotif.

7. Jika kita rugi kita mungkin terpaksa gulung tikar. Seratus ribu atau lebih pekerja, jurutera dan pengurus akan kehilangan pekerjaan mereka. Keluarga mereka akan menderita. Tetapi itu tidak mengapa kerana pengguna akan mendapat kereta yang lebih baik pada harga yang lebih rendah dari negara-negara asing.

8. Sudah tentu banyak wang Malaysia akan mengalir keluar ke negara-negara kaya dan pekerja-pekerja mereka akan mendapat pendapatan yang lebih tinggi. Tetapi adalah dasar Kerajaan untuk menyokong import dan kita perlu menerimanya.

9. Oleh itu marilah kita bersaing dan membolehkan pelanggan kita menikmati manfaatnya. Orang-orang yang kehilangan pekerjaan akan hilang daya sebagai pengguna, Tetapi ini adalah harga kecil untuk dibayar.

JUST JUSTO

1. Some people are very excited about Justo. Now they say the critics of the Prime Minister should apologise. Apologise for what? The fact remains that vast amounts of money has disappeared. Can Justo bring all the money back?

2. Justo was dismissed and Petro Saudi gave him 15 million Ringgit. Is he being bribed or what? That is a handsome amount to pay an employee or director after he had done something wrong. Normally he would just be kicked out. But we are told he is not happy with this amount and demanded for more or else he would leak documents. What is the proof that he tampered with the documents or he has more incriminating documents. How does he negate the fact as admitted by the Prime Minister in a written reply to Parliament? He said that, “a US1.9 billion dollar loan from 1MDB to a subsidiary of Petro Saudi International Limited was in order to reduce the risk on the equity holding.” Giving a loan to a joint-venture partner who was found unsuitable as a JV partner would increase the risk, not reduce it.

3. When the JV was dissolved after only 6 months of its formation, it must be because 1MDB realised that the venture was bad. What it should do is to demand the equity and the loan amounting to US1.9 billion be returned. Instead it was converted into a loan (murabahah).

4. Having given this US1.9 billion loan, where is the money now? The Government has not clarified. Is it in Cayman Islands, or in Singapore or where. That amount of money cannot be shifted around without being recorded by the banks involved. Surely Najib knows. Yet the money has not returned.

5. Even if Justo tampered with the e-mail, it does not alter the fact that 1MDB forked out US1.9 billion to the JV with Petro Saudi, which within 6 months was so worthless that the JV was aborted. And after that the investment and the loan of US700 million was converted to a loan to a partner you no longer believe could deliver through the JV. You had some direct control over a JV, but not over the borrower.

6. So what has all this to do with Justo blackmailing Petro Saudi: N othing.

7. The supporters of the Prime Minister seem unable to understand that 1MDB borrowed 42 billion Ringgit to invest in shady businesses. In the process large amounts of money has disappeared.

8. It is not just about Petro Saudi or the JV. The money has been used to buy IPP at inflated prices. This is wrong. Attempts to sell to Tenaga have only cause Tenaga shares to fall. Unless the IPP are sold at a loss there is no way investments in Edra would give profits. But if the sale is at a loss 1MDB will face problems of paying debts.

9. The restructuring of 1MDB seems to be based on settling the 42 billion Ringgit loan.

10. The money is to come from the sale of TRX and Bandar Malaysian land. 1MDB paid extremely low price for this land. But can 1MDB do so?

11. The London Stock Exchange News Service reported that International Petroleum Investment Company (IPIC), Aabar Investments PJS entered into a binding term sheet with Minister of Finance Inc., Ministry of Finance and 1MDB for the following.

– IPIC on 4 June, 2015 provides US1 billion to 1MDB to utilise immediately to settle certain of its liabilities.

– Also on 4 June ’15 IPIC has assumed the obligation to pay all interest due under two IPIC guaranteed 1MDB financing accounting amounting to US3.5 billion (RM13.3 billion) in aggregate principal amounts.

12. For this takeover of the loans, on 30 June, 2016, IPIC is to receive transfer of assets with aggregate value of an amount which represent the sum of the cash payment (US1 billion or RM3.8 billion), and the assumption of the debt of US3.5 billion or RM13.3 billion.

13. IPIC has met the cash payment and will meet the interim interest payment.

14. Curiously no mention is made of what the 1MDB asset are which will belong to IPIC.

15. What are the possible assets? If it is the power plants or the land, it would mean that these assets no longer belong to 1MDB to sell. So how does 1MDB recover the RM42 billion it had borrowed?

16. Is Justo going to reveal there is anything worse than what the London Stock Exchange has revealed? So who needs to apologise?

RACIAL EQUALITY

1. “Foreign Affairs” is an American magazine. It is highly respected in America but it is not my favourite magazine.

2. Recently while flying I came across its latest edition. Its theme in the issue is on race and colour and on how they affect relations between people. I became interested because I felt sure the magazine would have nothing good to say about Malaysia.

3. There is an article on colour-blindness in America – meaning to say that all Americans of whatever colour are equal. Apparently the equality between people of different colours has not produced good results. What it really means is that everything, including opportunities must be based on merit.

4. Sure there is a black man sitting in the Presidential chair in the White House. There was once a black general as Chief of the armed forces of America and as Secretary of State. And there has been and there are presently blacks holding high office in Washington.

5. But the fact remains that most of the blacks are poor, are constantly involved in drugs and crimes. Despite the blacks making up just about 10% of the population, the percentage of blacks in prison is nearly 50%. The per capita income of the blacks are well below the national average.

6. Being equal with the whites has not benefitted the blacks much. No mention is made of the deliberate killings of blacks by the police, who then escape indictment.

7. As I expected the magazines included a study of Malaysia’s record on race relations. It admitted that despite the affirmative action under the New Economic Policy, Malaysia’s economy performed better than most other developing countries. The races seem to be living in relative harmony. There were no serious racial clashes.

8. The affirmative action under the NEP seem to have reduced the disparity in wealth distribution between the indigenous Malays and the Chinese. There is mention of the bumiputra’s owning only 2 per cent of the countries wealth before NEP and their wealth has now increased to 19%. The disparity is still there but is much reduced. (In America Joseph Stiglitz writes that the disparity between rich and poor has reached a dangerous level).

9. India and South Africa have also tried affirmative action. But their results are not as good as in Malaysia.

10. It would seem that Malaysia has done a better job of building a more equitable multiracial society than most multiracial countries including the US. The policy of equality of treatment i.e. meritocracy has not yielded tangible results.

11. The magazine Foreign Affairs seems to admit that Malaysia’s affirmative action has merit. Like the reversal of the opinion on Malaysia’s fixed exchange rate policy, there now seem to be a reversal of condemnation of our affirmative action, at least by the Foreign Affairs magazine. Other foreign media simply copy the biased reports made a long time ago without trying to investigate the realities regarding Malaysia’s management of race relations and development of its economy.

THE 1MDB REPLY

1. To all my criticisms 1MDB, can only say that they are all wrong. But there are no proofs given. The answer is always about secrecy of Government matters.

2. I know about the TIA refusal to allow the future products of Terengganu oil wells to be used as collateral by talking to the people who were actually involved with the TIA. The Federal Government as guarantor for the RM5 billion loan was because Terengganu rejected the absurd. Why should Terengganu pull out of the Federal Government’s initial proposal that its oil wells future production be the collateral.

3. No Cabinet paper on the 5 billion loan was presented. Produce the paper for the public to see. Of course you will say Cabinet papers are secret.

4. If the loan is not off-budget then show in the Government yearly budget provision for raising the loans. There is none.

5. There are written evidence about Golden Sachs terms for the bond issue. Show that Golden Sachs or Ambank did not impose high interest rate and 10% commission on the loan. Don’t just say it is a secret.

6. So 1MDB issued a 30-year bond. When it borrows money the suggestion is made that 1MDB would make money.

7. The yields accrue of 6.15% or whatever is for the purchasers of the bonds. 1MDB will have to dole out money for 30 years as interest which means it borrows now and our children will bear the burden. And 1MDB will get only 88 cent to 1 Ringgit. What is so good about that.

8. Okay. The interest p.a. is RM 2.4 billion and not RM3 billion. Can 1MDB pay that amount? Already it had to get money from Ananda and the IPIC to pay. Borrowing money to pay interest does not reduce the principal. It only increases the debt. Even if it is payment for shares or whatever the loan would still be there. So you cannot explain more. It is confidential – secret.

9. Thirteen power plants bought. But the big ones in Malaysia can be bought for a song. But by paying RM18 billion, 1MDB overpaid at least by RM3 billion. Why? If they are good assets, why cannot they be listed? Why is it that when Tenaga and Malakoff were rumoured to buy 1MDB power plants, their shares all plunged.

10. 1MDB is a Government company but when it bought Government land at 1/50th of the market price, the Government lose a huge sum of money.

11. When 1MDB sells the land, it is merely taking what should be Government earnings from the sale. That process is no different from people who sell APs, contracts and licence. Is this how 1MDB expects to make money?

12. Is 1MDB a strategic development company? What has it developed – nothing. Even TRX is all fence and nothing else.

VERSI BAHASA MALAYSIA

1. Bagi semua kritikan saya, 1MDB hanya boleh mengatakan bahawa semua adalah salah. Tetapi tidak ada bukti-bukti yang diberikan. Jawapannya sentiasanya adalah mengenai kerahsiaan urusan Kerajaan

2. Saya tahu tentang keengganan TIA untuk membolehkan produk masa depan telaga minyak Terengganu digunakan sebagai cagaran dengan bercakap dengan orang-orang yang benar-benar terlibat dengan TIA. Kerajaan Persekutuan sebagai penjamin bagi pinjaman RM5 bilion adalah kerana Terengganu menolak perkara yang tidak masuk akal. Mengapa Terengganu perlu menarik diri daripada cadangan awal Kerajaan Persekutuan bahawa telaga minyak pengeluaran masa depan menjadi cagaran.

3. Tiada Kertas Kabinet bagi pinjaman 5 billio telah dibentangkan. Tunjuklah Kertas itu untuk orang ramai melihat. Sudah tentu anda akan berkata kertas-kertas Kabinet adalah rahsia.

4. Jika pinjaman itu tidak off-budget tunjuklah dalam proses penyediaan bajet tahunan Kerajaan peruntukan yang memboleh membuat pinjaman-pinjaman itu. Tidak ada pun.

5. Terdapat bukti bertulis mengenai terma-terma Golden Sachs untuk terbitan bon. Tunjuklah bahawa Golden Sachs atau Ambank tidak mengenakan kadar faedah yang tinggi dan komisen 10% ke atas pinjaman. Jangan hanya mengatakan ini adalah rahsia.

6. Jadi 1MDB mengeluarkan bon 30-tahun. Apabila ia meminjam wang cadangan itu dibuat atas dasar 1MDB akan membuat wang.

7. Hasil terakru daripada 6.15% atau apa sahaja, adalah untuk pembeli bon. 1MDB perlu membayar wang selama 30 tahun sebagai faedah, yang bermakna ia meminjam sekarang dan anak-anak kita akan menanggung beban. Dan 1MDB akan mendapat hanya 88 sen pada 1 Ringgit. Apa yang baik tentang itu.

8. Okay. Faedah setahun adalah RM 2.4 bilion dan bukan RM3 bilion. Bolehkah 1MDB membayar jumlah itu? Sudah pun ia terpaksa mendapatkan wang dari Ananda dan IPIC untuk membayar. Meminjam wang untuk membayar faedah tidak akan mengurangkan pokok pinjaman. Ia hanya meningkatkan bebanan hutang. Walaupun ia adalah bayaran untuk saham atau apa pun, pinjaman akan masih wujud. Jadi, anda tidak dapat menjelaskan lagi. Ia adalah sulit – rahsia.

9. Tiga belas loji kuasa dibeli, Tetapi loji-loji yang besar di Malaysia itu boleh dibeli dengan harga paling murah. Tetapi dengan membayar RM18 bilion, 1MDB terlebih bayar sekurang-kurangnya sebanyak RM3 bilion. Mengapa? Jika loji-loji itu adalah aset yang baik, mengapa mereka tidak dapat disenaraikan? Kenapa apabila telah desas-desus bahawa Tenaga dan Malakoff akan membeli loji kuasa 1MDB, nilai saham mereka menjunam

10. 1MDB adalah sebuah syarikat Kerajaan tetapi apabila ia membeli tanah Kerajaan pada hanya 1/50 daripada harga pasaran, Kerajaan kehilangan sejumlah wang yang besar.

11. Apabila 1MDB menjual tanah itu, ia hanya mengambil apa yang sepatutnya menjadi pendapatan Kerajaan daripada penjualan itu. Proses itu tidak berbeza daripada orang-orang yang menjual AP, kontrak dan lesen. Adakah ini caranya 1MDB dijangka membuat wang?

12. Adakah 1MDB sebuah syarikat pembangunan strategik? Apa yang telah ia majukan? – Tidak ada apa. Malahan TRX adalah pagar sahaja dan tidak ada apa-apa.

MORE INVESTMENTS BY 1MDB

1. 1MDB entered into a JV with Petro Saudi. It is not a Saudi Government company. 1MDB paid USD 1billlion as its 60% share of the JV. As far as can be ascertained Petro Saudi did not pay a single cent.

2. Then Petro Saudi is said to have bought the assets of Petro Saudi International, which is not owned by Petro Saudi. The JV between 1MDB and Petro Saudi then requested 1MDB to pay USD 700 million to settle the loan from Petro Saudi International to Petro Saudi.

3. The ownership of the oil fields in Argentina and Kazakhstan (or is it Turkmenistan) is not very clear, nor is the ownership of drilling ships.

4. Then suddenly USD 300 million of the payment by 1MDB is converted to a Murabaha loan. This USD 300 million seemed to have changed hands with lightning speed. We really don’t know where it is. And 1MDB will not tell us either.

5. Then there is the story of the investment in Cayman Islands. 1MDB did not invest directly but the money seems to have gone to Hong Kong companies owned by Jho Low. These companies apparently invested in Cayman Islands.

6. Then we are told by the Prime Minister that actually the fund is only recorded in Cayman Islands. The money is elsewhere, probably in Hong Kong. It is apparently invested in a hedge fund in Hong Kong.

7. When there was public uproar over the money being in Cayman Islands 1MDB agreed to bring it back. Although the money was said not to be in Cayman Islands, but the money was brought back from Cayman Islands in two tranches.

8. We are not told much about the first tranch. It was claimed to have been used to pay debts.

9. Then the second tranch with over 1 billion USD was brought back but not to Malaysia. It was brought back to Singapore and was deposited in a Swiss Bank.

10. Arul Kanda said he saw the cash there and Prime Minister said the money was there. It was not brought back because Bank Negara would ask too many questions. But Bank Negara must get the approval of the Minister according to the law for approving or disapproving any transaction. And the Minister is the effective head of 1MDB. So what is so difficult about getting Bank Negara’s approval?

11. Then the true reason came out. The Swiss Bank said no money had been deposited by 1MDB in the bank. The documents presented were false.

12. Then the Prime Minister amended his reply to Parliament stating that no money was brought back – only documents. What documents?

13. The second Minister of Finance now says it is “units”. Units of what?

14. 1MDB and the Prime Minister have not shown proof of the existence of the money from Cayman Islands. Is it in Singapore or has USD 1 billion dollars disappeared?

15. Statements without documentary proof are, as we have seen, quite useless. We need proof of all the investments and payments made by the 1MDB. But no proof has been shown accept for the acquisition of the power plants and purchase of Government land in Kuala Lumpur and private land in Penang. Until signed documentary proofs and not just statements by the Chief Executive Officer or Prime Minister, are shown, we have to assume that the money borrowed by 1MDB has disappeared.

THE 1MDB STORY

1. From the comments on my blog and the questions I have been asked by people while shopping, it is clear that many do not know much about 1MDB. They know enough that Najib has done something wrong with the RM42 billion borrowed money, but are not clear about what is so wrong that I should call upon him to resign.

2. So I think I need to explain why 1MDB is wrong in stages.

The Terengganu Investment Authority

3. Firstly the attempt to hijack the Terengganu Investment Authority (TIA) money. Petronas pays 5% of its gross earnings to the Terengganu Government. Over the years their royalty has grown quite big.

4. Jho Low persuaded Najib to make the TIA into a sovereign fund for investment like the Kuwait Investment Fund but under Najib’s control. Appointments of staff were made by Najib without Terengganu’s knowledge. Terengganu agreed at first but when Najib decided to raise through bonds RM5 billion using Terengganu oil wells as collateral, the istana and the Government thought it was not right.

5. Terengganu requested that the issuance of the bonds be deferred. Najib went ahead. Terengganu accordingly withdrew as it cannot let its’ oil wells be put at risk.

6. Jho Low then advised Najib that the Federal Government should guarantee the loan. Strictly speaking such a matter should be discussed and approved by Cabinet. There is no evidence that a cabinet paper was prepared and presented for approval despite the amount being unusually big. In fact for a long time Cabinet was not aware of the activities of 1MDB.

7. To avoid scrutiny by officials, the loan was classified as off – budget i.e. outside the annual budget presented to and approved by Parliament. Off – budget spending can be made but usually only limited in amount. RM5 billion have never been borrowed by Government or any of its agencies. It should not be off-budget. It should get Cabinet approval first and then presented to Parliament. None of these procedures were followed.

8. It is not clear whether any Government department or agencies have scrutinised the terms of the loans. But the terms were very unfavourable to 1MDB and the Government.

9. Goldman Sachs which was entrusted with raising the loan was given;

i) Commission of 10%

ii) The interest rate was fixed at 5.9%

10. What this means is that of the RM5 billion borrowed 1MDB would get only RM4.5 billion. Goldman Sachs would get RM500 million as commission, an inordinately large sum.

11. But 1MDB would pay 5.9% interest on the whole of RM5 billion. Since it gets only RM4.5 billion the rate of interest on this amount would be 6.6% plus. Goldman Sachs need not pay interest on the RM500,000,000/- it got as commission.

12. Loans taken by Government or guaranteed by Government would normally carry 3% interest or less. But the 1MDB loan cost almost 7% interest i.e, about RM350 million a year or almost RM1 million per day.

13. Who approved such terrible terms for a loan to a government owned company? We would like to know who. There must be some documents with the signature of the approving authority. If not somebody needs to answer for this stupidity. Or is it abuse of authority.

14. But more loans were raised from local as well as foreign banks. In all RM42 billion were borrowed. It is not clear what the terms are. But interest on RM42 billion must come to almost RM3 billion a year. Unless the investment yield fantastic returns, the interest burden would sink 1MDB. In fact as everyone knows Ananda Krishnan had to make available RM2 billion to pay the interest. Is it a loan or a free gift? Later 1MDB had to sell shares or properties for USD1 billion (RM3.7 billion) in order to settle short term loan from a German bank.

15. 1MDB is effectively headed by the Prime Minister who is also the Minister of Finance. When loans of more than 100 million are raised for investment overseas Bank Negara has to approve. But the final approval must come from the Minister responsible. And the Minister responsible is also the effective head of 1MDB.

Investments

16. The best known investments by 1MDB were in the purchase of power plants and Government land as well as private land.

Power Plants

17. RM18 billion was spent to purchase IPP belonging to Ananda Krishnan, Genting Sanyen Power (now known as Kuala Langat Power Plant) and Jimah Energy.

18. The prices paid for Genting Sanyen and Ananda’s IPP were well above market price. 1MDB also paid RM6 billion for unpaid loans. The Jimah IPP was to put up another power plant. But 1MDB had no money to build this plant

19. Genting Sanyen and Tanjung Energy (now known as Powertek Energy Sdn Bhd) were nearing expiration of their licenses. Had 1MDB waited until the licenses expired, the price would be next to nothing.

20. Why 1MDB did not wait until the expiry of the license is a mystery. Genting and Ananda clearly made more money than they were entitled to. One estimate is that the high price netted the sellers an extra RM3 billion. Besides they are relieved of the loan of RM6 billion.

21. So not only is the borrowing costly but the high cost of investments will mean low returns. Why is 1MDB so stupid.

22. As stated above 1MDB is unable to get the IPP listed again. Who would want to own overpriced and obviously unprofitable power plant.

Purchase of Land

23. The land along Jalan Tun Razak was actually meant for an agency to build shops etc for Bumiputras. But instead the Government sold the 70 acres to 1MDB for RM320 million i.e. at RM 60/- psf. Land close by had been sold at RM7000 /-psf. 1MDB should pay at least RM3000 to RM4000 /- psf.

24. Government lost a huge amount of money from the sales. The question is why did the Government sell at such a low price. One cannot help thinking it is because the PM ordered the sale. If so it is wrong and it constitutes abuse of authority. The full value should be paid to the Government now.

25. Then 1MDB decides to sell a small part of the land at the price it bought the whole 70 acres of land. Payment was made by Tabung Haji even before the transfer of ownership was completed. Apparently 1MDB needed the money immediately.

26. The directors of 1MDB and Tabung Haji are the same people. They claim that they abstained from voting. But obviously it was not an arms– length deal.

27. If the Government could sell to 1MDB at RM60 /- psf, it should also sell at the same price to TH. But effectively it has used money saved by intending pilgrims to give enormous profit to 1MDB.

28. It is the same with the Sungai Besi airport land. 1MDB acquires it at the ridiculously low price of RM90 /- psf. The value of the land is at least RM2000 /- psf.

29. But 1MDB bought private land in Penang at a much higher price. Yet the land is not at the centre of the city, has more than 1000 squatters and has not obtained the Penang Government approval for development. Seems like 1MDB had overpaid the seller for useless land. Why?

Assets

30. 1MDB claims it has assets worth RM52 billion.

31. So far no explanation has been given as to how these assets are valued. How much is the value of all the power plants. And how much are the prices of land worth?

32. Future values after development may be big but billions of Ringgits must be invested before the property can be sold. After deducting cost, the return cannot be very big. The power plants and the land cannot be worth RM52 billion.

33. Even if this money is used to repay debts, the disappearance of billions of Ringgit must be recovered, or 1MDB should be charged for the loss.

WHO’S BEHIND THE CRISIS

1. Prime Minister says Dr M (that’s me) is behind the crisis.

2. I will admit that I am behind the “crisis”. I am behind it because there is a climate of fear in this country.

3. Lots of people know about the loss of billions of Ringgit by 1MDB. These people are in a position to know because they have seen evidence of this loss. But they are afraid because of actions which the Government can take against them. They may lose their jobs, or contracts or expectations of titles etc.

4. So they come to tell me. And they ask me to “do something”. For a long time I desisted because I know if I reveal the wrong doings of 1MDB, it will lead to the Prime Minister being questioned.

5. I had tried to do it privately. But there was no result. I told the Prime Minister I no longer supported him. No result.

6. So I had to go public. Najib has destroyed UMNO and BN. I know he would lose the next election. And then the whole country will see turmoil as no party, would have the majority to run the country.

7. The opposition cannot because they would be quarrelling among themselves. A Pakatan Government would be weak and unstable.

8. Without a strong Government this country would become anarchic. The crisis that would accompany the anarchic situation would be worse.

9. So I decided to expose the wrong-doings of 1MDB of which the Prime Minister is effectively the head.

10. Is there a crisis? There is. It is caused by the Prime Minister creating 1MDB borrowing huge sums of money and losing billions of Ringgit.

11. The crisis can be ended immediately if the Prime Minister resigns and allow a full investigation to be made on the RM42 billion borrowed by 1MDB. As long as the Prime Minister is there, no proper investigation can be made. Already we are seeing not only are reports to the police on 1MDB and Jho Low not being investigated, but the person who made the report being declared a bankrupt, his house confiscated and sold and he himself being investigated for money laundering and financing terrorists. The court has decided he is not bankrupt.

12. If no crimes can be detected and all the money is returned, Najib can come back as Prime Minister and lead BN in the next election.

13. By accusing me of being responsible for the crisis, Najib is saying let us accept the disappearance of the billions of Ringgit and behave as if nothing wrong has been done. From the interest and concern shown by the people over the losses suffered by 1MDB, the matter cannot just be ignored. The people responsible must be investigated and if found guilty, they must be punished.

14. A crisis may be the result but should we allow thieves to steal billions of Ringgit in order to avoid a crisis.

HOW 1MDB MONEY WAS INVESTED

1. I am intrigued by the ability of 1MDB to invest 42 billion Ringgit in so many businesses. Really I should be fully satisfied with how 1MDB expended the huge loan that it borrowed.

2. But unfortunately I am not. I am not, because the information came from the current CEO, Arul Kanda Kandasamy. And Arul has been caught lying quite a number of times.

3. Almost as soon as he took over management of 1MDB he announced that the money from Cayman’s Island has been returned. He said clearly and openly that he saw the cash i.e. one billion dollars in cash. Then he said it was statements. What are the statements? Anyway in the end the bank said no cash and only documents were deposited in it and the documents carried false signatures.

4. He must have told the Prime Minister about this fantastic pile of dollar notes so the Prime Minister answered the question in Parliament that the cash is in the bank in Singapore. It cannot be brought back because Bank Negara asks too many questions. The Finance Minister must approve or disapprove all Bank Negara strictures or approvals.

5. Then the banks denied that the cash is in the bank. Embarrassing. The vision has disappeared. No. It is not cash. It is documents. No, it is units. What units? Dunno. Which bank? Not clear. The mystery deepens.

6. So when Arul announced the investments of 42 billion Ringgit, could it be something else that he saw which was not there. And do people use borrowed money to pay tax? What tax? No profit was declared but tax was paid. How much? Cost of managing 1MDB run into billions!

7. In any case, many names which are known to have received money from 1MDB are not mentioned. Lots of money went to Hong Kong companies with funny names.

8. Has nothing been paid to Petro Saudi, to Jho Low, to Brazen Sky and others. Jho Low denies but why has he not proven that he did not receive US 260 million (RM 988 million) from 1MDB to buy a bank.

9. Arul had lied before. It is not inconceivable that on the 42 billion Ringgit Arul may be lying again. Where a chunk of the 42 billion Ringgit went is still questionable.

10. I don’t think we can resolve the problem of where the 1MDB money has gone through four-eyed meetings. Najib can resolve through proving beyond reasonable doubt that no money has disappeared from the 42 billion borrowed.

11. The intention of 1MDB I presume is to make money for the Government. Show how much profit the Government has made since 2009. Why do you have to borrow money to pay interest on the debts?

12. Why cannot the power plant shares be listed?

13. Why does 1MDB pay only 60 – 90 Ringgit for Government land which it now wants to sell at 2000 – 4000 Ringgit psf? And now the land bought by Tabung Haji has been sold to some Indonesians at a loss. The loss will be borne by the pilgrims.

14. Actually there are many questions that the Prime Minister can answer not to me, but to the public. The money does not belong to me alone. From the question asked by so many people they want to know where their money is.

15. The money belongs to the people. It is the duty of the police, the anti-corruption agency to investigate the complaints and the reports that has been made – including by Bank Negara. But the agencies have not investigated.

16. There is a climate of fear which restrains them from investigating. For as long as the Prime Minister is the Prime Minister, investigating things involving him is not going to be really possible. It is necessary that the PM relinquish his position and authority if the Auditor General, the Public Accounts Committee or even a Royal Commission is to reveal the truth.

17. I went to the “Nothing to Hide” forum hoping to hear explanations from Dato Sri Najib and to ask questions. But it was cancelled because of security reasons.

18. I watched a video clip of what happened. There was no threat to security except for Ali Tinju making a lot of noise. It is obvious he wanted the meeting to be cancelled. We know who he is in favour of. It is a pity. Najib could have explained everything and people like me would be silenced.

LEGACY

1. A friend visited me in my office recently. I had helped him a lot when I was PM not with money or jobs, but by smoothening bureaucratic processes in the way of his projects. As a result he became a very successful educationist and was able to expand overseas. I regarded my help as essential as the bureaucrats can be unnecessarily dilatory or even obstructive. I do this for everyone and they are all very grateful. My friend was especially grateful.

2. Off and on he would drop in my office to discuss current issues. He worried about Najib’s Government policies and performance. He urged me to do something.

3. But when he dropped in this time he seemed somewhat changed.

4. He kept on urging me not to “attack” the PM. I explained why I am doing so. But he persisted in urging me to desist from my efforts at questioning the leadership regarding the current financial scandal.

5. He warned that if I continue I would lose my legacy. I told him what people think of my legacy, if there is any, is not important. I am concerned at what is happening in the country. Our good reputation is being eroded.

6. He repeated several times that I would lose my legacy. I really appreciated his concern. He is a friend and I felt he cared for me.

7. We parted as friends.

8. But now I understand better why he talked about my losing my legacy. He has been given the task of demonising me, of destroying what he calls my legacy. I think he and his boss believes that if I become unpopular then my condemnation of the shenanigans involving 1MDB would be ignored by people.

9. So we are seeing now a new and more aggressive campaign to demonise me and to show how much the PM is supported by the people. Clearly large sums of money are being spent on this campaign. My friend is now installed in the Prime Minister’s Office and is working hard to cover up the wrong-doings of 1MDB. The first pages of the mainstream media now carry explanations on how the borrowed funds were spent. They add up neatly to 42 billion Ringgit. Before criticisms were just ignored. A policy of elegant silence was followed. Now Najib has been advised to answer to explain. However, he lost an opportunity to explain when he did not turn up for for the “Nothing to Hide” forum.

10. But there really can be no explanation on the disappearance of the money supposedly brought back from Cayman Islands – six billion US Dollars. No explanation can be made on the denial by the Swiss bank that it received money from 1MDB. No explanation on Arul’s claim that he saw the cash and the PM explaining there was no cash. Now the cash has become units. What units? No explanation also on the inability to pay interest of 2 billion until Ananda donated or loaned 2 billion whatever. Nor is there any explanation as to why 1MDB needs investments of USD1 billion by IPIC to pay debts to Deutsche Bank when 42 billion investments have been made. Is there no returns on the investments? And many other questions remain unanswered.

11. My ex-friend will have to do better at demonising me if he is to earn titles etc.