A case of trying too hard

A murky and embarrassing case is closed, hiding top government officials’ involvement

Sometime over the next few days, a court in Kuala Lumpur will put the finishing touches to an agreement that allows Tajudin Ramli, the former head of Malaysian Airline System, not only to walk away from charges that he had allegedly looted the airline of tens of millions of US dollars but with an RM580 million (US$293.2 million) out-of-court settlement from the government.

It appears to be a settlement that the government would rather keep to itself. At the heart of the agreement with Tajudin is a convoluted story that began as long ago as the 1980s when Malaysia’s central bank, Bank Negara Malaysia, at the urging of then-Prime Minister Mahathir Mohamad, began speculating aggressively in global foreign exchange markets, at one time running up exposure rumored to be in the region of RM270 billion -- three times the country’s gross domestic product and more than five times its foreign reserves at the time.

Eventually, playing with the big boys came home to roost. In 1992 and 1993, Mahathir became convinced he could make billions of ringgit by taking advantage of a British recession, rising unemployment and a decision by the British government to float the pound sterling free of the European Exchange Rate Mechanism.

Mahathir ordered Bank Negara to buy vast amounts of pounds sterling on the theory that the British currency would appreciate once it floated. However, in what has been described as the greatest currency trade ever made, the financier and currency wizard George Soros’s Quantum hedge fund established short positions borrowing in pounds and investing in Deutschemark-denominated assets as well as using options and futures positions.

In all, Soros’s positions alone ac¬counted for a gargantuan US$10 billion. Many other investors, sensing Quantum was in for the kill, soon followed, putting strenuous downward pressure on the pound. The collapse was inevitable. Quantum walked away with US$1 billion in a single day, earning Mahathir’s eternal enmity and earning Soros the title “the man who broke the Bank of England.”

Mahathir and Bank Negara, on the other hand, walked away with a US$4 billion loss, followed by another US$2.2 billion loss in 1993, the total equivalent of RM15.5 billion. Although the disastrous trades destroyed the entire capital base of Bank Negara, after first denying it had taken place, the then-Finance Minister Anwar Ibrahim repeatedly reassured parliament that the losses were only “paper losses” and, now that he is Opposition Leader and head of the Pakatan Rakyat opposition coalition, has managed to skate free of the controversy.

Eventually, the Finance Ministry had to recapitalize the central bank, almost unheard of for any government anywhere. It is reliably estimated that Bank Negara lost as much as US$30 billion in this and other disastrous currency trades, costing the head of the central bank and his currency trader deputy their jobs.

It was at one with Mahathir’s unfortunate penchant for believing he could beat the global financial system in other ways. In the early 1980s, at his behest the Malaysian government attempted to corner the tin market through Maminco Sdn Bhd, a dummy company set up to buy tin futures and physical tin to push up prices on the London Tin Market. Malaysia at that point was producing 31 percent of the world’s tin.

However, the rising prices as a result of Malaysia’s action caused miners to increase production in the other 69 percent of the tin world. At the same time the US government released its tin stockpile. The price collapsed, costing Malaysia RM1.6 billon with the subsequent low prices wrecking Malaysia’s tin industry. Mahathir has repeatedly railed against western governments for rigging the rules against him.

The attempt to corner the tin market and the subsequent loss established an interesting precedent in terms of what would take place with the speculation in the pound sterling. Rather than acknowledge the losses in the tin speculation, the government set up another dummy company called Makuwasa Sdn Bhd, creating new shares supposedly reserved for ethnic Malays which were allocated to the Employee Provident Fund, the country’s retirement fund for private and public workers. The plan was to sell these cheaply acquired shares at market price for a profit to cover Maminco’s losses. Finally, in 1986, Mahathir was forced to admit that Makuwasa was created to recoup the government’s losses from the Maminco debacle and to repay loans to Bank Bumiputra.

Fast forward to today and the out-of-court settlement between several government-linked companies and Tajudin Ramli, in which the government quietly cancelled Tajudin’s debt of RM840 million. It is believed to be the biggest such sum awarded in Malaysian history.

In 1994, according to affidavits that Tajudin filed in court he bought 32 percent of the shares of the government-controlled Malaysian Airline System at a price of RM8.00 at Mahathir’s behest – while the shares were trading at RM3.30 – and became executive chairman using funds from government-linked companies. According his allegations, the idea was to use the “profit” off the share sale to cover as much as possible of the forex losses by Bank Negara from Mahathir’s currency speculation.

When Tajudin took control of MAS in 1994 through his company, Naluri Bhd, MAS had a cash reserve in excess of RM600 million. Seven years later, in 2001, when the government bought back MAS for RM8 a share, the state-owned airline had accumulated losses in excess of RM8 billion. The government bought back an almost bankrupt airline for the same price that it sold to Tajudin.

In the welter of lawsuits and countersuits that eventually followed, including a RM13.46 billion statement of claim that Tajudini brought against a government-linked company involved in the mess, he alleged in his affidavit that it was Mahathir who had instructed him to acquire the stake to bail out Bank Negara.

Like Mahathir, the then 49-year-old Tajudin was a native of Alor Setar in Kedah state. He was regarded as a shining example of the bumi businessman that Mahathir wanted to foster to run the country and take the commanding heights of the economy back from the ethnic Chinese.

Unfortunately, according to a long list of whistle-blowers within the airline, he was also involved in looting it of tens of millions of dollars and very nearly putting it into bankruptcy before the government buyback. When officials not connected to the United Malays National Organization recommended prosecution, they came under fire that nearly ruined their careers and almost put them in jail.

According to allegations in documents made public in August of 2010, Tajudin colluded with three other MAS officers and directors through two nominee companies, one in Singapore and the other in Hong Kong, to establish a company called Advanced Cargo Logistics GmbH Germany, at Hahn Airport in Frankfurt, Germany, to provide ground-handling services for MAS.

According to a report filed in March 2007 to then-Prime Minister Abdullah Ahmad Badawi by Ramli Yusuff, the director of Malaysia's Commercial Crime Investigation Department and an official who seems to have been singularly incorruptible, "Tan Sri Tajudin Ramli was in control of MAS from 1994 to 2001. When he left MAS in 2001, MAS had accumulated losses in excess of RM8 billion (US$2.54 billion). Many projects were made under very suspicious circumstances."

Ramli Yusuff’s report indicated a wide range of abuses that indicated Tajudin’s family was deeply involved in setting up shell companies to siphon off money from MAS ancillary operations. But instead of preferring charges against Tajudin, the Malaysian Anti-Corruption Commission (MACC) went after the inspecting officer, Ramli Yusuff instead for allegedly not declaring his assets, for misusing a police airplane, and abusing his power as a police officer, all of which were convincingly refuted.

Ramli, however, wasn't the only one to go before the courts. His lawyer, Rosli Dahlan, who was also the lawyer for the airline itself, prepared Ramli's defense against the criminal charges only to be arrested on charges of collaborating with Ramli. At one point, on a pretext that Rosli had mishandled a letter from the MACC, police officers invaded Rosli's office, arrested and handcuffed him, then kept him in a cell overnight, refusing him medical treatment for injuries to his wrists from the handcuffs. They also refused his request to file a report against the arresting officers.

Rosli went to a court especially created to handle MACC cases, only to have the case fizzle out when a prosecutor announced that neither Rosli nor Ramli had been charged for corruption, having been summarily acquitted without having to put on a defense.

For his part, Rosli has charged that the MACC, Bank Negara, the government of Malaysia and the three major newspapers owned by the political parties had conspired with those in power to damage him for his attempts to defend Ramli.

And for his part, Tan Sri Tajudin Ramli remains uninvestigated and uncharged, and a continuing example of bumiputera power at the top of Malaysia's political and social structure, apparently RM580 million richer.

It also brings into question Prime Minister Najib Tun Razak’s March 30, 2010, statement that the government "can no longer tolerate practices that support the behavior of rent-seeking and patronage, which have long tarnished the altruistic aims of the New Economic Policy. Inclusiveness, where all Malaysians contribute and benefit from economic growth - must be a fundamental element of any new economic approach."

http://www.asiasentinel.com/

Jack Abramoff, smooth operator

Jack Abramoff, the notorious former lobbyist at the center of Washington's biggest corruption scandal in decades, spent more than three years in prison for his crimes. Now a free man, he reveals how he was able to influence politicians and their staffers through generous gifts and job offers. He tells Lesley Stahl the reforms instituted in the wake of his scandal have had little effect.

The following is a script of "The Lobbyist's Playbook" which aired on Nov. 6, 2011.

Jack Abramoff may be the most notorious and crooked lobbyist of our time. He was at the center of a massive scandal of brazen corruption and influence peddling.

As a Republican lobbyist starting in the mid 1990s, he became a master at showering gifts on lawmakers in return for their votes on legislation and tax breaks favorable to his clients. He was so good at it, he took home $20 million a year.

How corrupt is lobbying in Washington, DC? Enough to get "60 Minutes" correspondent Lesley Stahl angry when she hears how Jack Abramoff bribed and influenced legislators. It all came crashing down five years ago, when Jack Abramoff pled guilty to corrupting public officials, tax evasion and fraud, and served three and a half years in prison. Today he's a symbol of how money corrupts Washington. In our interview tonight, he opens up his playbook for the first time. And explains exactly how he used his clients' money to buy powerful friends and influence legislation.

Extract from the interview:-

Jack Abramoff: I was so far into it that I couldn't figure out where right and wrong was. I believed that I was among the top moral people in the business. I was totally blinded by what was going on.

Jack Abramoff was a whiz at influencing legislation and one way he did that was to get his clients, like some Indian tribes, to make substantial campaign contributions to select members of Congress.

Abramoff: We would certainly try to make the activity legal, if we could. At times we didn't care.

But the "best way" to get a congressional office to do his bidding - he says - was to offer a staffer a job that could triple his salary.

Abramoff: When we would become friendly with an office and they were important to us, and the chief of staff was a competent person, I would say or my staff would say to him or her at some point, "You know, when you're done working on the Hill, we'd very much like you to consider coming to work for us." Now the moment I said that to them or any of our staff said that to 'em, that was it. We owned them. And what does that mean? Every request from our office, every request of our clients, everything that we want, they're gonna do. And not only that, they're gonna think of things we can't think of to do.

Neil Volz: Jack Abramoff could sweet talk a dog off a meat truck, that's how persuasive he was.

Neil Volz was one of the staffers Abramoff was talking about. He was chief of staff to Congressman Bob Ney, who as chairman of the House Administration Committee had considerable power to dispense favors. Abramoff targeted Volz and offered him a job.

And the rest is history. Search his name, you will never find short of information.

A day to remember

It's time to spent! spent! spent!

Why the fuss over the 2010 AG Report.

By Sakmongkol AK47

Let us show you a few examples. Perhaps then readers will understand what all the fuss is over the AG Report.

Bizarre overpricing- the National Youth Skills Institute (under the Youth and Sports Ministry) approved the purchase of a car jack that cost RM50 for RM5,700, a digital camera that cost RM2,990 was bought for RM8,254 and RM1,146 was paid for a set of technical pens with a market price of RM160;

Negligence- the Police Air Wing purchased two helicopters worth RM117.75 million, which could not be used, as they did not meet specifications. Another RM15.4mil was spent to train pilots to fly these helicopters.

Incompetence- Customs Department under-utilized its RM290mil information technology system but was planning to spend another RM451.30mil to develop a new one.

These are the findings of the Auditor General’s report a few years ago. If the transgressions were not rectified, we know it means, things have not improved. If matters are left as they are, we can then more or less expect what’s coming. We can expect the same stories about negligence and incompetence because those responsible are laid back about the issues. We have all the reasons to believe that the report for 2011, next year, will reveal the same story about misappropriation of funds, bizarre overpricing, projects not completed. These are indicators of negligence, incompetence and regretfully said- of officious arrogance.

The 2010 Auditor General's Report is precisely that- voluminous and horrifying mentions about more or less the same findings contained in reports of preceding years. What does that say? It says loud and clear, the same transgressions committed were not rectified or even allowed to continue. It means the same wrongdoings are allowed to be perpetrated because the enabling circumstances and possibly the same perpetrators were allowed to persist. It further shows those responsible to ensure the transgressions are not repeated have been incompetent and negligent in carrying remedial actions.

The same people who did all the transgressions are still in commanding positions; they will have the opportunity to improve upon their incompetence by doing more damage. The Chief Secretary’s village fool response by way of saying he is not worried and that the problem has been dealt with because he has sent circulars asking officials to exercise more discipline is a negligent expression and ensuing act of gross callousness. I am afraid, the public isn’t that forgiving.

We don’t want circulars- we want those transgressors punished or even sacked. As them to publicly explain what happened to those overspendings? Let’s ask the chairman of Giatmara for example, where is the shop that sells the heavy duty blender for 4 times the market price. Let’s make it the 1 Malaysia shop for heavy duty blenders. Maybe even give them soft loan from EPF. Let us Mydin the shop.

Yet we want to extend the services of such a fellow. Let’s elect Allred E Newman for Chief Secretary then. Then, we are assured the same transgressions repeated, will be met with the same incredulous response of what me worry!

The answer is also, we don’t have to suffer the incompetence of those entrusted to manage public money. If they don’t manage properly and because it’s our money they are managing, they deserve to be publicly assailed. This isn’t about being perplexed as to why the opposition should bicker about the report. If you do, then we shall have to explain to you in as simple terms as possible.

This is beyond opposition. This is about, the mismanagement of our money which deserves being treated as a cause of concern for possible fraud and deception.

The short answer to the question then as to why the opposition gets irked by the audit report as do all right thinking Malaysians is the money being treated isn’t the property of the transgressors. That being so, the administration of the money and the application of the funds thereof, must be done with utmost care. It’s not your father’s money. That is the short answer.

The long answer is, Malaysians are fed up of the deception and misappropriation of funds.

For the year 2010, the government approved a budget of RM 149 billion for operating expenditure. This wasn’t enough and the government had to increase the opex to 151 billion. The report said 9 ministries over spent. Here is where all of us should be concerned. This is taxpayers money being spent on opex. The 2 billion could have been spent of capex capital expenditure which builds capacity to create more wealth.

Now, Malaysians are equally outraged by the revelations of the 2010 Auditor-General Reports on the continuing financial scandals, hanky-panky and gross financial negligence in government. We are horrified to learn for example, the National Sports Institute acquired 23 horses totalling RM5.66 million without a Financial Ministry go-ahead with none of the horses competed in two recommended international championships; we have the case of the RM142 million RazakSAT malfunctioning barely a year after being commissioned; wait, we have more- The Malaysian Marine Parks Department spent a whopping RM56,350 for a pair of night vision Marine binoculars, 29 times more than its market value of RM1,940; and paid the same amount for another pair of night vision Bushnell binoculars, or 1,893 per cent more than its actual price of RM2,827.

We are once again appalled at the incompetence of front line workers incapable of appreciating the importance of proper placement of decimal points and making accounting mistakes that resulted in wasteful overspending. These should not have happened if there are efficient and proper internal audit systems. As the result of a laid back attitude, we are told of stories where a pensioner received RM21, 433 a month instead of RM214.33 for 16 months!. The mistake was detected after more than a year. The officer who finally detected the mistake should be a given a merit order.

We are also dismayed of hearing Giatmara Centre mistakenly paying RM170 per kg instead of RM1.70 per kg for sugar for a poverty eradication programme or RM25, 500 for 150 kg of sugar! This must be a special kind of sugar.

What about the village-fool response that I mentioned above? In his response to the 2010 Auditor-General’s Reports, the Chief Secretary to the Government Tan Sri Sidek Hassan has repeated his annual reaction and call to all departments and agencies to take heed of the Auditor-General’s comments and views. Which goes to show, that what I said about the same mistakes being repeated did take place, otherwise, he wouldn’t have to repeat his annual reaction would he?

No wonder then, there was this need to delay the submission of the 2010 Auditor-General’s Report to ensure that it would not completely overshadow Najib’s 2012 Budget. Otherwise, the Finance Minister’s charitable overtures would be overshadowed and overwhelmed by the over 1,300 pages of exposes of financial irregularities, hanky-panky as well as misappropriation of public funds in the first full year of PM Najib’s premiership.

All right thinking Malaysians are waiting for the Finance Minister or the Chief Secretary to explain the delay in submitting the 2010 Auditor-General Reports until after the end of the parliamentary debate on the 2012 Budget. If the Report was enclosed alongside the budget documents, the AG Report would have been the foremost parliamentary issue.