Zeti Says Malaysia Central Bank’s 1MDB Move Vital for Integrity – Bloomberg

Zeti Says Malaysia Central Bank’s 1MDB Move Vital for Integrity

Malaysia’s central bank had to take action against a debt-ridden state investment company to protect the integrity of the financial system, according to Governor Zeti Akhtar Aziz, who said an improvement in the country’s political situation would help the ringgit.

The attorney general’s office earlier this month dismissed the central bank’s second request for criminal proceedings against 1Malaysia Development Bhd. for breaching the Exchange Control Act. Bank Negara Malaysia revoked three permissions given to 1MDB for investments abroad totaling $1.83 billion, and instructed it to repatriate the amount.

“He has the right to make that assessment,” Zeti said, referring to the attorney general. “But for the central bank we believe it is very, very important to comply with our rules and regulations that we have in place. This is vital, it’s critical for the functioning of the financial system” and its integrity, she said.

While growth could ease to as little as 4.8 percent this year and the risk of a slowdown because of the global economy is bigger than the threat of inflation, Malaysia has a “high degree of resilience,” Zeti, 68, said in an interview in Lima, Peru on Sunday.

The central bank doesn’t see the risk of faster inflation after the first quarter of 2016 and interest rates at current levels are supportive of growth, Zeti said. Malaysia forecasts growth of 4.5 percent to 5.5 percent this year.

Malaysian policy makers have struggled to boost confidence in the economy and its finances since oil prices started slumping late last year and as allegations of financial irregularities at 1MDB hurt sentiment. Tensions in the Southeast Asian nation have also increased as Prime Minister Najib Razak battled accusations of impropriety over political donations that ended up in his private accounts.

“People are distracted now” because the country rarely has political developments of this nature, Zeti said. “Everyone wants these domestic issues to be resolved quickly, because as and when they are resolved, we expect the currency to recover even further,” after gains in recent days.

The debacle surrounding 1MDB has contributed to the ringgit performing the worst among major Asian currencies this year, while foreign investors have pulled more than $4 billion from Malaysian stocks in 2015. The central bank anticipated outflows would happen when Western counterparts reversed quantitative easing, Zeti said.
Political Funding

The Wall Street Journal reported in July that about $700 million may have moved through government agencies and companies linked to 1MDB before ending up in accounts bearing Najib’s name ahead of elections in 2013. The anti-corruption commission said the money was from donors in the Middle East, not 1MDB. Najib has denied any wrongdoing.

Zeti Says Malaysia Central Bank’s 1MDB Move Vital for Integrity
October 12, 2015 — Bloomberg


Public can challenge A-G’s refusal to charge 1MDB, say lawyers

Any member of the public or entity, including Bank Negara Malaysia, can challenge in court the Attorney-General’s decision that 1Malaysia Development Berhad (1MDB) has not committed any offence despite the central bank’s appeal to review the case, lawyers said.

Lawyer Amer Hamzah Arshad said such a challenge had never been mounted in Malaysia but it had been done in other Commonwealth jurisdictions.

“If one thinks that there is bad faith by the A-G’s refusal to prosecute, one could go to the court for remedy,” said the criminal lawyer.

This legal view comes as the central bank issued a statement yesterday that its probe into 1MDB had found that the state investor made inaccurate or incomplete disclosures to secure permissions for overseas investments.

Bank Negara said it had revoked three permissions granted to 1MDB for investments totalling US$1.83 billion (RM7.53 billion) on that basis.

It had also recommended that the A-G initiate criminal prosecution against 1MDB for breaches under the Exchange Control Act 1953.

Amer said he had come across of incidents where the A-G, who is also the public prosecutor, had finally framed charges against accused persons after investigation agencies appealed for a review.

The lawyer was asked to comment on an announcement by the Attorney-General’s Chamber (AGC) on Thursday that there would be no prosecution despite the central bank requesting a review to the prosecutor’s decision that no further action was required on 1MDB regarding false disclosures.

The AGC said 1MDB officials were investigated under Exchange Control Act, for knowingly and recklessly making a statement which was false.

Bank Negara submitted the investigation papers (IP) to the AGC on August 21. The papers were returned to the central bank on September 11, which replied the AGC on October 1 with a request for a review.

The AGC said it decided to maintain its earlier stand on grounds that no new evidence was available.

Under the Federal Constitution the A-G had discretion to institute, conduct or discontinue any criminal offence.

Bank Negara’s statement yesterday also acknowledged the A-G’s discretion on the matter.

But Amer said a strong inference could be drawn that central bank investigators had sufficient material to build a case.

Public can challenge A-G’s refusal to charge 1MDB, say lawyers
10 October 2015 – TMI


Malaysia’s Central Bank Defies AG, says there’s a 1MDB Case

In a stunning development, Malaysia’s central bank has issued a statement saying it had requested a criminal investigation into the affairs of the scandal-plagued 1Malaysia Development Bhd despite the fact that Prime Minister Najib Razak’s hand-picked Attorney General Mohamad Ali, to whom it had forwarded the case , said there was no reason for prosecution.

Najib fired the previous attorney general, Abdul Gani Patail, in September and replaced him with Ali, a former federal court judge, at the last minute after Gani reportedly had drawn up criminal charges against Najib and another unnamed official over the MDB scandal. Apandi Ali is considered a United Malays National Organization loyalist. Apandi’s most significant ruling on the country’s highest bench, before he retired, was to say that Christians, particularly Catholics, would not be allowed to use the word ‘Allah” to denote god in their literature and services.

“As an investigative authority, the bank is duty bound to conduct its investigations with the highest professional care and diligence,” according to the Bank Negara statement. “The bank at all times expects full and accurate disclosure of information by applicants in considering any application under the ECA. On its part, the bank concluded that permissions required under the ECA for 1MDB’s investments abroad were obtained based on inaccurate or without complete disclosure of material information relevant to the Bank’s assessment of 1MDB’s applications.”

Zeti Akhtar Aziz, the central bank governor, had delayed announcement of the results of the banking transactions by 1MB for several weeks. Sources in Kuala Lumpur said Zeti, one of the world’s most respected central bankers, was in essence blackmailed by forces aligned with Najib into previously burying the investigation over concerns that the government might prosecute her husband, Tawfik Ayman, because of secret overseas accounts. Rosmah Mansor, the prime minister’s wife, was reportedly involved in a campaign to drive Zeti from her position.

“I think it is the endgame,” said a well-connected Malaysian political observer. “But there is no way to know how it will end.”

Bank Negara’s defiance of the attorney general’s refusal to prosecute the case adds to pressures brought by the nine-member Council of Rulers – the country’s sultans – who in an unprecedented formal statement earlier this week warned that investigations into Najib’s affairs and 1MDB must be completed as soon as possible or the country’s image would be harmed. In the same statement, they warned that racial tensions are increasing and that steps must be taken to cool them off.

Despite its importance, the statement was relegated to the back pages of the mainstream press, which is owned by the governing political parties including UMNO. Home Affairs Minister Ahmad Zahid Hamidi issued a statement saying the one by the Sultans was aimed at the opposition for raising racial tensions. The attorney general’s closing down of the Bank Negara investigation was an apparent attempt to comply with the Sultans’ demand that the investigation be completed as soon as possible.

Najib and his allies have been involved in a wide-ranging campaign to stifle dissent over allegations of massive corruption, both personal and through UMNO. The government has used the loosely-worded sedition act or the “Security Offences (Special Measures Act (SOSMA),” passed in 2012 as a substitute to the colonial-era Internal Security Act, and other laws to arrest 138 government opponents.

Malaysia’s Central Bank Defies AG, says there’s a 1MDB Case
October 9, 2015 – Asia Sentinel


BNM seeks 1MDB to repatriate US$1.83b to M’sia after revoking permissions

KUALA LUMPUR (Oct 9): Bank Negara Malaysia (BNM) said it has revoked three permissions granted to troubled strategic investment company 1Malaysia Development Bhd (1MDB) for its investments abroad totalling US$1.83 billion, as the permissions were obtained based on inaccurate or without complete disclosure of material information.

In a statement today, BNM said the revocation is done under the Exchange Control Act 1953 (ECA).

The central bank added that it had also issued a direction under the Financial Services Act 2013 to 1MDB to repatriate the US$1.83 billion to Malaysia and submit a plan to the bank for this purpose.

On the Attorney-General’s Chambers’ decision yesterday, which cleared 1MDB of committing any offence related to false disclosure despite BNM’s appeal to review the case, the central bank said: “It is to be noted that under the Federal Constitution, the decision to initiate criminal prosecution lies solely with the Attorney General.”

“The Attorney-General’s decision with respect to the investigations on 1MDB relates to BNM’s recommendation to initiate criminal prosecution against 1MDB for breaches under the ECA.

“As an investigative authority, the bank is duty bound to conduct its investigations with the highest professional care and diligence. The bank at all times expects full and accurate disclosure of information by applicants in considering any application under the ECA,” said BNM.

“On its part, the bank concluded that permissions required under the ECA for 1MDB’s investments abroad were obtained based on inaccurate or without complete disclosure of material information relevant to the Bank’s assessment of 1MDB’s applications,” it added.

The central bank went on to say that it will continue to extend its full cooperation to ongoing investigations by the Royal Malaysia Police and the Malaysia Anti-Corruption Commission.

BNM seeks 1MDB to repatriate US$1.83b to M’sia after revoking permissions
October 9, 2015


Sultans called for swift and transparent investigation into a political scandal – NY Times

State Rulers in Malaysia Press for Inquiry Into Premier, Najib Razak

KUALA LUMPUR, Malaysia — In a rare and explicit intervention in politics, the sultans of nine of Malaysia’s states have called for a swift and transparent investigation into a political scandal involving Prime Minister Najib Razak, saying his failure to resolve allegations of corruption had created a “crisis of confidence” in the country.

Malaysia’s central bank and anticorruption officials are investigating whether millions of dollars transferred into Mr. Najib’s accounts came from companies linked to a government fund that Mr. Najib oversees.

The statement by the sultans, who have a largely ceremonial role, was their most direct intervention in politics in recent history. Analysts said it was likely to provide support for the embattled officials who are investigating the scandal and buttress the position of the growing ranks of Mr. Najib’s political opponents.

“The findings of the investigation must be reported comprehensively and in a transparent manner so that the people will be convinced of the sincerity of the government, which shall not at all conceal facts and the truth,” said the statement, which was released late Tuesday and circulated by Bernama, the national news agency.

The statement added that the scandal was “adversely affecting the world’s view of Malaysia” and was seen as “among the causes for the plunge in the value of the Malaysian ringgit, impacting the country’s financial market and economic climate.” The national currency, the ringgit, has fallen to its lowest value in more than a decade.

John Pang, a senior fellow at the S. Rajaratnam School of International Studies in Singapore, said Mr. Najib, who faces significant opposition in his party, now appears more isolated. “The statement adds to the sense that he has lost the confidence of the Malay rulers, along with other important sectors of society,” Mr. Pang said. The sultans, he said, “have never spoken so specifically on a matter of government.”

Their intervention “will embolden both the civil service and civil society groups that are dismayed by the scandal,” he said.

Even in a country where money politics have long been rife, the scale of the suspected graft in the scandal, which centers on the sovereign wealth fund, 1Malaysia Development Berhad, or 1MDB, has alarmed Malaysians. One set of transfers into Mr. Najib’s account, according to a statement by Malaysia’s anticorruption commission, was for nearly $700 million.

Mr. Najib has denied any wrongdoing, but he has not publicly explained the source or purpose of the money. Instead, his government has hobbled inquiries against him, raiding the homes of investigators, removing the attorney general, aggressively pursuing leaks and banning the publications of a leading news media group that was investigating the case.

State Rulers in Malaysia Press for Inquiry Into Premier, Najib Razak
OCT. 7, 2015 – NY Times


Be loyal to nation, not leaders, says Rafidah Aziz

Former Umno minister Tan Sri Rafidah Aziz has dismissed the notion that Malaysians should be loyal to their leaders, amidst controversy over an alleged bid to topple Prime Minister Datuk Seri Najib Razak.

She told a public lecture in Universiti Malaya today that nation-building required Malaysians to be loyal to the country rather than the individuals governing it.

“Loyalty is to the nation. There is no such thing as loyalty to anyone,” said Rafidah, who is former international trade and industry minister.

“Now if people can just separate that, we will have better nation-building than image-building of individuals.”

Rafidah said Malaysians were free to “curse” individual leaders, but added that she drew the line at condemning the country without basis.

She reminded the hall that songs about patriotism did not include lines urging them to be loyal to the prime minister or deputy prime minister.

“The songs are just about Malaysia. They don’t say ‘support A, don’t support B’, do they? Or Sejahteralah PM?” she asked, prompting laughter from the audience.

Be loyal to nation, not leaders, says Rafidah Aziz
12 September 2015 – TMI


Why restoring the basics of democracy is urgently needed

All levers of power, government institutions, and check and balance mechanisms must be restored as comprehensive solutions are needed to fix this country.

By TK Chua

Looking at the events unfolding each day in our country, I think we have serious issues on our hands. It does not matter who our next prime minister will be or which political coalition will be leading the country, I think the lessons learned and the reforms needed must be contemplated by all Malaysians starting from now.

Why do we think government leaders can commit grave wrongs with impunity? Why do we think they can cover-up and sweep every wrong under the carpet? Why do we think they can manipulate all levers of power in the government and galvanise certain people to support them blindly? Why do we think we need foreign governments to probe into the wrongdoings allegedly committed by our own leaders?

Some may think this is solely the fault of our PM. But I think the problems we face are bigger than that. No doubt, the PM does play a part but the nation and its governing system cannot simply assign the fault to one person, neither can they depend on the “goodness” of one man. We need a revamp of our constitution and governing system to bury dictatorial tendencies once and for all.

What are the causes of our problems today? If I may venture – it is total consolidation of power in the hands of one person; his unbounded control over our national coffers, his sole discretion in key civil service appointments and dismissals, his pervasive control over other branches of government and his final say over investigations and prosecutions. There is no resemblance of any form of democracy left except in name only.

If we think another leader or another political coalition is going to rescue Malaysia from this crisis or lead us into a vibrant, progressive and forward-looking nation, I suggest we think again. We need to restore the basics of our democracy and any leader or political coalition taking over must do this first and foremost. All levers of power, government institutions and check and balance mechanisms must be restored, with no exception.

We, the people must demand and jealously guard these basics. There shall be no grace period for any leader or political coalition to dilly-dally on this. We, the people must always remember that dictatorial tendencies are natural and inevitable; power corrupts and absolute power corrupts absolutely. Do not just talk religion and morality because that alone cannot stop abuses of power and corruption, unless the people take an active interest in the business of government.

Why restoring the basics of democracy is urgently needed
September 25, 2015 – FMT

All that is necessary
for the triumph of evil
is for good men
to do nothing.

- Edmund Burke
When the people
fears their government,
there is TYRANNY;
when the government
fears the people,
there is LIBERTY.

- Thomas Jefferson
Do you hear the people sing?
Real Poverty Rate in
Malaysia: 22.6%     ...more


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