Archive for May, 2015


TH land deal: Who would pay more when others buy it cheap?

QUICK TAKE: If a news report quoting sources is accurate and reliable, then Lembaga Tabung Haji (TH) appears to have made a blunder in the Tun Razak Exchange (TRX) land deal.

The Star reported on May 11 that a deal between Retirement Fund Inc (KWAP) and 1Malaysia Development Berhad (1MDB) will see the government pension fund paying over 15 per cent less than the deal inked by TH.

KWAP plans to buy a parcel of land and building as its new headquarters at the TRX project in Kuala Lumpur City Centre. KWAP would pay between RM1 billion and RM1.2 billion for both the land and a 40-storey tower in the site.

Quoting sources, it said the land was bought at about RM2,300 per sq ft (psf).

It said the agreement of the purchase had been ironed out between KWAP and 1MDB, which owns TRX.

“The heads of agreement is a prelude to the sale and purchase (S&P) agreement. The terms of agreement are also tight where KWAP will only pay 10 per cent first and the rest upon completion of the building,” it quoted an unnamed source as saying.

TH’s decision to pay 1MDB RM188.5 million, or RM2,774 psf, for the 0.64 ha land for the purpose of building a residential tower has resulted in an uproar among its depositors, some of whom withdrew their savings at its branch in Shah Alam on May 7.

The furore is over TH’s willingness to pay far more psf than what 1MDB had paid – RM64 psf – when it first bought the land from the government.

And what make the deal questionable is the presence of directors who sit on both the RM42 billion debt-laden 1MDB and TH.

The fact that these directors are also Umno members have given rise to allegations that the deal is concocted to help bail 1MDB out of its debts.

The fierce criticisms of the deal from both sides of the political divide and Muslim organisations have forced Prime Minister Najib Razak, who is 1MDB advisory board chairman, to advise TH to dispose of the land as quickly as possible.

Now, here’s the puzzling question for landbuyers.

If KWAP is able to buy a TRX land parcel for more than 15 per cent lower or cheaper than TH did, why should anyone buy it at a higher price from TH?

What can be deduced should TH really manage to sell its TRX land for more than RM188.5 billion?

It truly would be mindboggling if there was a buyer who would pay more for a piece of land when others are buying it at lower prices.

12 May 2015 –
TH land deal: Who would pay more when others buy it cheap?


Putrajaya’s dodgy dealing to raise billions in secret

KINIBIZ Would you pay rental to yourself to use property that you already own for years – and have already long fully paid for at that?

That is exactly what Putrajaya is doing, having paid some RM5.77 billion in rental over the past two-and-a-half years to use 186 land parcels it already owns. And it will continue to pay another RM23.4 billion in total over the next 12 years or so.

The recipient? Pembinaan PFI Sdn Bhd, an obscure company wholly owned by the Ministry of Finance. “This is a left pocket to right pocket transaction,” said Kulim member of parliament and Public Accounts Committee (PAC) member Abdul Aziz Sheikh Fadzir (photo) at a media briefing in mid-March this year.

This strange and convoluted deal came about from the implementation of the federal government’s private finance initiative (PFI) initiative, first announced during the time of fifth prime minister Abdullah Ahmad Badawi, which sought to adopt a concessional procurement model widely practiced in other countries such as the United Kingdom and Australia.

However, there are a number of things wrong with how Putrajaya has proceeded with this procurement method.

While the established practice for PFI projects to have the private sector source for their own financing, the Malaysian version sees the government providing the funds.

And these funds, totalling RM30 billion so far, were raised in a roundabout manner which critics say was intended to keep things off the government’s balance sheet.

Transparency is lacking too: project awards are shrouded in secrecy and even appear unnecessary in some cases, with no known process for evaluation and accountability (see the third part of this series).

Most curious of all is the apparent intention of the entire PFI idea, which seems to provide contracts and concessions to bumiputera contractors.

This raises questions on who these contractors are and whether they are benefitting from political connections in receiving these project awards.

May 11, 2015 – Malaysiakini
By Kharie Hisyam
Putrajaya’s dodgy dealing to raise billions in secret


Rafizi: PNB threw 1MDB RM579mil lifeline

Permodalan Nasional Bhd (PNB), a GLC set up to promote equity ownership among the bumiputra, was likely to have loaned RM579.2 million to debt-ridden 1Malaysia Development Bhd (1MDB).

PNB is the investment arm of Yayasan Pelaburan Bumiputra (YPB), a unit set up in 1978 to implement New Economic Policy objectives. Prime Minister Najib Abdul Razak is the chairperson of YPB board of trustees.

According to PKR secretary-general Rafizi Ramli, a report by The Star in March had stated that PNB and Tabung Haji had bought RM1.5 billion in sukuk bonds from 1MDB with Bandar Malaysia land as collateral.

But now that Tabung Haji had admitted that it has bought RM920.8 million in sukuk bonds from 1MDB, it could only mean that the balance was bought by PNB.

At a press conference today, Rafizi said three GLCs – Tabung Haji, PNB and Retirement Fund Inc (KWAP) – are now known to be pumping money into 1MDB.

“Only the Employee Provident Fund has been bold and confirmed that no EPF money has been invested in 1MDB.

“The one who hasn’t said anything is the Armed Forces Fund Board (LTAT),” Rafizi said, adding that he was confident that LTAT was already involved.

More 1MDB bonds soon?

On the sukuks issued to Tabung Haji and PNB, Rafizi said the money raised were meant to facilitate the relocation of military assets from what used to be the Sungai Besi army camp, as phase 1 of the Bandar Malaysia’s development.

However, he claimed, there has been no visible progress on this effort.

Rafizi also claimed that 1MDB had promised to pay back its loans using money raised from rent collected once Bandar Malaysia is developed.

“(But) even if you have a complete development, it is not confirmed that 1MDB will be able to get the right tenants at the right tenancy rate to make back the money,” he said.

Besides the RM1.5 billion bonds issued to Tabung Haji and PNB, Rafizi claimed the state investment arm plans to raise a further RM2.5 billion to develop Bandar Malaysia.

“My checks show that 1MDB plans to issue up to RM2.5 billion in sukuk, to finance the development of Bandar Malaysia, on top of RM2 billion in debts it had loaned from Ambank for Bandar Malaysia,” he said.

May 12, 2015 – Malaysiakini
Rafizi: PNB threw 1MDB RM579mil lifeline


Tabung Haji land purchase – Lack of integrity, good governance and transparency

Trouble with ‘from left pocket into right pocket’

COMMENT On one account, Prime Minister-cum-Finance Minister Najib Abdul Razak should be lauded for helping Tabung Haji to make good returns overnight.

There is no doubt that once Tabung Haji floats its prime land in the open market, there will be a number of bidders, be it cronies or true investors, especially since land in the Federal Territory is scarce.

The Tun Razak Exchange (TRX) land that the debt-ridden 1Malaysia Development Berhad (1MDB) had sold to Tabung Haji for RM188.5 million will undoubtedly help the latter to make millions in return, when a private developer decides to purchase the prime land even at market prices.

To Tabung Haji, it is a windfall which Najib assures us that the capital gains would immediately silence his critics, in particular former prime minister Dr Mahathir Mohamad.

Both 1MDB and Tabung Haji are government-linked bodies set up for different purposes. One is now allegedly laden with debts that it is unable to service, while the other is hard-earned money that Muslims have contributed over the years in order to fulfil their pilgrimage obligations.

Where the problem lies

It is a matter of lack of integrity, good governance and transparency that we see in the entire episode involving the people who were supposed to safeguard the country’s finances. This is where the problem lies, not about making a windfall or good returns overnight.

If Tabung Haji took up the advice from the prime minister to immediately dispose of the land following the recent expose, it is only obvious that the board is not fulfilling its fiduciary obligations as an independent party. It will not absolve any party of the allegations made by the 1MDB critics.

After all, as the funds’ chairperson Abdul Azeez Abdul Rahim had openly said, this is a political battle – therefore, all the more reason he should not drag Tabung Haji further down the path, but let Najib alone to face the brickbats from his nemesis, Dr Mahathir, and others.

Following the manner in which Najib had ‘advised’ Tabung Haji to dispose of the land, there is also no reason for the rakyat not to believe that the purchase of the land had also been done in the same manner.

In the first place, why was prime land owned by the government sold at a mere RM70 per square foot (psf) to 1MDB, when it should have been worth so much more if floated in the open market? Who approved the government’s decision to sell the land in the first place? Was it a decision made by the cabinet?

Integrity, please. Does this amount to ‘under-declaring’ the real market value of the government’s land bank? The government should have earned millions more, and the money could have gone into the coffers for the welfare of the rakyat such as building a hospital for the state of Perlis.

But, what irks most people the most is the billions of Ringgit that have allegedly gone missing in 1MDB, which have not been accounted for yet. Am I right in asking why did it have to sell the land if it had all the money to service the loans?

May 11, 2015 – Malaysiakini
Trouble with ‘from left pocket into right pocket’


’Proof’: Najib solely responsible for 1MDB, says Pua

Opposition wants PM to explain his clearly demarcated role in the scandal-ridden 1MDB.

KUALA LUMPUR: The Opposition wants Prime Minister Najib Abdul Razak to immediately schedule an official Ministerial Statement in Parliament during the current sitting to give a full and complete explanation on “the mother of the mother of the mother of all scandals” in Malaysia, the 1MDB heist of the century.

“Najib should drop all pretence of ignorance and give up the farcical charade that 1MDB was a healthy and salvageable company because he was only acting to deny his own culpability and protect his own interest in the matter.”

Petaling Jaya Utara MP Tony Pua was commenting on the latest “exposé” by the alternative media which “confirmed” via documents available in the public domain that the entire responsibility for the RM42 billion 1MDB scandal “implicitly” lies with the Prime Minister.

He was referring to a special Clause 117 – inked on 27 February 2009 according to Malay Mail Online – in the Memorandum and Articles of Association (M&A) of the Terengganu Investment Authority (TIA), 1MDB’s predecessor company, obtained by Malaysiakini and Malay Mail Online. “The special clause places absolute powers over the company’s decisions in the hands of the Prime Minister.”

Apparently, the reading is that the 1MDB Board of Directors was likewise merely a rubber stamp body for decisions made by Najib.

Hence, said Pua, Najib who was also Finance Minister “must in particular explain in full his involvement in the initial USD1 billion investment in Petrosaudi International Limited and the additional USD1 billion in loans extended to Petrosaudi”.

He must also explain, added Pua who is also DAP National Publicity Secretary, “his approval for the direct payment of more than USD1 billion to Good Star Limited, a company controlled by one Penangite, Jho Low”.

“He must also explain whether USD260 million was siphoned from 1MDB, as alleged, and used for the acquisition of the UBG Bhd banking group from the latter’s substantial shareholder, Sarawak Governor Taib Mahmud’s family vehicles,” said Pua.

In addition, continued the MP, Najib must also explain why 1MDB proceeded to raise bonds amounting to USD6.5 billion by paying fees in excess of 10 per cent to Goldman Sachs International, as well as why a costly guarantee was sought from Abu Dhabi’s International Petroleum Investment Corporation (IPIC) for USD3.5 billion of these bonds.

Most importantly, warned Pua, he must disclose exactly where all the above 1MDB’s money was today. “All of the above have led to 1MDB’s horrendous predicament today where it has no money to repay its mountain of debt nor service its interest amounting to some RM2.5 billion annually,” lamented Pua.

Delving into the TIA documents exposed by the alternative media, Pua pointed out that the special Clause 117 dictates that the Prime Minister must give his “written approval” for any TIA deals, including the firm’s investments or any bid for restructuring.

Other salient points in the M&A:

The Prime Minister’s written approval includes “any financial commitment (including investment), restructuring or any other matter which was likely to affect the guarantee given by the Federal Government of Malaysia for the benefit of the company, national interest, national security or any policy of the Federal Government of Malaysia”.

’Proof’: Najib solely responsible for 1MDB, says Pua
May 27, 2015 – FMT


Leaked documents show PM’s approval required for all deals under 1MDB precursor

KUALA LUMPUR, May 26 — The prime minister has the final say over any “financial commitment” undertaken by 1 Malaysia Development Berhad’s (1MDB) precursor, Terengganu Investment Authority (TIA), according to TIA’s Memorandum and Articles of Association agreement.

Clause 75 of the agreement states that the management of the company and the determination of overall investment policies or decisions lies with the board of directors.

1MDB was incorporated in 2009, after Prime Minister Datuk Seri Najib Razak announced the decision to turn TIA into a federal agency.

Clause 117 of the agreement inked on February 27, 2009, indicates that the prime minister must give his written approval for any of TIA’s deals, including the firm’s investments or any bid for restructuring.

The clause states that for any avoidance of doubt, none of three things can be executed “without the written prior approval of the prime minister”.

This includes “any financial commitment (including investment), restructuring or any other matter which is likely to affect the guarantee given by the Federal Government of Malaysia for the benefit of the company, national interest, national security or any policy of the Federal Government of Malaysia”.

The clause also stipulates that the government shall have the “final and conclusive” right to determine what constitutes national interest and national security.

Other matters which need the PM’s approval are amendments to the company’s Memorandum and Articles of Association of the Company and appointments and removal of directors and senior management team of TIA.

The document was made available to Malay Mail Online.

Leaked documents show PM’s approval required for all deals under 1MDB precursor
May 26, 2015 – MMO


Malaysia fast becoming a fascist state

COMMENT The increasingly and desperate use of oppressive laws like the Sedition Act 1948 is evidence enough that Malaysia is fast becoming a fascist state. By fascism, is meant a system of government marked by oppressive controls, violent suppression of the opposition, and typically a policy of belligerent nationalism and racist and religious extremism.

Even former prime minister Dr Mahathir Mohamad has voiced his fears of the country becoming a police state following the recent arrest of senior editors and top executives of The Edge media group under the sedition law.

As we commemorate World Press Freedom Day once again, let’s remind ourselves that the journalism’s first obligation is to the truth. Let us also remind ourselves that only a press free of censorship can tell the truth.

Our profession is essentially a pursuit of truth. We need not only to seek the truth but also to speak it. Boldly. Although the federal constitution does not guarantee press freedom, it guarantees the right to freedom of expression; a right to hold an opinion and to express it, however pugnacious that opinion may be.

The pursuit of truth is not merely a lofty idealism but a basic element and ethos of our profession. This is our mandate. We have no other option really; we are either in conspiracy with those who covet to hide the truth or comrades-in-arm with those who fight to free it. We are either journalists or servile apologists of the establishment.

There is no safe space in journalism. We need to understand that and we need to make a choice. That choice defines our professional identity. Our prayer and our hope is that we can find the courage to make the right choice – a choice that will make us free people or slaves to our own cowardice.

The Sedition Act 1948 was amended on April 10, just one month ago. According to a joint statement a week later by the Malaysian Bar, the Advocates’ Association of Sarawak and the Sabah Law Association, “The amendments have dealt a crippling blow to the rule of law in Malaysia, and lend weight to the widely held public perception that we are becoming an intolerant authoritarian state”.

“The amendments do not deal with one of the most offensive elements of the Sedition Act 1948, namely that the intention of a person accused of sedition, whether noble or mischievous, is irrelevant. The offence of sedition therefore remains one of strict liability. Strict liability for criminal offences is an extreme exception in criminal law, and certainly not one that should be used in respect of the constitutionally guaranteed freedom of speech and expression.

“The amendments also criminalise truth, inasmuch as the truth of the words that are said to constitute ‘seditious tendency’ is not a defence to a sedition charge.”

Crafted by the former colonial regime

In a nutshell, there is no defence for anyone charged under the sedition law. And none when charged has managed to escape thus far. Let us be reminded that the Sedition Act 1948 was not even enacted by Parliament but crafted by the former colonial regime.

The genesis of it is so archaic that it was actually first introduced in Singapore as the Sedition Ordinance 1938 of the Straits Settlements where it was a Crown Colony just as Penang and Malacca were. The main aim was to curtail opposition to colonial rule. Today, it is used to stifle growing opposition to a regime that has become increasingly unpopular.

Following amendments to the sedition law, the UN High Commissioner for Human Rights Zeid Ra’ad Al Hussein warned the government that the new provisions would “seriously undermine the freedom of expression and opinion in the country, in breach of Malaysia’s federal constitution and its international human rights obligations.”

He also pointed out that the Sedition Act has been applied in many instances to curb the legitimate exercise of freedom of expression in Malaysia – including through the arrests of individuals for merely tweeting their criticism of government policies and judicial decisions.

May 9, 2015 – Malaysiakini
Malaysia fast becoming a fascist state


Election Commission CANNOT dictate who we vote for

Can the Election Commission dictate who we vote for?

QUICK TAKE: It may seem that the government wants to exercise control over every aspect of our lives as citizens in this fair land. When the Election Commission (EC) jumped at the suggestion by controversial lecturer Ridhuan Tee by stating that candidates must qualify by having a credit in Bahasa Melayu, many threw up a fuss.

Rightly so, since by merit of language alone, several ministers may have to leave office, not to mention those of whom Bahasa Melayu is not their mother tongue.

Maybe, just to be fair, the EC should have a language competency test for prospective candidates. This test should be done upon nomination by the respective political parties. Held in a neutral location, and for which the results should be exhibited for public viewing.

Those disqualified few should have the option to take language lessons in selected EC-approved schools. Of course, they will have to pay a tuition fee that is GST rated, just so they can help the development of the country.

But seriously, if we take up the point to mandate that prospective candidates must have a credit in Bahasa Melayu in order to stand as a candidate, then something is wrong with the democratic process in Malaysia.

Can the EC dictate who we vote for?

A quick read of the Election Act 1958, would give you some insight to the authority of the EC in facilitating elections in Malaysia. The Election Act 1958 must be read alongside the Federal Constitution and thus, both documents are what give authority to the EC in the administration of elections.

The Federal Constitution Article 47 states, “Every citizen resident in the Federation is qualified to be a member – (b) of the Senate, if he is not less than thirty years old; (c) of the House of Representatives, if he is not less than twenty-one years old, unless he is disqualified for being a member by this Constitution or by any law made in pursuance of Article 48.”

Article 47 is clear in stating that a citizen of this country has the right to contest an election. The disqualifying clauses, as mentioned in Article 48, is that they are not mentally unstable, or a bankrupt, or a criminal, or a non-citizen.

Nowhere is there a mention of academic prowess. Regardless of their academic standing, a citizen can and is allowed to stand for election. This non-mention of academic qualification does not mean the political parties cannot impose their own conditions. It is the right of the political party to put forward their best candidate to the people.

This allowance to allow political parties the responsibility to put forward their best, does explain to a certain degree; the level of intelligence we see in some of our ministers in this day and age. If the candidate is not intelligent, it is the party’s fault.

Election Act 1958 is clear that the EC is to administer and facilitate elections. The voters are a primary responsibility of the EC, there is no mention of authority to filter candidates. The EC is not responsible for the quality of candidates. As long as the candidates meet the requirements of the Constitution, the EC is obliged to accept them as candidates.

Thus, it seems the EC cannot dictate who is allowed to be candidate other than what is mentioned in the Constitution.

07 May 2015 –
Can the Election Commission dictate who we vote for?


The Tabung Haji trio with 1MDB links – Conflict of interest

Three top officials in Tabung Haji are directly involved with debt-laden 1Malaysia Development Bhd (1MDB), which raises the question of conflict of interest in a recent deal involving the two entities.

Yesterday, Tabung Haji admitted that it is acquiring a plot of land in the Tun Razak Exchange site from 1MDB for a sum of RM188 million.

This sparked controversy because it is widely known that 1MDB bought the land for the Tun Razak Exchange project from the federal government at a price that was far below market value.

Following this, Umno Youth and Umno supreme council member Saifuddin Abdullah zeroed in on the fact that this deal could be tainted by conflict of interest.

The three figures are:

Ismee Ismail

Ismee is the Tabung Haji group managing director and CEO. He also sits on the 1MDB board.

Johan Abdullah

Johan is the Tabung Haji deputy group managing director and deputy CEO.

He is also the chairperson of 1MDB subsidiary Edra Global Energy Sdn Bhd.

Edra acquired power assets from Powertek (formerly known as Tanjong Energy), Genting Sanyen and Jimah.

Abdul Samad Alias

Abdul Samad sits on the Tabung Haji investment panel.

He also sits on the 1MDB advisory board, which is chaired by Prime Minister Najib Abdul Razak.

May 8, 2015 – Malaysiakini
The Tabung Haji trio with 1MDB links


Tabung Haji-1MDB ‘sweetheart deal’ puzzling

MP SPEAKS Following reports that Lembaga Tabung Haji (LTH) had purchased two plots of land in the Tun Razak Exchange (TRX) development from 1MDB at exorbitant prices, the Muslim pilgrims’ fund responded with a statement clarifying that they had actually bought only one plot of land for RM188.5 million.

According to LTH deputy group managing director Johan Abdullah, the investment was in line with LTH’s strategic plan to focus on property development.

He also added that the purchase price of RM188.5 million was discounted based on current market value.

Meanwhile, in addressing the leaked documents published on an anonymous blog, Johan (photo) said that “the leakage of information as seen on the proposal papers cannot be made proof of the final decision in the investment.”

In other words, LTH acknowledges the veracity of the documents but insists they were not final.

Based on the leaked documents, the LTH investment panel had, on 30 March 2015, recommended to the board of directors to propose to the minister to approve the purchase of two plots of land from 1MDB Real Estate Sdn Bhd, measuring 1.56 acres and 3.4 acres, at RM194 million or RM2,860 per square feet and RM578 million or RM3,900 per square feet respectively.

This was apparently endorsed by the LTH board of directors on 1 April 2015.

However, yesterday’s statement by LTH shows that the 1.56 acre plot was actually acquired at a slightly lower price of RM188.5 million or RM2,773 per square feet, which corresponds to a discount of less than three per cent compared to the recommended purchase price.

Nonetheless, it must be noted that RM2,773 per square feet is still a very high price for LTH to pay considering 1MDB bought the land for a mere RM64 four years ago in 2011.

Huge profit for 1MDB

In fact, LTH’s own internal risk assessment report revealed that comparable transactions in the vicinity saw land being sold for between RM649.49 per square feet to RM2,266.85 per square feet.

At RM2,773 per square feet, LTH has paid at least RM500 per square feet more than other comparable recent transactions.

This sweetheart deal has effectively allowed 1MDB to rake in a huge profit of RM184 million by acting as nothing more than a land broker.

Furthermore, LTH has not explained why they insisted to press on with the deal despite a “high-risk” assessment by their internal risk management team.

Among the many problems pointed out by the report include the currently lacklustre property sector, softening of real-estate prices in KL, increasing difficulty for buyers to obtain financing, an oversupply of luxury condominiums in the Klang Valley, as well as the generally slow pace of development of the TRX project.

In fact, the report even stated that LTH would face a reputation risk if it associated itself with 1MDB.

With so many dissuasive factors, it is alarming that LTH would take on such a high-risk investment, and in doing so potentially place the savings of millions of hajj pilgrims in jeopardy.

May 8, 2015 – Malaysiakini
By Zairil Khir Johari
Tabung Haji-1MDB ‘sweetheart deal’ puzzling

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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?