02
Jun
16

1MDB Nears a Sorry End

1Malaysia Development Bhd. Nears a Sorry End

The Malaysian government has begun to officially dismantle 1Malaysia Development Bhd., the Ministry of Finance-backed development fund that was brought into being by Prime Minister Najib Razak in 2008 and which has morphed into what arguably is the biggest scandal in Malaysian history.

The implications for investors are unclear. What assets are not sold off are expected to be moved into the Ministry of Finance, with the board of advisers – headed by Najib – and the board of directors being dissolved. A well-connected businessman told Asia Sentinel last week that the government – and thus the taxpayers – will probably end up having to eat the losses.

However, the eight-year history of the fund is an astonishing tale of greed and chicanery, with billions of dollars apparently having been stolen or otherwise unaccounted for, diverted into accounts in the Cayman and British Virgin Islands. Investigators believe that as much as US$1 billion was routed into Najib’s own accounts in March of 2013 before being diverted out again in October of that year, to disappear into cyberspace.

The scandal has played a major part in fomenting distrust in the United Malays National Organization, the leading party in the national ruling coalition, with Najib firing his own vice president and president and deputy prime minister, Muhyiddin Yassin, as well as Attorney General Abdul Ghani Patail, in an effort to contain the scandal. Other government officials have been sidelined or neutralized.

It has driven former Prime Minister Mahathir Mohamad to seek a deal with opposition figures including Lim Kit Siang, the head of the Democratic Action Party, whom he jailed in 1986, and others, in the vain attempt to bring down Najib. So far, propped up as head of UMNO and thus as Prime Minister by the votes of 196 district chiefs who are said to have been bought off with rent-seeking jobs and contracts as well as outright bribes, Najib has remained invulnerable, also by threatening opponents with jail, closing influential newspapers temporarily and shortstopping a reported investigation by the Malaysian Anti-Crime Commission that was on the edge of recommending his indictment. A similar request from Bank Negara, the central bank, for an investigation into the movement of funds was simply ignored.

The scandal has also ensnared Goldman Sachs’ former Southeast Asia head, Tim Leissner, who engineered a huge US$3 billion sale of 1MDB bonds that earned Goldman an estimated US$500 million. Leissner left the firm and moved to Los Angeles, where he has reportedly been meeting with FBI officials.

The fund is believed to be RM42 billion (US$11.6 million) in debt against an unknown amount of assets, and with the government in a protracted squabble with an Abu Dhabi entity, the International Petroleum Investment Corp. (IPIC) over as much as US$3.5 billion of funds that 1MDB officials thought they were transferring to an IPIC subsidiary, Aabar Investments PJS.

…more
1Malaysia Development Bhd. Nears a Sorry End
May 4, 2016 – Asia Sentinel

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for the triumph of evil
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to do nothing.

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there is TYRANNY;
when the government
fears the people,
there is LIBERTY.

- Thomas Jefferson
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