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Malaysia seems to be sinking fast…1MDB scandal may see us a credit rating and outlook downgrade

July 29, 2016

The 1MDB saga and other issues paint a picture of a nation that is in deep trouble, without a solution in sight.

Dzulkefly Ahmad

by Dzulkefly Ahmad

Now that events have unfolded to give us a better understanding of the scandal associated with 1Malaysia Development Berhad (1MDB), we may ask a pertinent question: is our troubled nation going into a tail-spin? God forbid.

But let us face the facts and consider the possible outcomes.

US prosecutors alleged last week that more than USD3.5 billion (RM14.6 billion) had been siphoned from 1MDB. They said the money, which was meant to benefit the Malaysian people, was diverted towards the purchase of real estate and artwork and to pay casino bills.

It is most damning to the Malaysian government that the US lawsuits represent an attempt to make the biggest ever forfeiture of assets that had gone through that country’s financial system. Consider how big a shame it is to Malaysia that it is the US Department of Justice, not our Attorney-General’s Chambers, that is assuming the role of plaintiff, seeking to forfeit assets amounting to USD1 billion (RM4 billion).

And when our AG, Apandi Ali, described the US allegations as “insinuations”, one of Malaysia’s most critical institutions became regrettably perceived as being on the brink of disaster. Apandi should have been ashamed to hear his US counterpart, Loretta Lynch, asserting that the ultimate goal of the civil suits was to return the money to the people of Malaysia.

The revelations in the US have given us enough reason to suspect that something was amiss in the Malaysian Anti-Corruption Commission’s decision to absolve 1MDB of any wrongdoing.

The police, meanwhile, are preoccupied with apprehending those who express legitimate dissent on the issue, using draconian laws such as the Sedition Act and the Prevention of Terrorism Act. There’s little doubt that the National Security Council Act will also be used to suppress dissent when it comes into effect. Malaysia is virtually becoming a police state.

In addition, numerous attempts to get the Speaker of Parliament to allow debate on the issue have come to naught, strengthening the impression that the legislative branch of government is nothing more than a rubber stamp for the executive branch.

And there’s more bad news. According to an exposé by Sarawak Report, the cost of the East Coast Rail Project has been inflated from RM30 billion to RM60 billion in an alleged secret deal with China. The purpose of the deal, it further alleged, was to enable the payment of 1MDB’s debts.

The rotting of Malaysia has been going on for some time, and it looks like we have reached a critical stage. We may be witnessing the final phase of a state’s failure.

The fact is that Malaysian democracy has been in dire straits for a long time and our systemic failures, if not seriously addressed, could well result in a downgrading of Malaysia’s sovereign rating and credit outlook.

A downgrade by rating agencies will be all it takes to trigger an implosion of the economy. The trouble is that no viable solution is in sight.

Dr Dzulkefly Ahmad is the Strategy Director of Parti Amanah Negara.

*With a firm belief in freedom of expression and without prejudice, FMT tries its best to share reliable content from third parties. Such articles are strictly the writer’s personal opinion. FMT does not necessarily endorse the views or opinions given by any third party content provider.*

 

1MDB scandal may see us a credit rating and outlook downgrade (MKini)


Dzulkefly Ahmad     Published and Updated 28 Jul 2016, 12:39 pm

 

 With the spectre of all the events that have unfolded very recently, are we about to witness a very troubled nation going into a tailspin? God forbid. But let us face the facts and arguably the imminent outcomes.

Malaysian democracy has indeed been in dire straits for a prolonged while and the systemic failure, if not seriously mitigated, could very well result in a downgrading of Malaysia’s sovereign rating and credit outlook.

Firstly, when the attorney-general of Malaysia was visibly clueless, and rebutted the civil suit filed by the attorney-general of the United State of America as “insinuations and allegations”, Malaysia’s most critical institution is regrettably perceived as dysfunctional.

The US prosecutors alleged last week that more than US$3.5 billion (RM14.6 billion) had been siphoned from the 1Malaysia Development Fund (1MDB). This money, they argued, were to benefit the Malaysian people but had allegedly been diverted to purchase real estate, artwork and pay for casino bills.

Most ironical, it is the US that is now assuming the role of a plaintiff, seeking to restrain and forfeit the 17 assets belonging to named individuals – the Red Granite Pictures Inc and its affiliates, including but not limited to the ‘Wolf of Wall Street’ motion picture (the defendant), amounting to US$1 billion (RM4 billion).

US doing our job

Most ashamedly unto Malaysia’s AG Mohamed Apandi Ali, was when Loretta Lynch, the AG of the American Department of Justice (DOJ), asserted that the ultimate goal is to return the funds to the people of Malaysia, funds believed to have been misappropriated (stolen) from 1MDB, to the tune of about US$3.5 billion (RM14.6 billion).

That this is the biggest ever forfeiture of assets that has gone through the US financial system, to be embarked by the US government in combating kleptocracy and the worst money laundering scam in the world, is most damning to Malaysia.

That the Malaysian Anti-Corruption Commission (MACC) had also in the recent past absolved 1MDB of any wrongdoing is most bemusing, much as it had generated extreme outrage, malice and contempt.

While the police are preoccupied with apprehending legitimate dissent on the 1MDB, using draconian laws like the Sedition Act, the Prevention of Terrorism Act (Pota) and soon the newly minted National Security Council Act (NSC), the nation has inadvertently slipped into a ‘police state’, aggravating the state of fear amongst it citizenry.

The numerous attempts to get the speaker of the bicameral Parliament to convene and debate on the heinous scandal of1MDB have come to naught. Much less to be able to table a vote of no confidence on the prime minister.

It does not take a pundit to tell us that the above events have indeed demolished any semblance of a working legislative branch of the government, long known to be a rubber-stamp of the executives in Putrajaya.

The rot in Malaysia that has been going on for some time now has surely reached a critical juncture. Now we are truly witnessing a failing state, a Mugabeland of sorts.

The latest expose by Sarawak Report of an allegedly inflated project for the East Coast Rail Project from RM30 billion to RM60 billion – an alleged secret deal with China to pay off 1MDB’s debt – if found true, would be most devastating.Briefly put, a credit and outlook downgrade by credit rating agencies will be all it takes to trigger an implosion of the economy, and with it, perhaps the suffering rakyat.

Worse, no viable solution is in sight even after the intervention of the Conference of Rulers. The prognosis is surely getting more grim by the day.


DZULKEFLY AHMAD is Parti Amanah Negara strategy director and former Kuala Selangor MP.

 

 

 

 

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