It was then i noticed a gentleman sitting on the first row all dressed up in the Malay baju and sampin, a formal man's wear for special occasion. sitting with his legs hanging out practically and bouncing back and forth like a dog's. I was pissed despite being in the mosque and supposedly having to stay rapt in attention to what was being preached. I thought this guy was totally rude and uncouth. I wondered how a military personnel could behave in such manner. I even had the mind to tell him off after the prayer but thought better of it as I was a guest on a Military base and liable to get shot if i misbehave. After the Friday prayer had ended I avoided getting anywhere near the guy as i did not want to shake his hands as we normally do before we leave the mosque. I found out later that he was the Defense Minister at the time and today happens to be our present Prime Minister.
I was shocked and sad at the same time thinking of how one who holds such a high rank in the government could be so unmindful when in the House Of God. He seemed to have no respect to the fact that he sat in the presence of the All Mighty perhaps due to a lack of awareness or simply an unconscious show of arrogance. (This coming from a guy who had spent two years in a Buddhist monastery as a Zen Student). I most probably had fouled myself from getting any merit from my Friday Prayer for thinking so much negative thoughts of this guy; Such is!
The rest is as they say; His - story!
From the moment in 2009 when Najib took over a sovereign wealth fund set up by the Malaysian state of oil-rich Terengganu and turned it into a development fund owned by the federal government, 1MDB has been controversial.
Mahathir, who was prime minister from 1981 to 2003, now accuses Najib of “hijacking” the Terengganu Investment Authority, or the TIA, from the state government. Not so, 1MDB said in a statement: The state government willingly “decided to withdraw from the TIA” after the federal government guaranteed the TIA’s bonds.
That didn’t end the argument. Beginning in March, as public pressure grew, the country’s auditor general, the parliament’s public accounts committee, the central bank, and the police have all homed in on 1MDB. The force of the scandal helped topple the ringgit, the worst-performing currency in Asia as of July 16, down 8.1 per cent against the dollar since the start of the year. Foreign reserves plunged 20 per cent in June from a year earlier.
On July 3, the Wall Street Journal (WSJ), citing documents from government probes, reported that investigators believe almost US$700 million in cash moved through state agencies, banks, and companies linked to 1MDB before eventually finding its way into Najib’s personal accounts. The money reportedly included two transactions—one worth US$620 million; another, US$61 million—made in March 2013, two months before a general election returned Najib to power as part of the Barisan Nasional, or National Front, coalition.
In a country with no public campaign financing and few strictures on political donations, the alleged cash flows caused alarm. Before the 2013 election, on March 12, 1MDB Chairman Lodin Wok Kamaruddin and Khadem Al Qubaisi, then chairman of Abu Dhabi’s Aabar Investments, signed an agreement to form a joint venture. The following month, 1MDB announced it had raised US$3 billion for its share of the partnership. “1MDB opted for a private placement to ensure the timely completion of this economic initiative,” the company said in a statement on April 15 of that year.
The timing was controversial. “1MDB may have been created with one of the key objectives being to raise a slush fund to finance Barisan Nasional’s election campaigns,” says MP Tony Pua, of the opposition Democratic Action Party. A statement from the prime minister’s office dismissed the allegations in the WSJ, saying they amounted to “political sabotage” at the hands of “certain individuals to undermine confidence in our economy, tarnish the government, and remove a democratically elected prime minister.” In a statement, 1MDB said it “has never provided any funds to the prime minister.”
Malaysia’s biggest-ever financial scandal has spotlighted a colourful cast of characters—some connected to 1MDB, some not. A politician since the age of 23, the mustachioed Najib is the eldest son of the country’s second prime minister following its independence from Britain in 1957, Abdul Razak Hussein, and a nephew of the third, Hussein Onn.
Riza Aziz, Rosmah’s son from her first marriage, is close to a Kuala Lumpur man about town who’s been linked to 1MDB named Low Taek Jho. Jho Low, as he’s known, is a whiz-kid dealmaker who exploded onto the gossip pages in 2009. One photo shows the moon-faced Low partying with California socialite Paris Hilton and clutching a bottle of Cristal champagne. The prime minister’s stepson co-founded a Los Angeles company that produced The Wolf of Wall Street, the 2013 film about lifestyle excesses and criminal exploits in the world of finance; Low got a full-screen “special thanks” credit at the end of Wolf. Low helped set up 1MDB’s first joint venture, with PetroSaudi International, according to reports in The Edge and the SR.
An additional touch of glamour comes from Goldman Sachs executive Tim Leissner, a lanky, blue-eyed German who’s married to former US fashion model and designer Kimora Lee Simmons, the ex-wife of Russell Simmons, co-founder of New York hip-hop music label Def Jam Recordings. In September 2013, when Najib and Rosmah traveled to San Francisco to open a new office of Khazanah Nasional, Malaysia’s sovereign wealth fund, Rosmah and Simmons were photographed together. Leissner, now Goldman’s Southeast Asia chairman, was a fixture in Malaysian dealmaking in the late 2000s. Goldman helped manage billionaire Tan Sri T. Ananda Krishnan’s 2009 initial public offering of Maxis, Malaysia’s biggest mobile phone service provider.
Goldman established a close and profitable relationship with 1MDB. From 2012 to 2013, the bank arranged three bond sales for the company, totalling US$6.5 billion. Fees, commissions, and expenses for Goldman totalled US$593 million—about 9.1 per cent of the money raised—according to a person familiar with the sales. “These transactions were individually tailored financing solutions, the fee and commissions for which reflected the underwriting risks assumed by Goldman Sachs on each series of bonds, as well as other prevailing conditions at the time, including spreads of credit benchmarks, hedging costs, and general market conditions,” says Hong Kong—based Goldman spokesman Edward Naylor.
In 2013, Goldman arranged 1MDB’s US$3 billion bond sale, the one passed up by Hanwha Life’s Song. The note is included in JPMorgan’s benchmark Asian and Emerging-Market Bond indexes. Goldman’s commissions, fees, and expenses from the sale were US$283 million, or 9.4 per cent of the amount raised, according to the prospectus. The person familiar with the transaction says Goldman’s take was high because the bank bought bonds from 1MDB, assuming the risk, and then resold them to customers.
In many ways, 1MDB’s star-crossed existence mirrors the misfortunes of this country of 30 million people. Najib set up 1MDB at a time when the Malaysian economy was on the mend; it expanded by 7.4 per cent in 2010, becoming one of the fastest growing in Southeast Asia. The company—supported by the advisory board chaired by Najib and including high-ranking government officials from China, Saudi Arabia, and the United Arab Emirates—set out to be a state-owned strategic development company that would forge global partnerships, draw foreign investment to Malaysia, and build up the country’s industrial base.
Early on, 1MDB formed joint ventures with Saudi and Abu Dhabi companies. On a visit to Malaysia in July 2013, Japanese Prime Minister Shinzo Abe attended a signing ceremony that was meant to initiate discussions on 1MDB’s plan to issue Samurai bonds guaranteed by the Japan Bank for International Cooperation. None of these plans panned out as they were supposed to. Over time, to its growing number of detractors, 1MDB looked more and more like a giant black box, its inner workings echoing the mysteries suggested by the wayang kulit, traditional shadow puppets, that frolic on the office walls of the Kuala Lumpur—based company.
1MDB, which has announced plans to wind itself down, is reducing its debt, according to President Arul Kanda. “1MDB has undertaken various initiatives to reduce the company’s debt levels and ensure that maximum value is generated for its 100 per cent shareholder, the Ministry of Finance,” Kanda said in a statement to Bloomberg Markets on July 16. As part of the plan, 1MDB has repaid a US$975 million loan, while more than 40 potential investors have shown interest in one of its property developments, Bandar Malaysia. He said the company also intends to sell its power plants. “We are focused and are making good progress,” he said.
The 1MDB story begins in 2008. In December of that year, Terengganu, a sultanate located across the Malay Peninsula from Kuala Lumpur, got federal government approval to set up its sovereign wealth fund, the TIA. Goldman Sachs and Boston Consulting Group advised the TIA in its early days. Jho Low advised the TIA from January to mid-May, according to a statement released on his behalf to local media in May 2014.
In May 2009, the TIA raised RM5 billion through the sale of 30-year Islamic bonds. Guaranteed by the federal government, they were offered at an interest rate of 5.75 per cent. In fact, according to Mahathir, the bonds were sold at a discounted price that effectively yielded bondholders 7 per cent. “Who approved such terrible terms for a loan to a government-owned company?” the former prime minister asked on his blog. 1MDB said in response that the effective yield was actually 6.15 per cent and was reasonable considering that these were Malaysia’s first 30-year notes.
In a similar vein, Low’s role at 1MDB involved “OPM”—other people’s money, says a former business associate in Kuala Lumpur. By now, Low had assembled an impressive array of connections. On September 7, 2009, Low met Patrick Mahony, an executive of PetroSaudi International, in New York, according to a report in The Edge. Tarek Obaid, a co-founder of PetroSaudi, had introduced them to each other via e-mail on August 28, the report said. It didn’t take long for 1MDB and PetroSaudi to cobble together a US$2.5 billion joint venture. Mahony didn’t respond to e-mailed questions. Obaid couldn’t be reached for comment.
As it got off the ground, 1MDB worked with more than a dozen financial institutions, but it forged especially close ties with Goldman. A helping hand came from Roger Ng, Goldman’s head of Southeast Asia sales and fixed-income trading, a Malaysian national well-known for his connections to politicians and tycoons, according to two people who know him. Leissner, then based in Singapore as Goldman’s co-president for Southeast Asia, played a key role in expanding the bank’s business inMalaysia. He declined to comment for this article. Ng, who left Goldman last year, didn’t respond to phone calls or a text message.
In December 2009, Goldman won a license from Malaysia’s Securities Commission to set up fund management and corporate finance advisory operations in the country. “The future outlook for Malaysia’s capital markets and its asset management industry is very positive,” Leissner said in a statement released by the commission at the time. “Through our local presence, we look forward to playing a larger role in their development.”
For 1MDB, Goldman played multiple roles. In 2012, it advised the firm on its acquisition of Tanjong Energy Holdings from Malaysian billionaire Krishnan and domestic power plants from Genting, a conglomerate. The following year, the bank helped 1MDB purchase the Jimah Energy Ventures power plant in Selangor, Malaysia, a deal that was completed in 2014.
The true extent of the trouble at 1MDB didn’t become apparent until late last year. Scandal aside, 2014 was a difficult year for Najib and his government. First came the disappearance of Malaysia Airlines Flight 370 and all 239 people on board in March. Then, in July, Flight 17, also operated by the state-owned airline, crashed near Donetsk in strife-torn eastern Ukraine, possibly after being hit by a surface-to-air missile; all 298 passengers and crew died. It was around that time that the SR and The Edge, under longtime editor Ho Kay Tat, began their exposés of 1MDB, adding to Najib’s woes.
In an unprecedented crackdown, Malaysian authorities this year have arrested more than 150 journalists, activists, opposition politicians, and lawyers on sedition charges or under a peaceful assembly act that strictly regulates public protests. One of Malaysia’s best-known political cartoonists, who goes by the name Zunar, has been charged with nine counts of sedition and faces up to 43 years in prison.
On June 22, Thai police arrested a tattooed Swiss national named Xavier Justo, a former executive at 1MDB investment partner PetroSaudi International, on the resort island of Koh Samui. Police said they suspected Justo of trying to extort money from PetroSaudi and leaking e-mails about the oil company’s dealings with 1MDB. Justo denied the allegations, the Bangkok Post reported.
Adding to a climate of fear and tension, the Malaysian police launched an investigation into whether government officials, including central bank personnel, were behind the leaking of documents that allegedly showed 1MDB money turning up in Najib’s accounts. The central bank on July 12 denied any impropriety.
As allegations swirl around him, the stakes for Najib are high. Not only is he prime minister and finance minister; he’s also president of a political machine, Umno, that has been in power since Malaysia’s independence. What’s more, he’s chairman of the Khazanah Nasional sovereign wealth fund, which had US$29 billion under management at the end of 2014. “Power is too concentrated to one person,” says Datuk Zaid Ibrahim, a former law minister who built the country’s largest law firm. He says the total lack of checks and balances in Malaysia has led to abuse of power.
In the early days of Najib’s rule, Malaysians had more cause for optimism than now, says Danny Quah, an economics professor at the LSE. Like many successful Malaysians overseas, Quah has maintained ties with his native country. He served on Malaysia’s National Economic Advisory Council from 2009 to 2011, and he still vividly recalls a day—March 30, 2010—when Najib stood in front of global investors and promised a “1Malaysia” where all Malaysians of different races would work together toward one goal—turning Malaysia into a developed nation by 2020. At the time, Najib had enough popular support to aim high. “Right then, it was a golden opportunity,” Quah says. “It’s a moment that passed.”
With the 1MDB scandal gaining momentum, outright war broke out between Mahathir and Najib. Najib, Mahathir said in June, had crossed the line. “1MDB is the straw that broke the camel’s back,” said Mahathir, who has repeatedly called for Najib to resign. Najib, who says he won’t step down, lashed back at Mahathir, known by the honourific Tun. “The ‘mess’ that Tun refers to is largely of his own making as a result of his attacks and his echoing of opposition lies and slander,” Najib wrote on his website.
As words flew between Mahathir and Najib in June, the Malaysian Volunteer Lawyers Association organised a forum to hear from Najib on 1MDB. It was called Nothing2Hide. Mahathir saw a chance to speak his mind about 1MDB and the money he said was missing. “I feel obligated to explain to the people what really happened and why I’ve decided not to support Najib any longer,” he said to the gathering. “This is not about me or Najib. It’s about the whole nation because what was lost belonged to all of us. I am just a spokesperson. Many people have come to me, asking me to do something.”
About 10 minutes into Mahathir’s speech, uniformed police moved in and stopped the aging but still spry former prime minister from speaking. Whatever Najib thought of the action taken against his mentor-turned-rival may never be known. Amid police concerns about “public order and national harmony,” he didn’t show up. — Bloomberg