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Monday, 31 August 2015

What if Tun M is correct that the RM2.6b is from 1MDB?

What if Tun Mahathir is correct that Najib stole RM2.6 billion from 1MDB and put it into his personal accounts?

A few days ago, Tun Mahathir said this:

"Najib said that it (RM2.6 billion) was a donation. Are we stupid (to swallow this lie).   
I am certain that the money in his personal banking accounts is from 1MDB. I am certain that it’s not a donation from an Arab.”

So if Tun Mahathir is correct, what then would the implications be? What is exactly at stake for all of us?

1. Najib Razak will cease to be Prime Minister of Malaysia and may go to jail.

This is provided that he loses the criminal case for any corruption charges brought on by the MACC, of course.

And of course he will also step down as the President of UMNO.

Najib: "Gee! I hope they won't put me in the same cell as Anwar"

As your read on you will find that if Tun M is correct, Najib will be the least of your concerns,

2. The person currently in charge of our police, our Home Minister and Deputy PM is a liar or incompetent. 

Yes, Our Home Minister, our current Deputy Prime Minister and possible future Prime Minister, 
Datuk Seri Ahmad Zahid Hamidi will be proven either a liar or incompetent as he is naive to simply believe unnamed Arab representatives.

I am in charge of internal security. If I am a liar then you'd better watch out!

This is because Zahid had said that he had personally met representatives of the Middle Eastern "family" who donated US$700 million (RM2.67 billion) to Datuk Seri Najib Razak. He said they told him the donation was to ensure Barisan Nasional (BN) and Umno won the 13th general election.

"I met with the donor's chief investment officer and I also met with the trustee of the funds," 

"He told me, 'Your Excellency's ‎country is not the only country we are channelling our donations. There are many other Muslim-friendly countries we have donated to'."

Zahid said they were helping BN because of the government's commitment to counter terrorism and maintain Malaysia's status as a Sunni country.-

Yes, if Tun M is correct then the Vice-President of UMNO is also a liar or incompetent.

3. Our Federal Territories Minister and our second Finance Minister are either incompetent, liars or complicit of abetting a crime.

Umno secretary-general Datuk Seri Tengku Adnan Tengku Mansor said he and the party treasurer and second Finance Minister Ahmad Husni  knew about the RM2.6 billion in Datuk Seri Najb Razak's personal accounts, 

Yes, I knew about the money. I explained so many times and you refuse to listen?

Tengku Adnan said the matter had been "repeatedly explained". "We have repeatedly explained this issue. As the secretary-general, I am aware of it and so is the party treasurer," 

Yes, if Tun M is correct then the Secretary General and the Treasurer of UMNO are both either liars, incompetent or abetting PM Najib of stealing billions from 1MDB.

4. Malaysia's MACC are liars, incompetent and cannot be trusted.

The donors who deposited RM2.6 billion into Prime Minister Datuk Seri Najib Razak’s bank accounts are from the Middle East, the Malaysian Anti-Corruption Commission (MACC) confirmed, although it said their identities cannot be disclosed.

In a statement, the commission said it had found out about the donors’ details through bank documents.

“MACC has obtained explanation from the donors who originated from the Middle East and they have verified the donation.

MACC speaks. Can they be trusted? 

The RM2.6 billion donation has no connection at all to 1MDB,” MACC said.

According to MACC, it had found four letters that were given to the bank when the RM2.6 billion amount was deposited into Najib’s account, with the bank documents stating that the contribution was a “donation”.

Yes, if Tun M is correct then our MACC are liars, incompetent and cannot be trusted and future investigations of any graft charges including the SRC probe are highly in doubt.

5. Malaysia's Auditor-General office are liars, incompetent and cannot be trusted - at least in the interim.

The Auditor-General's interim audit of 1MDB didn’t find any suspicious activity, providing a reprieve for Prime Minister Najib Razak as he fends off claims that money connected to the firm may have ended up in his own bank accounts.

To be fair, the Auditor General did say that this is an interim report that is 50% done but there is nothing suspicious at this moment,

Yes, if Tun M is correct then our AG are liars or incompetent thus far as they have yet to find billions missing from 1MDB even though they have completed the interim audit report.

6. Malaysia's entire financial system and possibly the world's financial system may collapse

I am not joking.

This is because our entire financial system is based on dependable and reliable Audited accounts to function. Banks lend money based on audited accounts, our stock market and investors depend on audited accounts to value the shares and decide if they want to put in their money or not.

Even our tax department depends on audited accounts to determine whether you are paying the right amount of taxes.

1MDB's auditors are the biggest and most trusted global names and include three out of the so-called Big 4 auditors - Ernst and Young, KPMG and Deloitte.

Ernst and Young did 1MDB's 2009 audit and cleared them without qualifications. However, at that time 1MDB did not have much money and not much transactions so we can absolve Ernst and Young of being culpable.

KPMG did 1MDB's 2010, 2011 and 2012 audits and cleared them without qualifications. This period of time had the most controversial transactions including the PetroSaudi joint venture.

Deloitte did 1MDB's 2013 and 2014 audits and cleared them without qualifications. This period was also significant as it was when 1MDB bought all those power plants and did all those joint-raising of funds and joint-ventures with Abu Dhabi govt owned IPIC and Aabar.

And even when called to give evidence during the PAC probe into 1MDB, both KPMG and Deloitte said they reconfirmed that they stand by the accuracy of their audit.

If both KPMG and Deloitte cannot be trusted then we are kind of screwed.
  • Deloitte & Co has insisted that its March 2014 audit on 1MDB is legitimate,“Deloitte told us that they have seen the bank statements pertaining to the RM13.4bil of assets in BSI Bank. They can verify the value of the assets in question as they did a test on whether the assets were at fair value at that point in time for FY14,” PAC chairman Datuk Nur Jazlan said at a press conference after the inquiry.

If both KPMG and Deloitte are so incompetent and cannot detect billions missing from 1MDB and cleared the accounts from 2010 right up to 2014 then there is no more hope for the Malaysian financial system. Banks may stop doing business and our stock market will collapse.

And since KPMG and Deloitte are two out of the Big 4 global names and does audits all over the world, Global finance markets will also be in crisis.

This would be even bigger than the Enron Crisis where former Big 5 audit firm Arthur Andersen had to close shop. In Enron's case, it was about inflating revenues via off-balance sheet transactions and not about failing to detect billions of dollars missing.

Therefore, if Tun M is correct then we would be  financial and economic disaster locally and possibly on a global scale.


I don't know about you but I sure hope that Tun Mahathir is wrong  that Najib stole RM2.6 billion from 1MDB and put it into his personal accounts

I hope he is wrong about this the same way previously that he was wrong about Pak Lah and son-in-law Khairy Jamaluddin when he accused Pak Lah and Khairy of being absolutely corrupt, But strangely, after Pak Lah stepped down there did not seem to be any wrong-doings confirmed and all the allegations of corruption mysteriously vanished. 

Heck, instead of going to jail Khairy even continued on to get elected into Parliament (twice) and became a Federal Cabinet Minister too.

But if Tun M is right then our future Prime Minister and the guy responsible for our police force, our MACC, our Auditor General and our Second Finance Minister are all either liars or incompetent.

And our local financial system and economy and possibly the global system too would be in crisis since two out of the Big 4 Audit firms cannot be trusted or are incompetent in detecting billions are missing from the accounts.

Yup. Entire Malaysian government cannot be trusted and we would be in financial and economic disaster too if Tun M is correct.

Let's hope not.

As for the RM2.6 billion, did it really come from the Arab donors and why?

I had explained why this is still in the realm of possibility and the Arabs did it probably because they wanted to save their own skin then.

EPILOGUE: Read further only if you have time and can accept criticisms against our elder "statesman"

Tun M has been quite culpable of "extreme bending of the truth" recently. The following are some examples.

He bent the truth that Malaysia is top ten most corrupt in the world even though we are ranked 50th   least corrupt our of 174 countries in Transparency International's Corruption Perception Index 2014 (we have been improving every year since 2009).

 He bent the truth saying that the TRX land is worth RM7000psf and Bandar Malaysia's land is worth RM1000psf and that 1MDB got it almost free. He repeated this again today.

He bent the truth saying that he "did not manage to raise a single dollar from the Arabs" when he built IIUM even though in IIUM's own website, it was stated the donations came from the Middle East. 

He bent the truth again saying that he only spent RM10million in campaign funds for Barisan Nasional for each General Elections. Since I assume you can do maths, I won't even bother, 

But it begs the question that if only RM10m is spent for each General Elections, then why was UMNO having so many proxies holding their money and why UMNO had to own so many companies? And why did he need to hand over RM1.2 billion to Pak Lah when he retired as President? 

At RM10m each per General Election, RM1.2 billion would be enough to fund the next 120 General Elections over the next 600 years.

Again, Tun M massively bent the truth to say the government forced the MACC director to take long leave when the truth is that the director had to undergo urgent surgery near his spine and needed two months recuperating time.

Tun M also bent the truth when he said all the Power Plants that 1MDB bought was going to expire and they could have bought it as "scrap metal". Turns out that only three out of the 14 plants were going to expire in the next 5 years (the earliest was 3 years later) and one was already renewed..

List of 1MDB power plants from a recent The Edge article

Tun M also bent the truth when he said 1MDB grossly overpaid for all the power plants. Turns out that in 1MDB latest tender to sell of their power business, they had received several bids above RM20b for their power plant business (1MDB paid RM18b to buy all these plants).
Click to Zoom and read The Edge recent article about who bid how much for 1MDB's power business.

Tun M also bent the truth to say the government has never answered his question on where the RM42 billion debt was spent on when it was answered numerous times by the Prime Minister, by 1MDB itself and by our Second Finance Minister in this very detailed 1 hour TV special. It is just that Tun M refused to listen or acknowledge the replies and went on to repeat the same old allegations over and over again..

An entire hour of explaining "Di Mana wang RM42b" and the majority of Malaysians are too lazy to watch but prefer to still believe RM42b is missing!

Tun M also bended the truth when he said Street Rallies are acceptable to overthrow the Prime Minister since for decades he said this is unacceptable and that only Donkeys and fools join the BERSIH rallies. Listen for yourself what he said just 3 years ago.

And if you want to know how he dealt with such street rallies in the past, have a look at his video - along with hundreds of police carrying machine guns and automatic rifles along with Armoured Personal Carriers on the streets of KL too.

In recent months, Tun M also gave interviews to the New York Times, to BBC and to The Australian where he used the foreign press to slam and bad-mouth Malaysia - this is despite decades of telling us that the foreign press cannot be trusted and have hidden agenda. 

For decades, he had criticized Anwar Ibrahim and opposition leaders using the foreign press to badmouth Malaysia but yet Tun M does exactly the same - int the USA, in England and in Australia too.

But my all-time favorite Tun M excuse is this one recently:

He had to sack the Lord President and suspend the entire Supreme Court  (our highest courts then) in 1988 because the late Agong complained that the then Lord President complaisance that the Agong's palace renovation was too noisy. He only gave this excuse after the Agong had passed away and could not defend himself.

FMT calls it "Twisted" 

I am sure that his excuse was "valid".

And not because the Lord president and all 6 judges of the Supreme Court were removed by Tun M to prevent an impending court case challenge against his UMNO presidency which would very likely remove him as Prime Minister then. 

The worst constitutional crisis ever in Malaysia which led to the reputation of Malaysia's legal system being in doubt even until today.

My personal view is that Tun M has become desperate and will resort to anything. That's what desperados do. 
He did not expect PM Najib to fight back decisively by removing the people loyal to Tun M within the system all in one go. This has closed off much of his options and made him desperate. 
And the reason why he is desperate is because he is Kiasu 
He has never lost before and always got his way. Now he is scared to lose and become Kiasu.  
Kiasu forced him to become desperate. 
Desperate people no longer calls about being called an extreme hypocrite and do not mind being a serial liar. 
He needs to know that this country is not by him, for him and to him. 
Yes, I have disrespected Tun M. But he made me disrespect him by continually lying and being a hypocrite with his recent actions.   
I used to respect you so much. But that was in the past - sentiments similarly expressed by so many others recently due to your recent actions including participating in BERSIH rallies two days straight and giving our national day celebrations a miss the very next day.
Is it in the constitution or in Pendidikan Moral that I must respect lying hypocrites?

Friday, 28 August 2015

Capital Controls and Pegging our Ringgit.

In 1998 when we pegged the currency at RM3.80, we also instituted currency controls which made it difficult for foreign capital to enter and exit Malaysia.

Essentially, we did not allow capital already in the country to leave Malaysia easily - trapping funds held by foreigners and Malaysians within our system and preventing them to go overseas.

Other countries who pegged their currencies such as Hong Kong or Brunei (which pegs it against the Singapore dollar), do not have such capital countries and defends their peg using their FOREX reserves.

At that time in 1998, Malaysia did not have strong FOREX reserves hence the traditional peg would not have worked as we would have gone bankrupt from defending that peg. Therefore,  on top of the peg, Malaysia had to implement very strict capital controls too.

Back to present day, the Ringgit closed at RM4.17 to the USD yesterday - down from the low of RM4.28 reached on Wednesday.

If you look at the graph, you can see that from January to July 2015 our ringgit fell 30sen from RM3.50 to RM3.80. But in less than a month from Aug 1, we dropped 48 sen from RM3.80 to RM4.28

This sharp depreciation is really evident when you look at the graph. Our Ringgit really went into a free-fall past RM3.80, which was the previous peg.

Of course other factors such as the China devaluation which also caused oil and commodity prices to fall further was also a factor but our currency depreciation velocity past RM3.80 was very much sharper from other countries' graph during the same period.

This led me to believe that one of the reason for this much sharper weakening was the RM3.80 peg of the past. In fact one economist said in 1998 that Malaysia will pay the price of capital controls and betraying investors confidence not during the 1998 period but the next time our currency is under great pressure. That time appears to be now.

I have read reports that many people - residents and non-residents - were afraid that after passing the previous peg level of RM3.80, Malaysia would implement the peg and capital controls again. 

Hence it is possible that past the RM3.80 level, many investors have accelerated the pace of taking out money from Malaysia as they were afraid that their money would be stuck and unable to go out if Malaysia imposes capital controls again.

This fear may be the reason why the depreciation started to accelerate much more than other countries during the same period once we went past RM3.80.

This is also why PM Najib had publicly announced very firmly last week that Malaysia will not peg the currency and implement capital capitals again.

The Govt is being brave in not succumbing to pegging currency and imposing currency controls again. That is the easiest thing to do and immediately no more complains about the Ringgit but this adversely affect Malaysia's economy more in the medium to long-term.

However, the market will probably not immediately believe this commitment as Malaysia has had a track-record of suddenly pegging the ringgit and implementing capital controls which trapped a lot of investors.

Therefore, govt has to prove to the market that the government is willing to let the Ringgit float freely - even if it means enduring high volatility and a sharp currency weakening in the short-term.

After a while, the market will be convinced on our commitment not to peg and implement capital controls. They will then focus back on Malaysia's strong fundamentals and potential and normalcy will return to our currency.

Pegging and capital countries are not necessarily good as it pisses off foreign investors. In fact, the next few years following 1998 saw a big drop in foreign investment and stunted our growth compared to the other countries affected by the Asian financial crisis in 1998.

South Korea and Thailand which was also badly affected by the 1998 crisis did not peg their currencies or imposed capital controls but their currencies also recovered in about the same time as when we pegged our Ringgit.

From the graphs below, you could argue they did even better too - despite not imposing capital controls.
Malaysia pegged our currency and imposed capital controls in 1998
South Korea and Thailand did not but their currencies recovered equally quickly too
The two graphs above was lifted from the economist blogger HishamHs blog post. He has a good write-up here on why Malaysia should not peg our currency. His article came to two conclusions:

  • A currency peg will not stop a depreciating currency, at least not for very long
  • A currency depreciation will not cause the economy to tank; that is something that should be attributed to the interest rate defence

The last six years of Tun Mahathir's government were essentially spent on trying to get back Malaysia to where it was before. Essentially, the Malaysian economy was stagnant for 6 years then.

Total Malaysia GDP
1997 - USD 100.2 billion
2003 - USD 110.2 billion

After currency controls and the peg were lifted, under Pak Lah's govt, there was a noticeable jump in growth - despite the 2008 Global Recession.

2009 - USD 202.3 billion
2014 - USD 326.9 billion In fact, during the last 5 years of Najib's govt, total GDP grew by USD125b - which was bigger than the entire economy size left by Tun Mahathir.

Growing from a small and not industrialized base is easy. But escaping the middle-income trap and growing from an already sizeable industrial base to a knowledge economy is much harder.

Many countries fail to escape this middle income trap - hence the need for different policies and strategies which the Economic Transformation Plan has outlined. We cannot keep using the old policies of the past as the environment and the challenges have changed too.

So far, based on the evidence of the past 6 years growth and the sustained private investment growth, the strategies seem to be working - but there will be some pain as we restructure and transform our economy. The choice is if we want to continue to be trapped in our comfort zone as a middle income country or do we bite the bullet and endure some pain now in order to escape the middle-income trap and transition to the next phase.

The State of the Nation: Has Malaysia escaped the middle-income trap? Read here.

Friday, 21 August 2015

What goes up fast can come down fast but this is not 1998 all over again

Many people ask me why this year, the Ringgit is the worst performing currency in Asia and why we have lots of capital outflow this year.

That's because the Ringgit was the best performing currency in Asia for the 2009-2010 and we had record capital inflows then.

Many people forget the above.

At that time, the USA was in recession and started pumping money into their economy causing interest rates there to drop close to zero - hence capital left their country and started looking for places to invest in for better yield.

Also at the same time, global oil prices rose to record levels and the foreign investors perceive Malaysia, being one of the only significant energy exporter in Asia to benefit from this.

Have a look at our FOREX reserves -in particular the years 2009-2011 where our reserve sjumped and you will get a good idea of the capital inflows during that year when our Bank Negara tried to intervene by buying USD to prevent our Ringgit from appreciating too fast - which then builds up the FOREX reserves.

Now, the reverse has become true. The USA is about to raise their interest rates and oil prices have plunged to multi-year lows.

And to make it worse, this time around, China's economy is at risk and they have started to devalue their currency - causing uncertainty to countries who export the most to China.

It's a simple case of what goes up fast can come down fast - especially if situation turns against you quickly
The current weakness has very little to do with corruption or weakness. If not, the Denmark, New Zealand and Norway currencies would not have plunged as much or worse than our Ringgit since they are among the top 3 most corrupt-free countries in the world.

Denmark and New Zealand are ranked number one and two least corrupt in the world in 2014 by Transparency International 
Norway is also high up in terms of corruption ranking but being heavily dependent on oil exports, it is being affected badly by the drop in oil prices and have fallen as bad as Malaysia, if not worse.

Do the political troubles affect Malaysia?

Yes. Mostly because investors typically do not welcome a sudden change of leadership as such changes normally means a change in policies.

Investors do not like uncertainty.

The best way to eliminate this uncertainty is not to change PM suddenly and uncdemocratically but to ask those to wait for General Elections in 2018 and allow the current PM Najib government to implement policies or stimulus packages that can help settle the economic uncertainties, solve problems and stimulate growth.

Ask the old man and the noisy opposition (who have been saying Malaysia is a failed state and is going bankrupt since 40 years ago) to stop with their nonsense right now, wait for 2018 and rally behind government plans to focus on the economy.  That will help.

Excessive politicking and endless daily rhetoric does not put food on our tables and does not grow or stabilize our economy.

Changing Prime Minister right now does not solve China's weakening economy, increase global oil prices nor stop the USA from increasing interest rates.

However the political troubles is not the main cause of the weakening. It is the macro-economic realities mentioned above that are the main causes.

It is important to note that out of 180 countries in the world, only 14 countries have not depreciated against the USD - and these include many countries that have pegged their currency with the USD.

Is the situation today the same as in 1997-1998?

Hardly, the same. Our economy is still strong.

I don't get why some people are mocking the govt that the Ringgit has fallen against the USD and is now wirse than the previous peg at RM3.80.

All Najib has to do is to do a Mahathir and peg the Ringgit at RM3.80.

Habis cerita. End of story. That is the easiest thing to do. 

When Mahathir pegged the RM at 3,80 in 1998, the rate was as low as USD1=RM4.88 (reached on 7th Jan 1998- ) and not RM4.00

Or people forget easily?

However, it is good to see that the govt has resisted this easy way out and preserve free capital flows which better reflects prevailing market conditions.

Pegging the Ringgit is the wrong way to go and will cause more harm than good.

Remember that it is not just the Ringgit that is affected and pretty much the entire world that has weakened against the USD- this a strong Ringgit compared to our competitors whose currency has similarly weakened will hurt us.

The surprise and sudden devaluation of the Chinese Yuan certainly sent shockwaves globally.

At the current rate, the Ringgit has actually performed better over the past 5 years than many large countries - especially the commodity exporters. Here is a table

And no. This is not 1998 all over again. See chart.

The weakening of the ringgit does not reflect the country’s current economic fundamentals which remains strong, says Minister Abdul Wahid Omar.

He said the local banking system is sound, economic activities are still intact to drive economic growth and the country is on track to achieve a Gross Domestic Product growth of between 4.5% and 5.5% this year.

“Back in 1997 and 1998 (during the Asian financial crisis), we were hit very badly,” he said, adding that many factors affected Malaysia then, including a trade deficit, reserves falling below US$30 billion (RM117.1 billion) and a very high debt level among companies with some exposed to foreign currency borrowings.

Company debt levels are much lower today with less exposure to foreign currency denominated borrowings due to strict BNM controls as well as lessons learned from the past.

“Our current position has improved tremendously, where we have recorded consistent trade surplus, our reserves is more than three times larger now and our corporate debt level is much lower,”

 Today is indeed completely different from 1998 as this article further explains

Contrary to the opinion of many that the country is on the verge of an economic collapse due to the weaker ringgit, independent macro-economic analyst, Professor Dr Hoo Ke Ping said that such negative sentiment was not based on facts. 
Hoo substantiated his views by presenting several points to prove that the current ringgit depreciation is actually not the same as experienced during the 1997-98 Asian Financial Crisis, which then had affected Malaysia and and other emerging economies in the region. 
“One of the ways to determine how bad our economy is doing is by comparing its current performance with the worst period we have ever performed. 
“So in comparison with what we endured during the 1997-98 Asian Financial Crisis, this is just a minor economic setback. 
“Mind you that in 1998, our market share collapsed, it was cut down to more than 70 per cent whereas currently it is only down to 15 per cent. 
“Also, at that time our foreign debt is approximately US$160 billion and we only have around US$ 20 billion reserve…now our total foreign borrowing is not even US$ 35 billion while our reserve is at best, US$ 99 billion,” said Hoo. 
In terms of domestic debt, Hoo explained that while our current debt is relatively high but it is still less than 100 per cent to our gross domestic product (GDP) ratio whereas in 1998 such debt had easily exceeded 158 to 200 per cent to GDP. 
Hoo also clarified that there is no reason for Malaysians to panic because the current currency depreciation has not escalated into a regional crisis. 
“Unlike now, in 1998 there was a huge regional crisis. Several countries almost went into bankruptcy they are South Korea, Thailand, Indonesia and even Hong Kong which was known at that time for having a good economic governance. 
“Even Japan too almost went bankrupt in June 1998…so back to the present situation, do you see any other countries within our region that is facing bankruptcy? No. 
“So if there is no regional crisis implicating us and our neighbours, there is actually no reason for us to panic. Despite the odds, our economy is still strong,” he said.

Yes, very different.

Wednesday, 19 August 2015

1MDB Myths: Did 1MDB really buy TRX and Sungai Besi land too cheap?

I still laugh whenever certain people on social media or politicians comments on how 1MDB tried to cheat Tabung Haji by selling land at RM2,700psf which they bought for a pittance from the govt.

This appears to be one of the most widely-believed and often repeated propaganda (and frankly, untruth) about 1MDB is that they bought land very cheap from the government in some sort of a sweet-heart deal. This myth also seems to be a major source of the hate for 1MDB.

Not withstanding the fact that 1MDB is 100% government-owned and bought the land from the govt, it can be said to be a left-pocket right pocket deal. 

For example:
I have an apple on my left hand and RM50 on my right hand. I completely own my left and right hand - hence my total net worth is RM50 plus an apple. 
Now, I pay RM50 to my left hand and the apple and RM50 is now on my right and left hand respectively - my total net worth is still RM50 plus an apple. 
So, I don't really understand what sweetheart deal this is since after the transaction, things really remains the same.
So, if things remain the same then why do it using 1MDB? 

Well, the govt wanted a focused company to do something different with the land.

So why not ask Sime Darby, SP Setia or some other GLC companies to do this? Or perhaps, Khazanah? 

Well firstly, Sime Darby and SP Setia are not entirely govt owned and are listed entities and have significant private ownership - thus selling land at these prices does not make sense and plus, those companies may not have the appetite or in line with their plans to do these projects.

Whereas Khazanah's 100% owned UEM Land has its hands full with the Iskandar Region.

In any case, the government wanted to do things different - hence 1MDB was asked to undertake this job.  If you don't try new approaches, we would forever have the same-old same old.

Whether this was the right or wrong decision at that time is debatable. Remember that hindsight is 20/20. And you could also have asked the question why Petronas (being an oil company) was tasked to work with a private company to build KLCC when you could have passed it to UDA to develop then.

Many years from now when TRX and Bandar Malaysia are completed and successful, perhaps people would look back and judge that asking 1MDB to build it would also have been the right decision then - much like how people look back favourably on the KLCC project or even the KL Sentral projects.

Okay, enough diversion, Back to the TRX and Sungai Besi land valuations.

We start with TRX

Remember when Tun Mahathir wrote this back in April 2015 and we all got really upset and wanted Najib's blood served on a tray?

  • Purchase of 70 acres of land in Jalan Tun Razak for RM320 million i.e: RM64.00 psf. Land last sold in the area was at RM7,000 psf. 
  • 20. It should be noted that TRX land is close to land recently sold at RM7000.00 psf. Assuming the market price is RM3000.00 psf the true value of this land is 6 billion Ringgit. The Government has therefore lost 5 billion plus because 1MDB paid only RM320 million. 

To put it bluntly, Tun Mahathir essentially lied thru his teeth - just like how he lied that he sacked the Lord President and all supreme court judges because the Lord President complained the Agong's renovations were too noisy. Or that it only cost Barisan Nasional RM10 million campaign spending for each General Elections (yeah, right). Or that the did not manage to raise a single dollar from Middle Eastern countries to build IIUM (IIUM was mostly funded by the Middle East countries. IIUM even says that in their website).

It is unbelievable that such an experienced leader like him would not have known any better regards how land development is actually priced.

Firstly, the RM7,000psf price that Tun M mentioned is actually RM7,209.80 per sq ft and was for only a small piece of land measuring 29,127 sq ft (compare to 3,049,200 sq ft for TRX's 70 acres).

This land was located right next to Pavilion KL (between Grand Millenium KL hotel and the Pavilion mall) and was bought by the Pavilion owner from the Hong Leong family in 2010 - breaking all sales records and above market expectations of RM3,000psf. It is likely that if someone else, other than the Pavilion owner bought it, they would not have offered so much.

No other transacted prices for land in Kuala Lumpur have even come close to that price since.

Twenty nine thousand Sq feet of land right next to KL's most successful and prestigious mall for expansion purposes by Pavilion owner and sitting on an established strip of real estate complete with roads and completed water, electricity, communications and road infrastructure - land which you can immediately start building on straight-away.

And you want to compare to Three Million sq feet of run-down urban land that needs to be completely redeveloped, infrastructure put in place and many years from even able to start building on? Oh please... how to even start comparing?

The TRX land is essentially an urban redevelopment project. What this means is that 1MDB has to do the following to redevelop the entire area:

  • Evict the squatters, pay compensation and provide for alternative housing or replacement premises. 
It took 1MDB almost two years to negotiate, settle, compensate and relocate all the squatters (which included the Imbi Palace, government flats and some wet markets) and had to pay more than RM100million in compensation.
  • Demolish the existing structures on the land.
  • Flatten the entire area and start digging. 
These are the before and after pictures of that area.

If you use Google Maps to zoom into that area (bottom right image above), you will see it is now essentially flat land with big holes in it. Again, this cost hundreds of millions of ringgit that 1MDB has to pay. 
And if you notice the bottom right image again, you will see that a big piece of the land is left untouched as TRX is committed to allocate 20 acres out of the 70 acres as a park. Yes, 20 acres of land that you cannot sell - so how do you even compare to the small 29k land next to pavillion and say the price is the same? You comparing strawberry with durian?

  • Build the common infrastructure for the TRX master development - including building of roads and traffic dispersal tunnels (if not, the entire place would be one massive traffic jam) , underground structures, and the installation of underground power and sewerage utilities, waste-water treatment plant etc. 
You think all these don't cost money? Ask Lim Guan Eng how much does building a tunnel cost (his tunnel project is RM6.3 billion). Who is going to pay? Of course 1MDB pay lah. 
All in all, 1MDB has spent and committed to spend billions to get to this stage. Arul Kanda recently revealed "1MDB will spend RM3 billion to upgrade Jalan Tun Razak to build infrastructure and direct connections to the highways - MEX, Smart and so on."
The individual plot buyers and the govt are not going to be building these roads and tunnels and other infrastructure - 1MDB has to pay for all these.

  • Design and obtain approval for the Masterplan including dividing into individual lots
Big parts of the 70 acre land is also lost here as you have to allow land for open space and roads and other infrastructure - certainly not comparable to the 29k sq feet Pavilion land at RM7k psf which you can fully develop on. 
  • Obtain Development orders and approved plot ratios for each lot.
And only after you have spent billions and did all the above then you can move to the final stage, which is:
  • Market and sell the individual plots.

Thus, the actual price of the land before TRX can sell it for the RM2,700psf, RM4,300psf or RM4,700psf at each ready plot is really RM320million + Billions.

Yup, the cost of the TRX land to 1MDB is really RM320million + Billions.

Certainly not as what Tun Mahathir and most people believe - "Buy at RM64.00psf when the land is valued at RM7,000psf and govt lost RM5 billion".

That's just stupid. And I really wonder why so many people got cheated so easily.

(by the way, Tabung Haji was given a great deal to buy at RM2,700 psf when other recent transacted deals at TRX was priced at RM4,300psf to RM4,700psf). I wonder who cheated who.

Now we move on to Bandar Malaysia

Again, Tun Mahathir lied through his teeth when he said this:

  • Purchase of 495 acres of land in the former Sungai Besi TUDM airport (now known as Bandar Malaysia) about RM 363.5 million i.e: at RM 91.00 psf. Estimated value RM1,000 psf.  
  • 21. With regard to the Sungai Besi Airport land, 1MDB paid 363.5 million Ringgit for 495 acres – i.e at RM91 psf. Assuming market price for this land is RM1000 psf. the Government lost approximately 20 billion Ringgit.
Firstly, reality check. Have you ever heard of anyone in Malaysia having paid RM20 billion to buy a piece of undeveloped land? No?

Who in Malaysia could even afford RM20 billion to buy a piece of land and at RM1,000 psf for 495 acres?

Let's compare with similarly large pieces of undeveloped land prices sold by govt in recent years - one piece larger than Bandar Malaysia and one piece smaller.

April 2013 - Selangor Govt sells 474.29 hectares (about 1170 acres) to Tropicana Land at about RM25 psf payable totaling RM1.3b in installments over a staggering twenty years!! This piece of land (previously known as Canal City) is just below Kota Kemuning and besides CyberJaya and serviced by 4 major highways.

Sept 2014 - Penang Govt sells 99 hectares (about 244 acres) of land at Batu Kawan at about RM45psf  totaling RM484 million payable in  installments over a generous 5 years. This piece of land is just right next to the 2nd Penang Bridge.

As you can see the land prices are between RM25 to RM45psf and is much lower than the RM91psf that Tun Mahathir said 1MDB stole Sungai Besi/Bandar Malaysia land at - and 1MDB didn't get any installment plans from govt either unlike the two other comparison deals.

Already, we can laugh at the RM1,000 psf that Tun Mahathir said it was worth.

Yes, land in Kuala Lumpur is more expensive than in Penang and in Selangor but to say it is 50 times or 25 times more expensive than in Selangor and Penang? Reality check, dude.

And of course after getting the land, 1MDB still had to do what they did with the TRX -  relocate, demolish structures, flatten land, build infrastructure etc before they even can sell the land at values anywhere near the RM1,000psf that Tun M said it should be sold at.

And worse... even before 1MDB could do all those "relocate, demolish structures, flatten land, build infrastructure etc" stuff, the govt imposed another condition on 1MDB before they could even take possession of the land.

1MDB must buy the land for, build and equip eight military facilities for the government first at 1MDB's cost.

 I am sure many of you all did not know this.
1Malaysia Development Bhd (1MDB) has awarded a RM2.1 billion contract to develop eight sites in the relocation of Pangkalan Udara Kuala Lumpur which will be transformed into Bandar Malaysia. 
Lembaga Tabung Angkatan Tentera (LTAT) will undertake the development through its wholly-owned subsidiary Perbadanan Perwira Harta Malaysia (PPHM), 1MDB said in a statement. 
It said that the relocation involves various units of the Royal Malaysian Air Force (RMAF), Royal Artillery Regiment (31 RAD) and the air wing of the Royal Malaysian Police (RMP) from the old Sungai Besi airport. 
PPHM is the turnkey contractor to design and build installations at the eight locations including three new sites - the RMAF base in Sendayan, Negeri Sembilan, the 31 RAD base in Kajang, Selangor and the RMP air wing base in Subang, Selangor. 
The land in Sendayan for the RMAF base and in Subang for the RMP air wing base was recently purchased by 1MDB. 
The strategic development company will also be contributing funds towards the improvement and upgrading of specialised equipment as part of the relocation exercise.
The RM2.1 billion tender to LTAT is on top of the money they spent buying the 400 acres plus in Sendayan and the other pieces of land that 1MDB had to pay to buy and also on top of the RM363.5 million that 1MDB already paid to the govt.

I am not sure which other property company in Malaysia would be willing to pay RM363 million, then pay RM2.1 billion and then pay hundreds of million to buy land and then wait several years for the military to relocated to the new facilities that 1MDB had to buy and pay to build - before they can even start working on the land.

Here are some pictures of the 8 military bases that 1MDB had to build

You think buying land, building and equipping 8 military facilities is cheap?

Thus, the cost of the Bandar Malaysia land to 1MDB is certainly not RM91psf @RM363.5 million.

The true cost is RM363.5 million + hundreds of millions to buy replacement land and RM2.1 billion to build replacement facilities + whatever development and infrastructure cost that comes after that.


And all the above is just financed by RM1million from the government + 1MDB having to borrow money (and paying interest).

Under Tun M days, this kind of company would probably be given RM5 billion or RM10 billion paid up capital and then asked to go develop the land - no need to worry about repaying back the loan plus interest.

In 1MDB's case, Najib did it differently and asked 1MDB to be self-sufficient to develop it but this means having to worry about repaying back the loan and interest.

Very different isn't it? Which model is more responsible?

Okay, great. Now I know what's the real deal.

So, how come Tun M said the value is RM1,000psf and all the opposition politicians don't tell me about all these replacement sites and hidden cost etc?

Well, they want you to hate 1MDB and believe there is massive songlap (even though all the auditors could not find any evidence of money missing from 1MDB) and to hate Najib.

To tell you the true story would mean they don't achieve their common aim to remove Najib as Prime Ministers.

So, they just lie and hide all these stuff from you.

But why didn't 1MDB and Najib tell us about all these?

Well, they did - numerous times. But no one listened.

Plus, your cybertrooper friends and "independent" media portals such as MalaysiaKini and Malaysian Insider etc don't really want to carry news that is favourable to the government or contradict the lies that the (now dead) Pakatan politicians spin.

Just like how many of you will probably have never heard of the news of the largest lawsuit damages ever awarded by a court in Malaysia in Oct 2014.

RM557million in damages awarded against one person by a court verdict

Yup. I wonder why you have never even heard of the story of the largest damages ever awarded in history against an individual person in Malaysia. 

And have you ever heard any PKR or DAP representative comment on this? Strange, isn't it?

Sunday, 16 August 2015

The Silence of ex-AG Gani and other completely unrelated facts

I was reading Rahman Dahlan's interview in The Star today and what he said or hinted seem to reinforce what I had been suspecting all along.

1) Ex-Attorney General Tan Sri Abdul Gani Patail was the the person entrusted by Tun Mahathir to be the lead prosecutor against Anwar Ibrahim in the first sodomy and corruption trials in 1998.

Anwar had personally accused Gani and then Assistant Commissioner of Police Musa Hassan of fabricating evidence against him during the trial, in particular introducing the medical report that suggested Anwar's black-eye sustained from beatings in prison were self-inflicted

2) Gani was made the Attorney-General on 1 January 2002  by Tun Mahathir - a position of immense power and you would only put someone in there that you can completely trust or have some form of control over him - something you would do if you are an experienced and cunning politician.

3) Tun M wanted PM Najib to step down and the word is that the deadline given was June. Tun M also knew the inner workings of UMNO - including how UMNO funds their party.

4) In June, the UMNO party elections were delayed until after GE14.

5) A task force was illegally set-up by AG Gani without cabinet or parliament approval in June - hence making it illegally formed.

More strangely, he AG not only formed this task-force  but he even led this task-force - although he was not supposed to even be in this task force as he is not the investigating authorities.  His role was merely to decide if and when to press any charges presented to him by the various investigating authorities.

6) Close ally of Tun M, Khairuddin Abu Hasan gloated that he met Clare Brown "by chance" while in England in June. At about the same time, a Tan Sri member of the MACC was exposed (and later confirmed by Sarawak Report) to have met Clare Brown in England too.

7) In July, a week after the UMNO party elections were delayed, only a few pages of the investigation papers of the Task Force was leaked by investigators to Wall Street Jorunal and possibly Sarawak Report which suggested that USD700m of 1MDB money was deposited into Najib's accounts - which is strange since Two out of the Big 4 auditors (over 4 years) and the Auditor General report could not find any evidence of money lost from 1MDB.

This USD700m is remarkably similar to the the supposed USD700m that was paid to Good Star even though PetroSaudi had said many times that Good Star is their 100% owned sub subsidiary.

This is made even more strange because Sarawak Report today confirmed that the amounts in Najib's accounts was more than USD1 billion which came from a few different sources and also confirmed that the money was used to pay to various UMNO leaders - during and after GE 13 and - consistent with Najib's stand that those money was not for his own personal use and was funding for UMNO during GE13 and beyond that.

Thus, why mention only USD700m (which is associated with the Good Star funds) when you could mention more than USD 1 billion which would be even more sensational?

Other details such as the money coming from donations and the account held in trust for the Party was not similarly leaked to Wall Street Journal.

8) New AG Tan Sri Apandi Ali was saying with regards to the (purported) draft charge sheet (against the PM). Apandi sent out a statement saying that the Attorney-General's chambers is very concerned that there is a deliberate attempt to criminalise the PM and force him out of the office.

The purported Charge Sheet was said to be prepared by the ex-AG personally but was not in the AG system and was not recommended by MACC since MACC said their investigations were not complete.

9) PDRM also confirmed there was such a plot and investigated certain members of the Task force.

10) AG Gani was removed on the same day as Muhyiddin together with the special branch head, which was also appointed by Tun M.

11) Three weeks after the sudden removal, AG Gani has not said a single word about his removal. If he had thought it was unfair, he would have spoke up like Muhyiddin, Shafie or the MACC officials. Total silence and this silence is very deafening.

It looks like AG Gani would be the best person to shed some light on what is actually happening and confirm whether there was such a plot to falsely criminalize Najib to remove him.

It really doesn't matter if Najib manages to prove that he is innocent later on as once Najib had been charged, he will have to step down as Prime Minister.

The Attorney-General has final authority to press any charges on any person and if the then Deputy Prime Minister had supported this, the perception is complete.

In the past, when deposing Pak Lah and Selangor MB Khalid Ibrahim, using allegations of corruptions to remove leaders was also used and widely believed by the public - only for us to find out afterwards that all such allegations was false.

In fact, Khalid Ibrahim went all the way to sue PKR for defamation over their 91 page allegations last year and two days ago, won an unconditional apology from PKR, which was read out in court.


There is no conclusion to the above FACTS as to suggest so is highly dangerous, hints at a conspiracy at the highest levels and possibly criminal.

You make your own conclusions. I have mine but will not share it publicly.


  • Veteran Supreme Council member Tan Sri Shahrir Samad confirmed that the UMNO supreme council would never question about UMNO's funding nor such matters are disclosed to them and left it to the party president, treasurer and the state UMNO leaders - a practise dating back to Tun Mahathir time. He also confirmed that it was always the practise to have trustee accounts held in the name of the president and other leaders.
  • "The question related to donations were never raised or exposed to Supreme Council members or state committee as along as I've been in the council and the Johor Umno liaison committee," said the politician who has been a member of the council since the time of former party president Tun Dr Mahathir Mohamad. 
  • "Besides the current assets and income, the party also trusts the president, the state liaison chairman and treasurer to find other financial sources to fund its political activities and elections," he was quoted as saying..

  • It is possible that PM Najib may not have trusted the Deputy President enough to reveal details of such funds to him nor deemed it necessary for Deputy President to know.

  • Najib said this was a practice, even from the time of former Prime Minister, Tun Dr Mahathir Mohamad.
  • Speaking at the UMNO Pasir Gudang division meeting, Najib said Dr Mahathir's deputies also never questioned him over the matter as it was the party president's who was entrusted with the funds.

Saturday, 8 August 2015

Arab money and the Malaysian Spring?

This research paper by the "German Institute for International and Security Affairs" explains in detail how much and why Saudi Arabia was funding friendly incumbent govts to prevent them from falling to presumably western instigated and funded Arab Spring movements: "Leading the Counter-Revolution: Saudi Arabia and the Arab Spring"

The famous Wharton School of Business from University of Pennsylvania also estimates that Saudi Arabia and fellow Gulf Countries spent at least USD150 billion to counter the Arab Spring movement - not just among themselves but on friendly nations too.

Recently, prolific blogger RPK wrote  "WAS THE RM2.6 BILLION PART OF THE WAR ON TERROR? ",  and pointed out that since 2009, Najib visited the King in Saudi Arabia many times (I counted at least 5 official visits by Najib and a few unofficial visits to do the Umrah).

RPK speculated that the "donation" to Najib could be part of the war on terror and could have come from Saudi Arabia and cited examples of funding that came direct to certain friendly NGOs or parties instead of through official government channels.

The Arab Spring is defined as the period between 17 Dec 2010 – 26 Oct 2013 where many government friendly to Saudi Arabia  - particularly in the Middle East fell.

By the end of February 2012, rulers had been forced from power in Tunisia, Egypt, Libya, and Yemen; civil uprisings had erupted in Bahrain and Syria; major protests had broken out in Algeria, Iraq, Jordan, Kuwait, Morocco, and Sudan; and minor protests had occurred in Mauritania, Oman, Saudi Arabia, Djibouti, Western Sahara, and Palestine. Weapons and Tuareg fighters returning from the Libyan Civil War stoked a simmering conflict in Mali which has been described as "fallout" from the Arab Spring in North Africa.

There is much evidence that Saudi Arabia had been using their hundreds of billions of Petro-dollars yearly exports (oil price was high then) to stop regime change in friendly countries.

Reuters also had an article on Jan 10th, 2013 titled "Analysis: Arab Spring diverts part of Gulf petrodollar flows" where it stated:

High global oil prices mean the Gulf is swimming in petrodollars. A measure of that is the region's combined current account balance, its surplus in trade of goods and services. 
The six states in the Gulf Cooperation Council posted a record surplus of about US$350 billion last year (2012), more than 80 percent larger than China's surplus.
There are signs that a larger proportion of the money is being diverted to other destinations.  
Instead of going to the West, some petrodollars are now being spent on other Arab states, in an effort to support their economies and restore political stability after the Arab Spring. 
Qatar and Saudi Arabia, for example, have provided a combined $9 billion of financial aid to Egypt since its revolution in early 2011. 

While Malaysia is not an Arab country nor a North African country, we are perceived as a friendly moderate Muslim country and prior to GE13, we could easily be perceived as yet another country on the verge of a Arab-spring style regime change.

The evidence was plenty. It was even officially stated in its own website that the overt CIA, the National Endowment of Democracy (NED) had funded the Pakatan Rakyat parties.

Prior to GE13, the Pakatan Rakyat govt was very active promoting Malaysia as the next country to fall in the Arab Spring.

Have a look at the many videos on YouTube about this upcoming "Malaysia Spring". Here is one titled "Anwar Ibrahim: Lepas Arab Spring, Dalam Pilihanraya Akan Datang, Malaysia Spring Rakyat Menang"

From abroad, the various BERSIH and Pakatan Rakyat demonstrations and rallies prior to GE13 looked very much like Malaysia is also on the verge of our own "coloured-revolution".

April 2012-BERSIH 3.0 rally

If you were a foreigner, you would think Malaysia was an Arab Spring country too
Himpunan KL112 in January 2013
Anwar Ibrahim being hailed by the over CIA, the NED in an official event in the year 2007

Add the above to PAS' strong association with the Muslim Brotherhood party who toppled the Egypt govt, it is not inconceivable that conservative Muslim Arab powerhouses may believe that Malaysia prior was on the verge of falling to yet another Western-funded Arab Spring colour revolution.

Hence, it is not totally out of the question if a Middle East party donated billions into Najib's personal account for use of the party to prevent a similar "Malaysian Spring" in GE13.

It's not as if Najib used the money personally to buy cincin or gone property-shopping as he would have been too busy campaigning for GE13 during that period of time.

The fund were transferred to Malaysia just a month before GE13 and the account was closed after the elections.

Putting it into Najib's personal account also promises anonymity as it would understandably be a very sensitive issue and hard for Najib to reveal at this moment.

In any case, we shall not speculate more since Najib himself already promised to reveal the source of this donation.

It's not as if Najib said he won't tell - only if DAP and PKR also reveals their funding - which definitely includes details of CIA or NED funding.

Again Najib repeated his commitment: to reveal the donation today:
Najib says Umno is prepared to unveil its party accounts on the condition the opposition is ready to do the same. 
He was willing to do so at anytime as the funds received were solely in the interests of the party and not for personal interest. 
"Are the opposition that taintless? If they want to know everything, they have to explain where are their funds are coming not only accuse me and Umno while they are gleefully accepting (funds). 
"As far as I know, they are also doing well with all kinds of stuff coming in," 
He said as the Prime Minister, he is responsible for whatever happened. 
"Do not say I am selling the country. I will never sell the country," he said. 
Najib said that the donation received was not because he gave something to some parties. 
"I accepted it not because I gave contracts. Other parties can also get the contract and some maybe succeed in converting land for development for those who donated. But there is no link at all. 
"That is why MACC said it is not a bribe and it is not 1MDB money," he said.

Maybe this is why the Wall Street Journal revealed details of Najib's accounts - hoping to force Najib to expose the Middle-East counter-revolution efforts against the West's funded and instigated Arab Spring movements?

Is it possible that Najib's domestic enemies, working with the opposition, is taking advantage on this geo-political intrigue - hoping to remove him so that they can be Prime Minister .

I mean, how else could you explain why only a few pages of a thick investigation paper started months ago was delivered by government investigators into the laps of the Wall Street Journal just days after UMNO's party elections were postponed? Selective release of information, very suspiciously timed and leaked by internal sources.

Sure as heck sounds like a conspiracy and coup to me.

If it Middle-East donation without conditions, it is certainly better than UMNO-BN's being funded by tycoons or via UMNO proxies of the Tun Mahathir days - where they will expect to get lucrative government contracts such as the ludicrously profitable take-or-pay IPPs.

At this moment, I am super curious about what PM Najib will reveal about this donation.

It is a great wonder why he is still so cool - as if Najib is certain he has done no wrong and whatever he reveals will turn the tables on his enemies.

Seriously, can't wait. There is more than meet the eyes.