Najib sees a snap election as his best option, because the news can only get worse.
Over the next few weeks and months it is going to get harder and harder to keep up his denials that he stole from the public through 1MDB. No one in the rest of the world believes him as it is, although his denials are parroted by UMNO controlled media to the Malaysians themselves.
So, what are the upcoming problems he will have to weather?
It is already known in financial circles that his slush fund 1MDB has lost its case over the arbitration with Abu Dhabi, which Najib and his side-kick Arul Kanda had been ludicrously boasting they could win. Abu Dhabi was demanding $6.5 billion in settlement arising out of their agreement in June 2015 to pay 1MDB’s debts: it is expected that $3 billion has been awarded with the remainder pushed over to criminal prosecutors, so serious are the shenanigans involving Najib.
The result will have to be confirmed shortly, in accordance with London Stock Exchange rules. However, today the Financial Times let the cat squarely out of the bag by reporting that sources have revealed that Najib is already negotiating for yet another bail-out from China over this debt. So much for his promise that Malaysian taxpayers would not have to shoulder the burden of the billion dollar thefts from 1MDB:
Malaysia’s troubled state investment fund 1MDB is preparing to make a repayment, with Chinese assistance, to Abu Dhabi’s state-owned International Petroleum Investment Company, as it seeks to settle a dispute in which the Emirati fund is claiming about $6.5bn.
The relationship between the two funds — once hailed as a “strategic partnership” between Abu Dhabi and Malaysia — has gone sour amid allegations that Emirati officials were involved in a plot to siphon more than $1bn from 1MDB.
China has been approached as a source of funds for 1MDB, according to three people with knowledge of the matter, one of whom said Malaysia would swap assets for financing…
Relations between Kuala Lumpur and Beijing have grown increasingly cordialas US investigations into the 1MDB affair have complicated Malaysia’s relationship with Washington. …
Arul Kanda, the former investment banker who is president of 1MDB, said in an email: “1MDB does not have anything further to add to previous statements in relation to the ongoing dispute with Ipic.”
Mr Qubaisi’s lawyer declined to comment…
Today Kanda was continuing to refuse to comment and Second Finance Minister Johari claimed he knew nothing of the China deal. This is because he is not really the Second Finance Minister, as Jho Low holds that de facto role.
Souring of relations with US/ putting Malaysia in China’s debt
This is what Najib is prepared to do to keep in control of the forces of law and order in Malaysia, which would otherwise arrest him. His UMNO bubble top management are proving willing to support him, as long as they continue to get their share of the 1MDB and other loot.
Relations with Washington will indeed get worse as the inevitable path of the 1MDB investigation follows its course, because as the prime mover behind the 1MDB scam and a major beneficiary with billions of dollars entering his accounts, Najib will be eventually indicted in the criminal stage of the DOJ’s investigation.
Malaysians have deliberately not been informed about how these investigations proceed and led to think that somehow Najib has escaped indictment. However, there are standard stages in major money laundering cases like this, which is that first the proceeds of the crime are seized, in order to prevent the perpetrators being able to move their stolen wealth in advance of being found guilty.
Najib will be charged
The next stage is then proceeded with at leisure and thoroughly, as the criminal indictments are carefully prepared. Senior insiders have confirmed to Sarawak Report that in any money laundering offence it is a matter of principle that all the known perpetrators are charged, whether they are themselves in the United States, whether they are US citizens or whoever they are in terms of rank.
Najib was not named in the sequestration, because it was not through his name that the assets seized were held. However, his lawyers will have warned him that the order in July plainly confirmed his key role in the conspiracy to steal money from Malaysia and then to commit the further offence of laundering it through the United States.
Put simply, the evidence against Najib is overwhelming and legions of bankers and collaborators are now cooperating with the FBI investigation to firm up that evidence. He will therefore be named and a warrant of arrest will be issued and Malaysia will be requested to extradite him to the USA to face those charges.
Najib knows this, but is trading off the ignorance of Malaysians, who are being told by BN’s controlled media that since he has not been named in the asset seizure order he will not be named in the subsequent criminal charges.
Najib is also trying to gull ignorant Malaysians into believing that somehow ‘Trump will pull the dogs off’. This is not how the system works in the United States, which is a country where justice operates independently of politicians and follows the due process of the law. There is also a free media, which would fall upon the scandal of Trump intervening in such a case…. and why should Trump bother anyway?
The US DOJ has issued several warrants for politically powerful people around the world, solely on the basis of the crimes they have committed. Indeed, to fail to charge the ringleader, who personally received a billion dollars from the crime, would be deemed unacceptable if other charges were to be laid against lower players (unlike the ‘whipping boy’ system which operates in Malaysia and which has so far protected Najib from numerous local criminal matters).
Rushed Early Election
So, since the 1MDB investigation is still proceeding with full force over in the United States, Najib knows what’s coming.
What Najib has plainly therefore decided is to rush through another phoney election ‘win’ (with all the opposition leaders in jail) so that he and his puppet AG and IGP can refuse that extradition order when it eventually comes through.
He plans to haughtily claim that it is an outrage and an imposition that forces of law and order in the United States should issue a warrant against a man ‘democratically elected” and beloved of his people.
“Malaysians don’t mind being ripped off, so piss off!” is how he plans to put it to the Americans.
Meanwhile, he has shown willing to hand his country over to China lock, stock and barrel, in order to keep afloat with the billions of debts incurred through theft and to keep the backing of a protective power – so much for defending the interests of Malays.
However, UMNO leaders will be happy, if well paid – they all plan to leave for Australia soon anyway or maybe the US or UK.
There is furthermore the small matter of Malaysia’s economy in all this, where the news is also set to get far worse not better, as Najib knows. The longer he waits on the election, the worse the impact of the plunging ringgit will weigh on voters.
At the moment Malaysia’s currency is being kept artificially aloft (despite its record low), since Najib is desperately wasting all the Central Bank’s dwindling reserves on keeping it higher than the markets dictate. The reason is the overwhelming loss of confidence thanks to Najib’s corrupt governance and 1MDB.
Eventually, that Central Bank money is going to run out and the ringgit will be impossible to prop forever. Analysts forecast that it is set to shoot through the 4.5 to the dollar, where it is presently hovering just short of and hit 5 to the dollar, bringing disaster to Malaysia’s economy.
Najib would rather have the election out of the way before he has to argue that one too.
Najib’s key strategy for ‘winning’ his snap election has been to throw himself at PAS, a party he once touted as ‘extremist’ to Western allies.
For years Najib criticised the PR alliance forged by the now imprisoned Anwar as being a dangerous threat to stability because of the ‘extremists’ within PAS. However, now that he sees it as being to his political advantage he has not hesitated to split PAS and to himself ally with the ultra-conservative, ‘extremist’ wing of that party, leaving the moderate Muslims to reform as Amanah and rejoin the opposition.
To court the key leadership of this extremist remaining rump of PAS, Najib has dragged UMNO into its Sharia law agenda and has now even adopted what were till only recently considered divisive, backward and extremist ideas by UMNO, into the party’s own agenda.
This is not because Najib believes it is a good idea to start whipping women in the streets, but because he wants to break up the opposition vote and if whipping women in the streets is what its takes, then whip them he will.
The UMNO bubble around the leadership will support Najib in this, if he continues to pay them with the money stolen from the people via 1MDB. And Najib is now using his control over the weekly sermons produced for each and every mosque by Jakim and his control of media to try and convince bewildered members of PAS that it is OK to support a sinner (Najib) in return for this ‘prize’ of introducing Sharia law.
This cynicism reached a crescendo at the weekend as Najib headed a street march to protest at the treatment of Rohingyas – having rounded up other pro-democracy protesters just the week before and labelling them terrorists. Najib wanted to show he was a good Muslim for supporting this persecuted minority from Burma…. and yet it was he who commanded that their boat people be driven back out to sea last year, where they died beneath the waves.
Burma has formally protested that his behaviour has made their problems worse not better. He should live with those many lives on his conscience and not seek to fake Brownie points by pretending to champion and care for these refugees he in practice turned away – purely to pave the ground for an election.
Stop the opposition organising and exploit Hadi’s role in PAS
Najib’s final reason for trying to rush through this election is to act before the realigned opposition can organise themselves and while he still has control of the ailing Hadi, who presently heads up a very troubled following at PAS.
He made a typical intervention at the coronation of the new Agong today, by forcing through the removal of his predecessor Mahathir from the ceremony. Thus protocol has been swept aside and criticism has been outlawed: Najib is on the wrong side of the law, so he relies on such shows of force.
If Malaysians do elect Najib therefore, they should know what they will get: a rogue leader, at odds with neighbours like Burma and Singapore; who is wanted for crimes in the USA; who has had his political opponents jailed; who has placed the economy in tatters; who has lined up China, now waiting to move in and who is all the while reliant on Sharia extremists, who will be next campaigning to beef up further on ‘moral punishments’ (Najib excluded) and force conversions on all and sundry.
It’s not the Malaysia of yesteryear, but it is the future under Najib.
Growing control… Ragad has started to inevitably dominate her elderly husband….
What would a wise and heavenly judge mete out as punishment to a man, who had desecrated Paradise and left its people’s destitute to fuel his own greed and power?
Would they strike him down with some cruel disease like cancer? Or arrange for him to be arrested, tried and jailed: his assets confiscated?
Or might they rescue this man from death only to subject him to an even more sobering, troubling and lengthy ordeal as he begins to realise that all he lusted for must turn to dust, like he himself? Might they condemn this selfish monster to a prolonged taste of his own medicine, as the target of another being every bit as selfish and greedy as himself, in order to torment him as he reaches out for help, love and respect in his old age?
In which case, Governor Taib Mahmud has finally met a subtle and divine justice in the form of his increasingly powerful and domineering much younger wife Ragad.
Sarawak Report has now received extensive evidence about the situation in which Sarawak’s ageing Governor now finds himself, as the victim of an arranged marriage to a serial exploiter, who counts openly together with her family members, the days until her hated husband dies.
Syrian born Ragad makes her curses in Arabic to her husband’s face, not just once a day but several times, as her secret joke with her surrounding family members, because he cannot understand her language. Unfortunately for her, there are others too who understand her words (unbeknown to her) and who have testified to Sarawak Report the shocking situation where a wife hands her husband a drink with such words as:
“May God take you. May God make people come and give me their condolences on you very soon. May God make this drink be poison to you. May Allah make me bury you very soon… May God give you a deadly disease”
Deadly curses heard said by Ragad, according to Arabic speakers who informed SR
“She says these things whilst rolling her eyes lovingly and smiling sweetly, as she hands something for her husband to take to eat or drink“,shocked onlookers have confided to Sarawak Report. “It is for her to vent her own fury and to amuse her mother and sister, who have ensconsed themselves in the home, which Taib plainly hates”.
Ragad was introduced to Taib through a marriage broker, whom she had used once before, thanks to enquiries made by Taib Mahmud’s sister Ragad and her Lebanese husband Robert Geneid. Taib was about to run for election once more in 2011 at an advanced age after three decades already in power and it was felt he needed a wife.
Getting what she can, but she wants security from the will….
Ragad paid 800,000 Rials (US$200,000) to the Saudi broker, nearly the entire settlement obtained from her divorce from her previous husband just two weeks before. The agreement was in anticipation of the vast wealth of the man to whom she was being introduced, but had not yet met.
Taib was not informed that his 30 year old bride had already been twice married and had two children from her first marriage. The entire arrangement was a family enterprise organised by Ragad’s mother and is treated as such, say insiders: “They are all after their cut”.
The couple had not even met before they performed an Islamic marriage in Saudi Arabia. Two weeks later they had a wedding in Damascus and it was only a month after that people back home in Sarawak (where Taib made all his money) were treated to the information that their Chief Minister had married and a surprise ceremony was also performed there.
Keep your eyes on the prize!
“Ragad was repulsed by her elderly spouse on sight, quite understandably” one insider told Sarawak Report in an extensive interview, explaining that she had originally understood it was the Sultan of Brunei she was to be spliced with, who looked young and fanciable enough. “She was disgusted when she realised who it actually was, but her mother was firm. She said “keep your eyes on the prize” and eventually Ragad forced herself to agree to full conjugal relations, as Taib was threatening divorce if not”.
It is in many ways a sad and tragic story. A wealthy old man looking for comfort in his old age has ended up with a woman who wishes him dead as soon as possible, so she can collect on her duties.
Ragad has widely discussed the ‘good news’ with associates, which is that Taib has already survived a serious bout of cancer and is not expected to live too much longer. She and her family are waiting on a recurrence of his disease, in the anticipation that he will die sooner rather than later.
However, whilst one might sympathise with such an awful predicament for a poorly old man, is that not the penalty he has paid for his own illicit wealth, his disregard for others and his vain and greedy decision to buy himself a young woman for his old age? How could she have possibly have married him for anything else but his money and therefore why would her attitude be any different from this?
“Ragad soon discovered that Taib had put all his affairs in order and left everything to his four children when he was ill before” Sarawak Report has been told. “So, Ragad has been pressuring to secure herself a large settlement since there is no love lost between her and those off-spring. In fact, they are very jealous and hate her”
So, not only is Taib beleaguered with a gold-digging wife, who makes fun of him and curses him, but he is surrounded by greedy, sullen and resentful heirs who hate the person he lives with and are scrapping to get all of his money stolen from the people. Again it is a clear penalty of illicit wealth and selfish greed, that little of the normal kindness and charity within families of more modest means features in the interactions of this rapacious ‘first family of Sarawak’.
Ragad is desperate to get pregnant to secure her cash
Ragad has been working to secure her position by falling pregnant, insiders have confirmed. However, three miscarriages have indicated what was feared, which is that chemo-therapy and age have diminished the chances of a natural child. “She has been trying to get him to go to the doctor, so they can have treatment, but he doesn’t want more children. He has accepted to take in her two already, even though he didn’t know they existed when they married. He is refusing and she is furious. She needs a child to secure her chunk of his money when he dies”.
Sarawak Report is sorry to have to impart such information, which would be private under ordinary circumstances. However, what the Taib family are fighting over is wealth that has been stolen from the State and its people. Now that a foreign born woman and all her family have also dug themselves into the situation, all this enormous financial wealth, taken from the natural resources of the country, could be removed entirely from the jurisdiction of Malaysia and into the hands of a greedy adventuress and her distant Middle Eastern family. This makes it of public interest.
Ragad has already secured massive sums handed to her by her husband and he has promised her a home and allowance when he dies. But, people say that she and her mother and sister and brother are anxious to make much more from their advantageous match.
“They are determined to bring him under their power. They have a long history of using black magic and they are trying it out on him. She inserts bodily fluids into his drinks, this is one method”
explained one insider, who described the practices, which are too disgusting to write about in detail.
Black magic aside, Taib, who is now 80 years old is vulnerable to his far younger, larger and stronger wife, thus turning the tables on a man who was once able to bully others and did so. “He began by showing jealously and trying to force her to stay at home and do as he wished, but these days she just does as she wants. She goes out to all hours when they are abroad as well. If he protests there are furious rows and she has a habit of taking valuables and destroying them in front of him. She is stronger than him.”
Taib used to be guarded by a long-standing secretary, who was loyal only to him:
“She sorted that. First she got him sacked and then allowed him back his job only if she does everything through her. So every call and every caller, it is now monitored and controlled by Ragad and that includes the family. The balance of power has definitely been changing in that household over the past couple of years as he just gives up and gets frailer”.
There is a view that if Ragad cannot have her way with a child, she will use her proximity and growing influence over her now fading husband to secure the level of wealth through his will at some stage.
Taib is mean and acquisitive and it is likely he will fight to protect his wealth for his family till the end. Two greedy and tenacious characters are now locked together and fighting for the spoils of Taib’s rape of Sarawak. But for what benefit? What pleasure and comfort?
Great shows for the camera…. but Ragad cannot resist constantly abusing her husband verbally to his face in a language he cannot understand..
Taib has bought a jet, which he has put to one side for his retirement (to be presented back to him by the State of Sarawak). But how much spending and extravagance can bring solace to an old man, who like a child only needs genuine love and regard to make the difference to his final years?
As this Thief Minister is finding out far too late, the most important things in life are the things that money cannot buy. In fact, too much money destroys these things.
So, maybe there has been an act of justice here and some celestial being has ensured ‘karma’ for Mr Taib or maybe it is just the inevitable outcome of life. It seems to have been his lot to have retained enough time on earth to be done by as he did; to belatedly discover the difference between what matters and what does not and to realise that he worked all his life to obtain the latter at everyone else’s expense.
This old man in his guilded cage may soon start to wish he could escape what he has brought upon his own head. In which case he should succumb to his own poison sooner rather than later.
As More Action Is Taken By Singapore Najib Demands Blind Loyalty From UMNO
2 December 2016
Najib Razak has been desperately seeking to instil military discipline into his UMNO ‘troops’ during their recent Assembly, decking all of them out in different coloured uniforms each day like Rosmah’s handbags, as if he were some mad dictator.
This is not least, of cause, because he is a mad dictator. He has ditched the requirement to re-elect him to his party position until after the next election, precisely because he fears they would take the opportunity to replace him.
UMNO accessories – different day, different colour
Indeed, whilst he yesterday made ‘cleansing the party of traitors’ his prime target before facing the electorate, there are those who believe that voters would prefer to see a cleansing of the party.
Even the opposition believe that keeping dirty Najib in post is by far their best option for the threatened snap poll.
Najib’s big message therefore was that UMNO party members must obey him. Forget obeying the law, forget obeying the principles of right and wrong or indeed obeying the constitutional authority of the public who elected them. They must only obey him.
And, since he pays them, they all were happy to shout and wave and applaud as one corrupt leader after another was paraded up on stage and as Najib issued blood curdling Jihadist threats against political opponents and minority communities, as if they were an opposing army instead of neighbours with democratic rights.
This is what Najib has done to his party and to Malaysia, simply because he cannot give a straight answer to the question ‘What did you do with the money from 1MDB?’.
Singapore moves on banks
Meanwhile, neighbouring Singapore heaped yet more international humiliation on the Prime Minister, who had to sack his own Attorney General and Deputy (and many more besides) in order to pretend he didn’t steal billions from the public.
As the UMNO goons (all decked out in blue today) whooped and cheered, Singapore fined Coutts Bank and Standard Chartered, both for transferring money that the Monetary Authority described as having been misappropriated by 1MDB.
“The Monetary Authority of Singapore (MAS) has imposed multi-million dollar fines on the Singapore branches of Standard Chartered bank and Coutts & Co for breaching anti-money laundering regulations in relation to 1MDB-related fund flows through these banks, it said in a release on Friday (Dec 2).
Najib has, as we all know, has declared that no money was misappropriated from 1MDB. He has also said that the $681 million that popped up in his personal account, which the US Dept of Justice traced back to 1MDB, in fact came from a secret Saudi Sheikh.
Cheers and claps from UMNO (more dedak please).
What are genuine good Muslims or good Christians or good anybody to make of such behaviour?
It seems not only has this man made his country financially bankrupt, he has made his party morally bankrupt.
Bonuses – what do ‘Fat Mike Sherwood and Najib have in common?
Indeed, there is good reason to believe that Najib’s sudden fighting talk about a snap early election is precisely because he is fearful of further damning revelations from the international investigations into the world’s biggest ever kleptocracy scandal.
Bogus ‘Dr’ Tim Leissner, GSI wizz kid SE Asia boss, who faked his CV and qualifications
Singapore has not only moved against these two banks. The Monetary Authority also inflicted a ten year ban on the former Asia boss of Goldman Sachs.
Tim Leissner, the personal friend of Najib’s and Jho Low fixed up all the dodgy 1MDB bond deals totalling $6.5 billion, through the agency of corrupt collaboration with two Abu Dhabi fund managers working for Aabar.
The bank had already sacked Leissner and he is said to be cooperating with the US financial authorities, who are also investigating this, the world’s biggest single kleptocracy scandal ever, in a relentless fashion.
Few observers of 1MDB are in any doubt but that the distinctly fishy Goldman commission on those bond issues hides further dirty corrupt practices that appear to have involved more massive kickbacks for Jho Low’s ring of fraudsters serving Najib and rich payments to those who collaborated from other outfits.
The grilling of Leissner and others ought flush out the truth, sooner rather than later.
So was it coincidental that just last week that Goldman Sachs’ International boss, ‘Fat Mike Sherwood’ caused consternation by resigning his powerful position unexpectedly, with few reasons given?
Fat Mike was till that moment considered a major contender to take over the top post at the bank, having built up its ’emerging markets’ business in a quite spectacular fashion in those lean post-crash years, just as 1MDB was getting going.
A big part of those fantastic profits were owing to 1MDB and today Singapore’s Monetary Affairs Authority confirmed that Sherwood signed off on those bond deals:
“Mr Leissner, who left Goldman Sachs in February, managed the client relationship with 1MDB for all of its three bond issues from 2012-13.
A team of Goldman Sachs staff, mainly from Hong Kong but also from Singapore, Malaysia and the United Arab Emirates, arranged the bond issues and they were fully underwritten by London-based Goldman Sachs International, the MAS said.[Financial Times]
Should Sherwood have judged differently on touching such a deal and indeed on releasing an offer document that praised 1MDB for having a ‘robust three tier management structure free from political influence’ when in fact the fund was completely controlled by Najib and half the money raised was stolen on day one?
Perhaps, if this was not the actual reason Fat Mike resigned, then it should have been and perhaps soon we will receive the opinion of US regulators on the matter also?
Consider the news that made Fat Mike so famous back in the UK in the first place. It was the fact that in the depth of a belt tightening recession for everyone else (as a result of a financial crash for which Goldman Sachs was in very large measure responsible) he and his UK international team issued the biggest bonuses ever in the winter of 2014.
Sherwood himself clinched no less that £13 million on top of his normal salary papers estimated. Significantly, this hand-out was not for profits made that year, but the previous year of 2013 – exactly when GSI was reaping in its nearly $700 million reward, purely for having raised three dodgy bond deals for 1MDB:
Fat Mike Sherwood – did he bow out before the news about his 2013 bonus comes out?
So, like Sherwood, has Najib also decided to move before things get worse and to throw caution to the winds with a snap election before even more gets out about 1MDB?
Tainted analysts with vested interests in managing Malaysia’s corruption, like the ‘Asia Wealth Management’ boss for the bank UBS, have been putting themselves about the media in recent days, trying to talk up the ringgit.
But, it isn’t working. Excuses are being made for the continuing decline of the currency, such as ‘The Trump Effect’, when everyone knows the real problem is ‘The Najib/1MDB Effect’.
For the past fortnight the true dire state of the ringgit has been disguised by Najib’s tame new Central Bank Governor, who has been wasting the country’s reserves by throwing huge sums at buying up the currency, which everyone else is sensibly getting out of.
He has made it fundamentally worse by lecturing banks that they must stop the frantic selling, thereby proving the desperate nature of the crisis.
The fact of the matter is that no one wants to invest in a country which is run by a coven of criminals, who are locking up people left, right and centre in an arbitrary fashion for complaining that the rule of law is not being upheld.
No one wants to invest in a country where all respectable people from all sides of the political divide have been forced to unite in condemnation of a thief Prime Minister, who refuses to quit office.
It is particularly telling for observers of Malaysia that this is a country where it remains possible for a man to remain in office, despite having been exposed as a kleptocrat billionaire – who on earth can consider their money safe under the jurisdiction of such a man and his bought and corrupted cohorts, who are making up the rules as they go along to slap down anyone who points out the truth?
Because the UMNO leadership control the local media, these goons are still living in a mental bubble, telling themselves that they can keep up their crackdown and eventually obedience and order will reassert itself in their favour. But, this is not Operation Lalang, not least because Mahathir was competent and everyone can see that Najib is not.
Najib may succeed in continuing to hold on to power by attacking protestors, locking up the opposition, encouraging extremism and violence and then cheating the election, but the price will be a tumbling ringgit and poverty for all. Malaysians are used to a better life and they will not thank UMNO for this.
Hard copy version
See the leader below in the UK’s respected ECONOMIST magazine – followed by its financial comment:
Malaysians underestimate the damage caused by the 1MDB scandal
FORTY thousand people wearing yellow shirts gathered in Malaysia’s capital on November 19th, to protest against corruption and impunity in government. The rally was orderly and restrained; the response of the authorities was not. On the eve of the protest, police arrested Maria Chin Abdullah, leader of a coalition of human-rights groups that organised the event. She was placed in solitary confinement, and can be held there for 28 days. Even by Malaysia’s dismal recent standards this marked a fresh low. Ordinary Malaysians should not stand by while their leaders undermine the rule of law so casually.
Ms Chin Abdullah’s detention was justified by an anti-terrorism law which the government had promised would never be used against political opponents. The true motivation was to stifle outrage over 1MDB, a state-owned investment firm from which billions have gone missing. In July American government investigators said they thought that $3.5bn had been taken from the firm and that hundreds of millions of dollars went to the prime minister, Najib Razak (who says he has never taken public funds for personal gain). The investigators’ findings corroborated exposés written by local and foreign journalists, who have been unravelling the saga for several years.
Elsewhere the scandal would have sparked a swift change in government. But the United Malays National Organisation (UMNO) has held power for six decades and enjoys broad support from Malaysia’s ethnic-Malay majority, some of whom resent their ethnic-Chinese and Indian compatriots. The party has devised many ways to protect its leaders from internal revolts, so Mr Najib found it easy to purge critics, delay a parliamentary investigation and replace an attorney-general said to have been preparing charges against him.
No one in Malaysia has been charged over 1MDB’s missing money. But a court has handed a prison sentence to an opposition politician who frustrated efforts to hush up the affair. The editor and publisher of one of Malaysia’s last independent news organisations face jail under a rule which forbids certain content published with “intent to annoy”. A competitor closed in March after authorities ordered its website blocked.
Mr Najib’s party is carelessly widening Malaysia’s ethnic and religious splits. Seeking to bolster support among conservative Malay Muslims, it is toying with a proposal to intensify the whippings which may be meted out by sharia courts. It has failed properly to condemn pro-government gangs that last year menacingly gathered in a Chinese part of the capital. Their leaders paint ethnic Malays as victims of sinister conspiracies—dangerous rumour-mongering in a country where politics is still defined by the racial violence of the 1960s.
Easily broken, hard to fix
Until now foreign investors have been fairly sanguine about the economy. But they are growing rattled. The ringgit has depreciated faster than other emerging-market currencies (see article). Last week the authorities asked foreign banks to stop some ringgit trading abroad, raising fears of harsher controls.
Rural ethnic Malays, a crucial constituency, feel that the scandal is a remote affair. Even some educated urbanites still favour Mr Najib’s government over the opposition, underestimating the damage being done by the scandal. If change is to come, the disparate opposition needs to do a better job of winning such people over; its fractious parties must overcome their divisions and present a plausible candidate to replace Mr Najib in a general election that could be held as soon as next year. Malaysia has always been an imperfect democracy, but the rot eating at its institutions is harming its international standing and its economic prospects alike.
FORWARD AND BACKWARD
Malaysia’s central bank tries to stem a slide in the ringgit
The ringgit is underperforming other emerging-market currencies
“THERE is no new policy on capital flows. There is no proxy capital control either,” insisted Muhammad Ibrahim, governor of Malaysia’s central bank, in a dinner speech on November 18th. This echoed a similar central-bank promise 15 months ago. For those hoping to bring money in and out of Malaysia, the commitments are reassuring. The frequency with which they need reiterating is less so.
It is no secret that the central bank is worried about the sharp drop in Malaysia’s exchange rate. Like other emerging-market currencies, the ringgit has suffered from China’s slowdown in the past two years and Donald Trump’s upset victory on November 8th. But, like Malaysia’s politics, beset by lurid tales of financial malfeasance, the currency has been unusually skittish (see chart).
Mr Muhammad blames what he calls “the arbitrary and unpredictable devices of the offshore markets”. Whereas China has been keen to “internationalise” the yuan, Malaysia’s central bank has an equally determined policy of “non-internationalisation”. It prohibits the trading of ringgit assets outside of its jurisdiction.
International investors can nonetheless bet against the currency offshore, settling the bets in dollars rather than ringgit. These “non-deliverable forward” contracts (NDFs) allow foreign investors, who own over a third of Malaysia’s government bonds, to hedge their exposure to the currency. But the NDF market can also be turned to speculative ends. And this speculation, Mr Muhammad believes, is contaminating the onshore markets as well.
If the offshore side-bets all point in one, bearish, direction, the onshore markets tend to follow their lead. And foreign banks that take the other, bullish, side of these offshore trades might try to hedge by selling ringgit in the onshore market. A 2013 study of nine NDF markets by the Bank for International Settlements found that the offshore and onshore markets both influenced each other, except in Malaysia, where onshore followed off.
Malaysia’s central bank has instructed onshore institutions not to take part in the NDF market or help others to do so. Foreign banks with operations in Malaysia seem to be deferring to the central bank’s wishes, notes Stephen Innes of Oanda, a foreign-exchange broker, to preserve their good name in Malaysia. “They are not aggressively selling the ringgit right now.”
But one reason the offshore market is so spiky is because trading is thin. That illiquidity may worsen if banks retreat. And if foreign investors cannot easily hedge their exposure to the ringgit, they will be less willing to buy ringgit assets. That might leave Malaysia with a weaker currency over the long term even if it is more stable from day to day. “No one from the banks is willing to discuss the ramifications,” Mr Innes says. “I find that quite unique.” Others may find it worrying. Silencing the markets is not the same as calming them.