Getting at Mohd Najib Through 1MDB

A Kadir Jasin

HAVING withdrawn his support for the Prime Minister, Mohd Najib Abdul Razak, the former Prime Minister, (Tun) Dr Mahathir Mohamad, on Sept 10 added insult to injury.

He questioned the integrity of the Prime Minister’s pet corporation – 1Malaysia Development Berhad. It is like what the Malay proverb says “pukul anak sindir menantu.” You can’t beat Mohd Najib you beat his favourite undertaking.

Expressing his concern over the debt being amassed by the sovereign wealth fund, Dr Mahathir said it could overwhelm the government’s already strained finances.

He asked why Malaysia needs a state investment fund like 1MDB, when it is heavily in debt, pointing out that such a company is usually formed by countries with large government surpluses.

“The money for 1MDB is not from the country’s surpluses. It is borrowed. The billions of ringgit borrowed add massively to the nation’s debts. Debts taken by the country must be repaid. If not we will become insolvent like Argentina. A country that suffers deficits annually will not be able to repay debts of this size,” he wrote in his blog on Sept 10. (Read more here).

Very few people outside the PM’s inner circle know for sure how much debts 1MDB has accumulated and its true financial standing. The public is generally suspicious of the stories the company tells.

In June, it issued a statement assuring the public that its debt “does not pose any significant risk to the sovereign rating and stability of Malaysia.”

It said that its debt totalled RM37 billion for the financial year ended March 31, 2013.

In a textbook response to public concern it said: “As a limited liability company, 1MDB poses limited liability risks to the government as its shareholder.

“The government guarantees RM5.8 billion of the group’s total loan on which 1MDB has significant interest cover. 1MDB has never missed any payment schedule.”

It has repeatedly delayed the launch of its electricity IPO. Media reports suggest that it is now delayed to 2017.

The public in general may not be aware that 1MDB has been borrowing from them. If they know, they would understand Dr Mahathir’s worry.

For instance, in March this year, 1MDB issued RM1.5-billion worth of Sukuk (Syariah compliant bonds) and the buyers were the Lembaga Tabung Haji (LTH) and Permodalan Nasional Bhd (PNB). Ironically the LTH GMD/CEO, Ismee Ismail, is on the board of 1MDB. (Full board here).

What Now Dr M?

TO someone who loves to banter, Dr M must have found Mohd Najib’s not-so-elegant silence frustrating. Silence of that nature can be deafening.

In short it says, Mohd Najib is saying, Dr Mahathir can say whatever he likes, but I am the PM and I do whatever I like.

Dr Mahathir’s latest jab came at the wrong time for Mohd Najib. After five years of positioning himself as the great transformer, who gets the recognition? His high-profile Pemandu CEO, Idris Jala.

The Sarawakian was named one the 50 most influential policymakers in the world by Bloomberg Markets. The US-based magazine credited the 56-year-old Sarawak senator with “making it easier to invest and do business in Malaysia as he shapes economic policy meant to help the country catch up to its more-developed neighbours.”

Still Dr Mahathir stops short of doing the ultimate – calling for Mohd Najib’s resignation. That was what he did with (Tun) Abdullah Ahmad Badawi in the aftermath of the 2008 General Elections.

Within months Abdullah was put out to the pasture and in came Dr Mahathir's ultimate choice – Mohd Najib Abdul Razak. Ahhhh… the wheel of time keeps on turning.

Wallahuaklam.