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Wednesday, July 8, 2015

Najib crisis SAVAGES the ringgit

Najib crisis SAVAGES the ringgit
KUALA LUMPUR - Malaysian Prime Minister Najib Razak has been officiating functions as per normal, even as he grapples with the toughest political crisis of his life.
In the financial markets, it is anything but business as usual. Financial markets reflected the turmoil on Monday, with the ringgit hitting a 16-year low of 3.809 to the US dollar.
The Malaysian currency fell to 2.81 to the Singapore dollar.
The political blowout is expected to drag on, following allegations that nearly some US$700 million (S$949 m) in state monies were transferred to his personal bank accounts - and this comes ahead of an expected rough ride at year end, particularly if Grexit and an expected US rate hike result in further capital outflows.
For now, Mr Najib has said he would sue The Wall Street Journal for its Friday report that government investigations into debt-laden 1MDB had uncovered transaction trails for the sums that were deposited into his personal bank accounts.
He has maintained he would not be daft enough to keep the monies in his accounts in Malaysia if he had planned to steal it.
But even so, it is worth noting he has not denied the alleged deposit of those sums into his accounts. He has insisted that he has "never taken funds for personal gain", and that the allegations are false, "part of a concerted campaign of political sabotage to topple a democratically elected Prime Minister".
On the international front, his position has been seen as tenuous; Forbes writer Chris Wright has expressed doubt that the Malaysian leader can survive the scandal, even if he is eventually cleared.
Locally, Mr Najib's reputation has taken a battering.
Because his party Umno has spearheaded the country since independence in 1957, the prevailing public sentiments are that government institutions have become too politically linked to Umno to function independently in any investigation.
So damaging are the allegations that his brother Nazir intimated on Monday that Mr Najib and his cohorts should consider the repercussions for Malaysia.
The semi-retired banker posted on Instagram a picture of the National Monument, erected in honour of Malaysia's fallen war heroes and the following caption: "They gave their lives so we could build a nation. In this darkest hour of political times, we must remember to place the country and the rakyat first - not personal interests, not personal loyalties, not even party politics."
Mr Najib's popularity has been slipping in the past year on the back of issues such as the new consumption tax and his lack of strong leadership in tackling right-wing elements.
The bungled operations and the RM42 billion (S$14.9 b) debt of 1MDB - the strategic development company created by him on his watch as both chairman of its advisory panel and the country's finance minister - has only aggravated sentiments.
Now reports that funds were channelled from the state-owned entity to his accounts could prove the last straw. Anger at the lack of transparency over 1MDB's transactions is now being directed at other agencies as well.
For instance, the central bank has come under the spotlight, many questioning its lack of oversight over the movement of such large amounts between accounts; others say the Attorney-General Abdul Gani Patail ought to have frozen the alleged accounts pending the completion of the probe.
On Saturday, he announced that a special multi-agency taskforce is looking into the 1MDB money trail and seized documents pertaining to it in a raid of the three companies mentioned in the WSJ report.
The central bank has opted to remain silent. It indicated on Friday that 1MDB's initial statement that it had "never provided any funds to the Prime Minister" was a sufficient media response.
Others have been more open with their views. Former attorney-general Abu Talib Othman has advised Mr Najib to clarify whether he holds the alleged accounts with AmIslamic Bank, rather than sue WSJ as that would take a long time.
In the interim, electoral watchdog Bersih 2.0 has also warned that it will call for a public rally should Mr Najib not be more forthright in his answers.
Independent political analyst Khoo Kay Peng foresees more political and economic uncertainties in the coming months, with the embattled Mr Najib seeking to cling onto power, ostensibly backed by his party but with shrinking public support.
"This is a difficult situation as no prime minister has ever been charged, nor agency proven willing to do its job responsibly," he said.
In its report, WSJ said investigation documents sighted by it did not give the original source of the funds or what had happened to the cash after it had allegedly been deposited into Mr Najib's accounts.
On Monday, former minister Zaid Ibrahim said the funds had helped finance Umno and its coalition Barisan Nasional (BN) partners in the 2013 general election. The polls were won by BN in Malaysia's first-past-the-post system, even though it received only 47 per cent of the popular vote, against the opposition Pakatan's 51 per cent share.
When Mr Najib announced plans to take WSJ to court, he made no mention about suing former prime minister Mahathir Mohamad, although he had specifically named him and whistle-blowing blog Sarawak Report as being the instigators "behind this latest lie".
Mr Najib contends his former mentor is gunning for him because he refuses to take orders from him. - Asiaone

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