Najib's camp mulls REVENGE STRIKE against Muhyiddin, Cabinet's 'insubordination' over 1MDB

Over the weekend, the political establishment was shaken by allegations by eminent media man, Datuk A Kadir Jasin, that the 1MDB fund was in serious trouble and had to rely on decision by the Bank Negara governor to relax standard loan classification criteria in order to prevent a massive downgrade of the Malaysian banking system.

These allegations came on the heel of a very bad week for 1MDB and by extension, the Prime Minister, Datuk Seri Najib Razak.

In the space of less than 7 days, the 1MDB issue jumped from being discussed at informal gatherings organised by third tier NGOs like NOW (National Oversight and Whistleblowers) and C4 (Centre to Combat Corruption and Cronyism) to being discussed at the Cabinet Meeting Room (“Bilik Mesyuarat Kabinet”), east wing of the Prime Minister’s Office.

Not only did this lend speculation of a plot underway to remove Najib as prime minister, these developments also affected other national counters like FGV, which sank to an all-time low of RM2.60.

Even worse, the opposition attacks on 1MDB has managed to influence an Umno division leader to lodge a police report against the fund, a situation without parallel in the 68 years of Umno's existence.

In short, the prime minister’s image has been battered, political instability has increased, the ringgit has weakened and Felda settlers have less to celebrate this weekend.

To make things worse, the Perkasa president, Datuk Ibrahim Ali, arrogantly gave orders to Najib, further denting the prestige of the Umno president.

I want to first state unequivocally that there was no need for the Cabinet to overstep its boundaries and discuss 1MDB when the prime minister was not present at the meeting. No one should be surprised if the prime minister and his team have taken this attempt as no less than insubordination of the highest level, something that will be dealt with at the appropriate time. Those responsible should carefully think, do they have the numbers in either the Cabinet or the Umno Supreme Council, because from my last count, “pro-Najib totok” supporters form an overwhelming majority in both groups.

However, an immediate issue still needs to be addressed – the issue that has caused the PM so much discomfort. This is 1MDB’s apparent complete lack of any rudimentary social media strategy to counter the “blitzkrieg” style attacks launched against it.

To give you a context, 1MDB is facing attacks on multiple fronts – Tony Pua and Rafizi Ramli have acted as the German Panzer tanks, constantly shelling the issue for the past four years.

Tun Dr Mahathir and his team of bloggers, have played the role of the Luftwaffe, dive bombing any retreating position 1MDB tried to take.

The result – a pincer movement that makes 1MDB look extremely vulnerable.

The more vulnerable 1MDB looks, the more vulnerable 1MDB becomes. That is the basic tenet behind any liquidity crisis for a fund that has long dated assets funded by shorter dated obligations.

The reason, I think, is a lack of experience. Take for example 1MDB’s latest press release announcing its results, where it remarked that the fund performed well while losing over RM 600 million.

That is an example of a text book error in terms of communication of financial results.

How to do the Wall Street communicators solve this problem?

Ever heard of IFRS and non-IFRS earnings? IFRS earnings is a loss of RM600 million, non-IFRS earnings (well you can account for one-off factors, fluctuation in exchange rates, basically anything) will post a profit. People will shrug off the loss as a one-off and believe that the next year results will be better.

The next point is where are the third party "validators"? Has there been any moves to engage the pro-Umno bloggers to counter the spin?

From my contacts, the initial attempts to engage bloggers failed because the 1MDB personnel who came to meet the bloggers were too junior and lacked the experience in dealing with the social media world.

Does anybody in 1MDB actually understand the role of media in fighting off a liquidity crisis? On that note, do they even know the difference between a solvency crisis and a liquidity crisis?

Do I need to tell them that they need to put out a media statement denying all that Kadir Jasin said in order to protect the reputation of their chairman?

The fund’s financial reputation is taking a hammering in the international markets, making it more difficult for people like myself to organise a rescue attempt.

I hope 1MDB staff understand that working hours is not Monday to Friday when dealing with a crisis like this. The PM's reputation, prestige and honour is at stake. – TMI