Political Capture and Control by the top 1%.

Look at the amount of borrowings by 1MDB. It is now RM 42 billion. That was at end March 2014. By now, maybe more. Maybe 1MDB has borrowed some more we don’t know. We know it just borrowed RM2 billion from Ananda Krishnan. Unless Anada gave a free gift, the loan is RM42 billion. You dig another hole to cover an existing hole. The number of holes remain the same.

The most recent statements put as RM51.4 bilion in assets and a debt of RM49.97. It has a net loss of RM665.million.

What do we actually call 1MDB? We have been calling it a SWF thus far. Tan Sri Wok Lodin comes along and says- everyone doesn’t understand. 1MDB is not a SWF- it a strategic development company investing in strategic industries. Here there and everywhere.

I don’t understand –that is ok. Maybe I have not been keeping update with current economics literature. Dr Mahathir also doesn’t understand. He is in the same position as when Anwar didn’t understand currency problems.

We don’t have a SWF actually if by definition SWF is a company with government funds that invests its windfall gains in industries OUTSIDE the country. Khazanah invests inside and outside. It’s just another company. That was why the de facto business advisor to Najib- one man by the name of JJ said in parliament, that 1MDB does not use public money.

The best term that comes to my mind now is 1MDB is a public interest company- in the sense that whatever it does, interests the public, more so the public spirited individuals and groups. It cannot escape accountability because it is a government owned company, wholly owned by MOF. It was given RM1 million as seed capital and from there it went on borrowing money and issuing bonds like nobody’s business. IT IS our business to see that this government is duty bound to protect us from duplicitous and even corrupt dealings.

1MDB has lied to us. It is not a responsible borrower anymore. It says it has fully redeemed money from the Cayman Islands. It it did, why must it borrow from Ananda?  We don’t know what were the terms of the loan- Did it come with promises that Ananda will be the bigger owner of the soon to be listed energy company?

 That means, originally, 1MDB made a big splash announcing that it bought Tanjung Energy with its 13 IPPs strewn all around the world already with some provisions of converting debt to equity. Now, with its failure to pay the short term loan of RM2 billion, it borrows another RM2 billion to pay off that loan, Ananda Krishnan will eventually be owning not only the 13 IPPs but more. Ananda is the other TNB for Malaysia.  

What do we have here? A government headed by Najib which seemingly works for the benefit of the country, regulating businesses undertaken by a government agency supposedly working for the interest of us the public, ending actually working for the interests of a small clique of business elite. It’s the bloody 1% of the business elite of this country leveraging on political capture.

So what has 1MDB become? It has become just another sophisticated means for the rich to become super-richer. The recent Davos Economic Forum which the PM did not attend talked about the trends in political capture and economic inequality. The governments of the world are working hand in hand with the business elites to ensure wealth of the world is captured by the top 1% and the rest being shared by 99%.

1MDB may just point to that insidious tip of the iceberg. That this government, despite all its pompous declarations and plans has lied to the people, is in fact working to secure political capture to secure wealth for the e1% in this country.

As an OXFAM working paper said:

Economic inequality is rapidly increasing in the majority of countries. The wealth of the world is divided in two: almost half going to the richest one percent; the other half to the remaining 99 percent. The World economic Forum has identified this as a major risk to human progress. Extreme economic inequality and political capture are too often interdependent. Left unchecked, political institutions become undermined and governments overwhelmingly serve the interests of economic elites to the detriment of ordinary people.

The PM of course did not attend the Davos Economic Summit so he would not be able to listen directly. His people make reports about the issues discussed. But with miserable English translation, the message is lost.

 A central theme among the leaders of the world is regaining trust from the people. The people of Malaysia no longer trust this government especially the PM.

Notwithstanding the assessment by the Economist, Najib will be most vulnerable. If we cannot identify who is qualified to replace Najib as PM that is because he or even she is not among the present cabinet members. If we look only into the cabinet, then, its true there is no one , respectable and esteemed enough to replace Najib.