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Malaysia: Shortchanged, a sloppy state capture bid & lamentable legal lethargy


Muhyiddin Yassin holding a sign posing for the camera

© The Independent Singapore

The actual date of the United Nations’ 75th anniversary on October 24 passed largely unnoticed in Malaysia. Yet what happened in Malaysia that weekend was of immensely wider significance to the cause of democracy, public order and human rights championed by the UN.  An egregious case of suspected state capture by a few overzealous  politicians was averted ably by an alert and astute (Yang dipertuan) Agong.

In a sharp break with tradition on Friday, October 23rd Malaysian Prime Minister Tan Sri Muhyiddin Mohd Yassin embarked on a rather controversial road journey in a ceremonial motorcade with police outriders from Putrajaya to the Sultan Abdul Aziz Palace in Kuantan, capital of the state of Pahang. The openly declared purpose of the nearly 400km return journey was to obtain the immediate assent of the Malaysian King to  the Cabinet’s debatable  decision of that morning to declare a state of Emergency.

It was a contentious mission as it was also an attempt to circumvent parliamentary scrutiny of the intended Emergency objective. The Royal Assent was sought for the express purpose of the proclamation of a state of emergency that very evening in order, it was claimed, that Muhyiddin’s government could handle the Covid-19 pandemic with greater efficacy and prowess.

To reinforce and register the significance and urgency of his mission the prime minister of the fledgling and fitful seven-month-old government brought along with him four senior ministers and some other highest level officials. This deliberate departure from the traditional tack of circumspection, courtesy and reserve customarily observed in a cloistered and placid Royal palace seemed odd and outlandish.

The King’s Measured Response

The King, obviously enjoying a restful respite from his normal routine in the nation’s capital in Kuala Lumpur, graciously received the prime minister and his entourage at teatime on Friday with due protocol, courtesy and a photo-op. It was reported that the audience involving the prime minister’s entourage lasted well over ninety minutes.

In addition to the publicity provided for the prime minister’s meeting with the King some news portals prophesied that the prime minister would be making an important announcement late that evening. The prime minister and his colleagues must have believed that the King would, at that audience, with alacrity provide the requested Royal Assent for the promulgation of the Emergency.

The King, on his part, was alert, astute and acted discerningly and sought understanding for more time to deliberate on the request in consultation with other Malay Rulers. After being informed of this decision the prime minister and his entourage headed back to Kuala Lumpur. Needless to say, there was no major announcement on Friday, October 23rd.

It would seem then that the King, through appropriate channels sought the early participation of his brother Rulers in a meeting to discuss the proposal for an Emergency. That meeting was scheduled for the afternoon of Sunday, October 25.

At that Sunday meeting of the Rulers the King obviously obtained a consensus that the prevailing peaceful situation in the country did not warrant the need for the declaration of a state of Emergency. An official statement on this consensual decision was issued that Sunday evening.

Royal Demurral

Shorn of all the protocol, polite language and palace niceties it was an act of royal demurral. The prime minister had been politely declined a demarche that he had made to create an emergency. There seemed to be no legal, let alone any other compelling, basis for the declaration of the Emergency.

Analysts are bound to study this demurral for years to come. Every courageous and correct decision will often have a great story behind it. The principal legal advisor to the prime minister must assume full responsibility for this unprecedented rebuff and the fatuous recommendation.

The principal legal advisor of the nation must also be held accountable for another important instance of ineptitude that surfaced the weekend of October 24/25.

Backtracking & Bullied on IMDB

On Friday October 23rd several countries and entities finally announced the details of the agreed settlement that their financial and regulatory authorities had reached over Goldman Sachs’ misconduct on reporting and regulatory infringements in these jurisdictions. Goldman Sachs had advised and profited immensely from IMDB-related matters in these jurisdictions but not as infamously and as insidiously as in Malaysia.

In the UK the City of London had fined Goldman US$45 million, in the US the agreed settlement with the Department of Justice was for US$2 billion. In Singapore Goldman was required to pay US$122 million for its role in 1MDB bond offerings and the investment bank was required to observe certain conditions over a 36-month period.

In Hongkong Goldman Sachs was fined US$350 million by Hongkong’s Securities and Futures Commission. These were negotiated settlements that Goldman Sachs voluntarily agreed and had the means to pay.

The pertinent point is that none of these jurisdictions experienced the kind of colossal financial losses, deception, reputational damage, collateral damage that was directly suffered by the government and people of Malaysia. The Infringements in these other jurisdictions related to the laws, norms and the fine fin tech language of their financial and banking regulations. They were seemingly and largely of a technical nature which is one reason these inappropriate actions did not trigger immediate detection.

In Malaysia there was extensive and material damage to the confidence in the government, the management of the country’s financial affairs and the country’s debt servicing capacity. To-date there has been no mention of a ballpark amount of the losses suffered by the country.

It is likely that when the final accounting is done with the high cost of raising money from the bond market Malaysia may be taking a hit of perhaps US$15 to 20 billion dollars as a result of IMDB’s recklessness. Such recklessness was aided and abetted by Goldman Sachs, supposedly the most reputable international advisory and investment bank.

The Financial Times in its November 14 2018 edition carried an article by John Gapper which had a reference to a Goldman Sachs senior partner located in Southeast Asia who had “ helped channel (US) $2.7bn into bribes. “

Yet it is disdainful that the Malaysian authorities charged with negotiating a settlement agreed to a paltry sum of less than US4 billion with Goldman Sachs. Malaysia was where the principal misrepresentation, deceit, egregious misconduct and financial malfeasance took place.

Functionaries associated with Goldman Sachs indulged in outright blandishments, outrageous bribery and bullying to take gullible Malaysians for a ride. Goldman Sachs also earned a commission of several hundred million US dollars.

How and why did the principal legal advisor to the Malaysian Government agree to a sharply reduced figure of US$3.9 billion when his predecessor had sought US$7.5 billion?

With all the lead time that the principal legal advisor had had up to March 2020 could he not have looked for a figure higher than the US$7.5 billion sought originally by his predecessor.

The reason this is being mentioned is that Goldman Sachs was allowed to take advantage of a change of government in Kuala Lumpur to pare down considerably Malaysia’s logical, reasonable and legitimate claims.

The Muhyiddin Government, if it attributed any significance to national pride and had some knowledge of how the US financial institutions function could have easily upped the ante to a US$20 billion demand. That would have been only a small multiple of the direct financial losses suffered by Malaysia.

Ineptitude Suspected

The principal legal advisor who had been appointed last March did not seem to have the expertise, enthusiasm and endurance needed to handle this matter. The first principal legal advisor appointed in June 2018 had had understandably the onerous task of sorting out the mess created by the dethroned government of the previous Prime Minister, Dato Sri Najib Abdul Razak. Najib has since been tried and convicted in one set of cases.

The new principal legal advisor did not have such pressing issues to handle and in effect mishandled the assignment he had inherited.

Astronomical Fines

A cursory Google check would have shown the kind of fines US financial institutions have been subject to in recent years. BNP paid nearly US$8.9 billion, HSBC US$ 1.9 billion, Citigroup US$19 billion and the Bank of America paid a total of US$76.1 billion.

Malaysia’s principal legal official must realise that a claim by the country is a solemn, sovereign one. Malaysia had to be appropriately compensated so that the country’s national pride, integrity and sovereignty is not only upheld but respected. Malaysia is by no means a tin pot country where a thousand Covid cases a day or a 10 billion ringgit shakeout would warrant the declaration of a state of national emergency.

The  country’s principal legal advisor ought have more acuity, alertness and astuteness even if he or she did not possess the sophistication and aplomb with which HM the Yang dipertuan Agong handled this last approach for an Emergency.

The writer is a retired ambassador with 45 years of public sector experience in Malaysia

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Source: MSN | World News

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