Malaysia wracked by slow, uncertain leadership change

Sunday, October 19, 2008

The Vancouver Sun (19/10/08): Malaysia, once one of the most politically stable and financially sound countries of Southeast Asia, is being wracked by the uncertainty of a seemingly interminable transfer of power.

Prime Minister Abdullah Badawi, a courteous but ineffectual leader, has been on the skids since the ruling coalition led by the United Malays National Organization (Umno), narrowly retained power in March elections.

Significant factions within Umno want Abdullah to resign soon and hand over the party leadership and government to his deputy, Najib Razak.

These calls for Abdullah's head are driven by the apparent resurgence of Anwar Ibrahim, the previously disgraced Umno deputy leader and now head of the opposition People's Alliance coalition.

Anwar claims there have been so many defections from the ruling alliance since March that he now controls a majority of seats in parliament and should be prime minister.

But despite the economic decline that sees inflation at 27 per cent and capital flight accompanying this political uncertainty, no one will wield the knife on Abdullah. It's a measure of the supreme importance of good manners and respect for power in Malaysian society.

"We want to ensure that the power transition process does not affect Abdullah's honour. It must be done in a dignified manner," said Trade Minister Muhyiddin Yassin on Friday.

Muhyiddin was speaking after Umno's executive committee decided to postpone until March party leadership elections which had been scheduled for December.

After the meeting Abdullah said he will decide by October 9 whether he will be a candidate for the leadership.

Abdullah has already offered some compromises to his critics. Recently he offered to hand over the Umno leadership to Najib in 2010 rather than 2013 when Abdullah's term runs out.

But party dissidents and especially Najib's supporters wanted Abdullah gone before 2010. In advance of Friday's executive meeting it was widely rumoured Abdullah would be tendering his resignation to the committee.

That didn't happen. Courtesy and good manners won out and extending the deadline for a leadership review until March offers Abdullah an honourable exit. He is expected to take it.

But this does nothing to secure the future of Umno, which has been the ruling party for all 51 years since independence from Britain and which, under the firm hand of former prime minister Mahathir Mohammed, became a model of developing country success.

While Najib is clear favourite at the moment to take over Umno and the prime minister's post, there are grave doubts about his suitability for the jobs.

Najib has an impeccable political heritage, in some ways too impeccable and too elitist at a time when very many Malaysians are looking for reforms that will remove the deadening rule of patronage and the bonds of racially structured politics between the majority ethnic Malays and the minority ethnic Chinese and South Asians.

There is also the major problem of the murdered Mongolian model, Altantuya Shaariibuu.

Altantuya was the mistress of Abdul Razak Baginda, an analyst and policy adviser to Najib as defence minister. There are also reports that she played a role when Baginda was negotiating Malaysia's purchase of submarines from France.

But Baginda apparently tired of Altantuya's charms and returned to the bosom of his family.

Altantuya, however, proved to be a fatal attraction and in October 2006 started loudly demonstrating outside Baginda's house. She promptly disappeared and police later found fragments of her body in the jungle.

Investigations led to the arrest and trial of Baginda and two police officers assigned as bodyguards to the office of deputy prime minister Razak.

The trial continues.

This ought to be the perfect set-up for opposition leader Anwar to complete his political restoration and engineer the first change of government in Malaysia's history.

But Anwar seems to be running out of steam. A couple of months ago he announced he would have the support of a majority of members of parliament by September 16. Then he wanted an emergency sitting of parliament and a confidence vote on September 23.

Now Anwar is talking about a confidence vote when parliament resumes on October 13 after Ramadan, the Muslim month of fasting.

The smell test says Anwar doesn't yet have the numbers and Malaysia is still some way from restored political and economic stability.


Let Parliament vet defence deals above RM100m, says MP

The Star (18/10/08): Parliament should play a role in scrutinising how the RM2.3bil Eurocopter deal was awarded and be consulted on all future procurements above RM100mil.

“It’s high time that defence procurement be subjected to parliamentary scrutiny in order to ensure accountability in the process,” said Bukit Bendera MP Liew Chin Tong

He said he had submitted a motion to the Dewan Rakyat during the previous and current sittings, calling for deals which involve a contractual value of RM100mil and above to be subject to parliamentary and Auditor-General scrutiny.

Liew said the Government usually justifies the secrecy involving defence procurement in the name of national strategic interest.

“However, as the sum of the contracts are huge, it is apt for Parliament to play a role here,” he said in a statement.

He said that according to a World Bank study, 15% of the value of defence procurements worldwide goes into some form of corruption as it is one of the most secretive trade on earth.

“Even advance democracies with independent media and stronger parliamentary scrutiny are susceptible to corruption in this sector due to its unique nature.

“It is not difficult to imagine the situation in countries with weaker mechanism of scrutiny,” he said.

Earlier this month, Mentari Services Sdn Bhd chairman Capt (Rtd) Zahar Hashim alleged that the tender made during Datuk Seri Najib Tun Razak’s tenure as Defence Minister to replace the aging Nuri helicopters had been too costly.

He claimed the Government could have saved almost RM1.5bil if it had bought the Kazan-M172 helicopters from Kelowna Flight­craft Ltd, the firm he represents, instead of buying Cougar EC-725s from the German-French firm Eurocopter.

He said the Kazan-M172 met all the specifications required by the armed forces and cost RM898mil while the Cougar units cost the Government RM2.317bil.

Najib had said that he would explain the matter in full in Parliament.


Najib must keep cronies and family members at bay, says Mahathir

Friday, October 17, 2008

Bernama(12/10/08): Datuk Seri Najib Tun Razak should not be surrounded by cronies and family members when he is prime minister, Tun Dr Mahathir Mohamad said here Sunday.

"There are several former members of parliament and experts whose advice he should seek to run the country," the former prime minister told Bernama after addressing a Malaysian youth seminar at the University of Melbourne.

"There is a lot of work to be done to restore the confidence of the people in the government," Dr Mahathir said.

"But Najib must not try to do everything himself. He must get proper advice from the right people.

"He should not be surrounded by cronies and family members as this will not be good for the country."

Dr Mahathir, however, did not identify them.

He said Najib, his deputy, Umno and its partner component parties must work hard as a team to win public support for the government which suffered a setback at the last elections.

"The votes we lost were protest votes. Malaysians were not happy and this was reflected at the ballot box," he said.

Dr Mahathir said sections of the public felt that the government had become arrogant and out of touch with their needs.

"Some MPs felt, that once elected and given a ministerial position, there was no need for them to go back to their electorate to talk to the people, to discuss issues and find out what needed to be done and to explain government policies," he said.

Dr Mahathir said he hoped that this would change under the leadership of Najib.


DAP demands probe into RM6.75b 'foolish defence decision'

Daily Express (13/9/07): The opposition DAP Wednesday demanded an inquiry into a billion-dollar defence scandal involving the purchase of patrol boats that were either not delivered or proved defective.

It said the probe should determine whether the Cabinet was "misled into making a foolish decision" in approving the RM6.75 billion deal.

"The 6.75-billion-ringgit offshore patrol vessels scandal is the largest single case of misuse of funds in the 2006 Auditor-General's Report," DAP Sec-Gen Lim Guan Eng said in a statement.

"Public interest requires a royal commission of inquiry as to how RM6.75 billion could be lost," he said.

Lim earlier called on Deputy Prime Minister Datuk Seri Najib Tun Razak, who is also Defence Minister, to investigate the deal.

He said the report had found the value of the contract should only have been RM4.9 billion. He added that only two of the six vessels had been delivered to date, and both were defective.

The order for the six boats was part of a RM24 billion deal signed in 1998 with the ship-builder, PSC-Naval Dockyard.

It was plagued by technical problems and delays, with PSC-Naval Dockyard seeking more money from the Government to complete the vessels.

In 2005 Malaysian conglomerate Boustead Holdings, which is controlled by the armed forces pension fund, bought a 30 per cent stake in the owner of PSC-Naval Dockyard.

Meanwhile, Indonesia's billion-dollar arms deal with Russia should not be viewed as negative for regional stability, said Prime Minister Datuk Seri Abdullah Ahmad Badawi.

Jakarta's plans to buy Russian-made equipment will beef up the country's defence capability and ultimately contribute to Southeast Asia's security, he said at the Forbes Global CEO conference here.

"I wouldn't see it as something that can bring about negative developments strategy-wise in Southeast Asia," he said in response to a question.

"All the countries in Southeast Asia need to strengthen their defence capability," Abdullah said.

"I think that's very important but we are not involved in any kind of arms race... therefore I do not see that as something that we need to worry about," he said.

Under the agreement, inked last week during a stop by President Vladimir Putin in Jakarta, Russia is providing a billion-dollar line of credit for Jakarta to use to buy its helicopters, tanks and submarines.

Malaysia has initiated a major arms build-up over the past few years, announcing deals for French submarines, British and Russian missile systems and Polish tanks among other equipment.

Australia has also said it does not feel threatened by Indonesia's military deal. - AFP

Related: A nation adrift with scandals, lies and corruption


Graft in Malaysia’s Defense Ministry

Defence (24/9/07): Najib Tun Razak, Malaysia’s defense minister, finds a fountain of cash in military purchases.

Despite the fact that the country’s borders have been largely secure for 40 years, Malaysia’s Defence Ministry has for decades been available to provide a river of money to defense ministers, the ruling United Malays National Organisation and any of the Sandhurst-educated generals who could get their hands into the till.

But if three separate contracts over the past several years are any yardstick, Najib Tun Razak, who became defense minister in 1999 and kept the portfolio when he became deputy prime minister, appears to have mastered the game far beyond the expectations of any previous defense leaders. Opposition figures say the three contracts, one for Russian Sukhoi jet fighters, a second for French submarines and a third for navy patrol boats, appear to have produced at least US$300 million for UMNO cronies, Najib’s friends and others.

Describing “the mundane but important element of patronage,” Foreign Policy in Focus, a think tank supported by the Institute for Policy Studies in Washington, wrote in a 2005 article that “many foreign arms manufacturers generally used well-connected Malaysians as their lobbyists for contracts. The commission paid to such representatives is estimated to range from 10 to 20 percent.” Even prior to the 1997 Asian financial crisis, Southeast Asia, which hasn’t had an external war in decades but is rich enough to spend plenty on guns, was the world’s second-largest arms market after the Middle East, representing about 20 percent of the world’s purchases.

By the end of next year, Malaysia is expected to have 18 Sukhoi-20MKM jets intended to replace 14 US-made F-5Es, which have been in service for two decades. Two Sukhois were delivered this year, and the Malaysian Air Force also has 18 MiG-29N Fulcrums.

All three of the contracts, which were approved under Najib and have been widely cited by the opposition, fit well into Foreign Policy in Focus’s patronage scale. Bringing the three together, and taking a new look at their associations, is instructive. They have been forced back into public attention by the continuing trial of Abdul Razak Baginda, one of Najib’s closest friends, who is on trial for his life in a suburban high court along with two of Najib’s bodyguards for the murder of Altantuya Shaariibuu, a Mongolian translator who was shot in the head on October 19, 2006, and then blown up with C4 explosives available only from Malaysia’s military.

According to testimony in the trial, Altantuya accompanied her then-lover Abdul Razak to Paris at a time when Malaysia’s defense ministry was negotiating through a Kuala Lumpur-based company, Perimekar Sdn Bhd, to buy two Scorpene submarines and a used Agosta submarine produced by the French government under a French-Spanish joint venture, Armaris. Perimekar at the time was owned by a company called Ombak Laut, which was wholly owned by Abdul Razak.

The contract was not competitive. The Malaysian ministry of defense paid 1 billion euros (RM 4.5 billion) to Amaris for the three submarines, for which Perimekar received a commission of 114 million euros (RM510 million). Deputy Defense Minister Zainal Abdidin Zin told the Dewan Rakyat, Malaysia’s parliament, that the money was paid for “coordination and support services” although the fee amounted to a whopping 11 percent of the sales price for the submarines. Altantuya, by her own admission in the last letter she wrote before her murder, said she had been blackmailing Abdul Razak, pressuring him for US$500,000. She did not say how she was blackmailing him, leaving open lots of questions.

Spending for defense accelerated across the board after Najib, called “the driving force” behind Malaysia’s military modernization program by Foreign Policy in Focus, became defense chief. The shopping list, the think tank reported, “includes battle tanks from Poland, Russian and British surface-to-air missiles and mobile military bridges, Austrian Steyr assault rifles and Pakistani anti-tank missiles. Kuala Lumpur is also negotiating to buy several F/A 18s, three submarines from France and an unspecified number of Russian Suhkoi Su-30 fighter aircraft.

It was the Sukhois that have become the second controversial purchase brokered by Najib. The deal, worth US$900 million (RM3.2 billion), was through a Russian state company, Federal State Unitary Enterprise 'Rosoboronexport' on May 19, 2003. IMT Defence Sdn. Bhd. was appointed the local agent for the Russian company and received 12 percent of the purchase price, US$108 million (RM380 million). The principal figure and chairman of IMT Defence is Mohamad Adib Adam, the former chief minister of Malacca, previous Land and Development Minister and a longtime UMNO stalwart.

The involvement of IMT Defence only became known because in March 2005, a former director of IMT, Mohamad Zainuri Mohamad Idrus, filed suit against several Adib-related companies, alleging that Adib and his sister, Askiah Adam, “wanted to prevent him from exposing the reality of the Sukhoi deal.” In 2006, Mohamad Zainuri lodged a police report alleging that Adib had stolen the US$108 million (RM 380 million) commission that was supposed to be channeled to the company.

According to Mohamad Zainuri’s report, Adib had secretly registered a new company in the federal island of Labuan, Malaysia’s offshore banking center, bearing a name similar to IMT Defence Sdn. Bhd., allegedly in order to channel the commission illegally to the new company. The report was then sent to the Commercial Crime Investigations Department Headquarters. No report, however, has ever been released to the public.

Then, over the last few weeks, a third military scandal surfaced. Malaysia’s Auditor General, in a report tabled in Parliament on September 7, alleged that a contract to build naval vessels given to PSC-Naval Dockyard, a subsidiary of Penang Shipbuilding & Construction Sdn Bhd, which is owned by another UMNO crony, Amin Shah Omar Shah, is near failure.

PSC-Naval Dockyard was contracted to deliver six patrol boats for the Malaysian Navy in 2004 and complete the delivery by last April. Those were supposed to be the first of 27 offshore vessels ultimately to cost RM24 billion plus the right to maintain and repair all of the country's naval craft. But only two of the barely operational patrol boats had been delivered by mid 2006. There were 298 recorded complaints about the two boats, which were also found to have 100 and 383 uncompleted items aboard them respectively.

The original RM5.35 billion contract ballooned to RM6.75 billion by January 2007. The auditor also reported that the ministry had paid out Rm4.26 billion to PSC up to December 2006 although only Rm2.87 billion of work had been done, an overpayment of Rm1.39 billion, or 48 percent. In addition, Malaysia’s cabinet waived late penalties of Rm214 million. Between December 1999, according to the Auditor General, 14 “progress payments” amounting to Rm943 million despite the fact that the auditor general could find no payment vouchers or relevant documents dealing with the payments.

The auditor general attributed the failure to serious financial mismanagement and technical incompetence stemming from the fact that PSC had never built anything but trawlers or police boats before being given the contract. Once called “Malaysia’s Onassis” by former finance minister Daim Zainuddin, Amin Shah was in trouble almost from the start, according to a report in Singapore’s Business Times in 2005. The financial crisis of 1997-1998 meant he was desperate to find funds to shore up ancillary businesses, Business times reported.

After a flock of lawsuits, the government ultimately cut off funding in 2004 amid losses and a net liabilities position. Boustead Holdings effectively took control from Amin Shah, reducing him to non-executive chairman.

According to the British group Campaign Against the Arms Trade, “Transparency International (UK) estimates that ‘the official arms trade (across the world) accounts for 50% of all corrupt international transactions’ and considers that ‘a conservative estimate of the level of commissions paid is 10 percent It needs stressing that this refers to the ‘official’ arms trade...Arms deals often involve huge sums of money and are always shrouded in secrecy. This combination renders them liable to corruption. Corrupt payments can generate a demand for weaponry where none should exist, potentially diverting resources from social needs, including health and development.”

It isn’t just the airplanes or the tanks or the ships themselves. A multi-engine plane, for instance, means that separate raiders can win contracts for different engines, different avionics, literally dozens of different items.

In the 1980s in particular, Malaysia became famous for two complete boondoggles, the first the purchase of British Alvis Scorpion tanks. Although the tank was supposed to be a lightly armed, fast-firing, lightly armored weapon, gun runners dealing with Malaysian military figures in managed to lumber the Scorpions by exchanging the recommended Rolls-Royce gasoline engines with slower diesel ones because the engine manufacturer managed got to the procurement team.

Another gun runner contracted to exchange the original recommended .75 millimeter gun for a .90 millimeter one so big that it had to be leveled each time a new shell was jacked into the chamber, meaning it was slow-firing. The gun was so heavy that the turret’s aluminum races had to be replaced with steel ones, making the vehicle so top-heavy that troops using it were afraid it would topple over. So instead of a fast-firing, lightly-armed and maneuverable weapon, the Malaysian army ended up with a tank that would only go about 60 km/hour instead of 90 and had to be stopped virtually every time it fired, which would have made it a sitting duck for an enemy, had there been one in the first place.

Likewise, Malaysian specifications required a wheeled armored car that could be loaded into an airplane and flown to East Malaysia in case of trouble with Indonesia or Singapore. But the contract for South African Sibmas wheeled 6x67 armored personnel carriers, armed with 90mm Cockerill guns, came up with a vehicle so big that the tires had to be deflated before it could be loaded into an airplane.

When local newspapers reported on the vehicles’ lack of military effectiveness, they were threatened with prosecution under Malaysia’s Official Secrets Act and the scandal was shelved.

But, said a foreign defense attaché privately at the time, “I hope to god Malaysia never gets into a war. They couldn’t get out of their own footprints.”


Kit Siang calls for inquiry into allegations against DPM

The Edge Daily (16/10/08): A parliamentary committee of inquiry should be set up to investigate allegations that Deputy Prime Minister Datuk Seri Najib Razak is implicated in the Altantuya Shaariibuu murder case, said DAP adviser Lim Kit Siang (Ipoh Timur).

The DAP chief whip told the Dewan Rakyat that an inquiry into the allegations was vital, as the exchange of SMSes said to be between Najib and lawyer Datuk Muhammad Shafee Abdullah, as well as the statutory declaration by private investigator P Balasubramaniam, seemed to implicate Najib.

Reading an excerpt from a website purportedly showing the exchange of SMSes between Najib and Shafee, who was then Razak Baginda's lawyer, Lim said it was of paramount importance that Najib be cleared of any involvement in the murder case or abuse of power before he took over the reins of power.

"There is no point for (Datuk Seri) Abdullah (Ahmad Badawi) to say that Najib is a good person. We do not want the personal belief of the prime minister but a full investigation on his deputy," said Lim, drawing cheers from the opposition bench.

He also criticised the use of the Internal Security Act (ISA) on five Hindraf leaders, blogger Raja Petra Kamarudin, Seputeh MP Teresa Kok and Sin Chew Daily reporter Tan Hoon Cheng.

The implementation of the long-awaited Independent Police Complaints and Misconduct Commission (IPCMC) was also not carried out as promised, said Lim.

Calling the BN undemocratic, Lim said its MPs failed to seek answers on allegations against the deputy premier, who would be dogged by controversy when representing Malaysia at international summits.

Datuk Ismail Kasim (Arau-BN) interjected, asking Lim to explain whether a takeover of the federal government through defections was democratic.

When Lim continued to debate, Datuk Baharum Mohamed (Sekijang-BN) raised Standing Order 36(6) and told the Speaker that Lim tried to smear the image of parliamentarians.

The Speaker allowed Lim to continue but reminded him to wind up his debate by 12.30pm, an hour from the time he took the floor.

Lim then accused Umno of being corrupt. Some Umno division chiefs spent RM1 million each to get elected in the previous party elections, he said, citing a former Umno MP.

He said it was understood that money politics in Umno was rampant and according to a news report, division chiefs now spend between RM2 million and RM3 million to secure their position.

"The price of oil can go down but the price of money politics doesn't," he said, asking how much an Umno vice-president aspirant would have to spend to get elected.

This led to Baharum and Datuk Seri Tiong King Sing (Bintulu-BN) exchanging words with Lim and asking him to shut up. Datuk Bung Moktar Radin (Kinabatangan-BN) joined in the fray in defence of his colleagues.

A shouting match ensued as N Gobalakrishan (Padang Serai-PKR), who was seen at the cafeteria moments earlier, rushed into the House to bolster the opposition front.

Calm was restored only after a few minutes, and some BN MPs who were visibly upset at Lim's remarks and accusations left the House.


Anti-Najib campaign turns racial

Malaysian Insider (16/10/08): The campaign against Datuk Seri Najib Razak has taken racial and religious overtones.

Malaysia Today, the website once operated by jailed blogger Raja Petra Kamarudin, published today what appeared to be a doctored picture of Najib performing religious rites dressed as a Hindu priest.

Accompanying the photograph was an article accusing Najib of using the services of a "faith healer, spiritual leader and voodoo master," known as Guruji.

This latest attack, posted anonymously, appears to be an attempt to drive a wedge between Najib and his most powerful constituency, the Malays.

By appealing to base racial instincts, the campaign against Najib invites comparisons to a similar strategy used successfully for the benefit of the Barisan Nasional coalition in 1990.

In the 1990 election campaign, with the Opposition apparently making inroads into BN strongholds, a photograph showing Tengku Razaleigh Hamzah wearing an East Malaysian headgear was widely distributed just days before polls.

The photograph of Tengku Razaleigh in the headgear, which bore motif similar to a crucifix, is credited with turning away significant numbers of Muslim votes from Semangat 46.

Now, Najib finds himself the brunt of what appears to be a similar campaign.

In the Malaysia Today article, he is alleged to be using Guruji to "neutralise" his enemies. It also alleges Najib and his wife are taking part in Hindu rituals.

The posting is the latest in what is turning into a campaign against Najib which has intensified since Datuk Seri Abdullah Ahmad Badawi announced he would not defend his Umno presidency next March.

Abdullah's decision appears to pave the way for Najib to become Umno president, and by convention the prime minister if BN remains in power.

Last week, the website posted a series of text message exchanges between Najib and Datuk Shafee Abdullah, the lawyer who initially represented Abdul Razak Baginda, who was eventually charged for abetment in the murder of Mongolian model Altantuya Shaariibuu.

Razak is a confidante of Najib and the SMS exchange appeared to imply the possibility that the deputy prime minister had interfered in investigations.

Najib has denied any abuse of power despite widespread criticism from Opposition parties who have called for an official investigation.

This week, a separate posting on Malaysia Today also published a letter from a local defence contractor alleging irregularities in the awarding of a contract to Eurocopter by the Defence Ministry while Najib was still the minister in charge.

PM Abdullah, who recently took over the defence portfolio, said yesterday he would be asking for a thorough briefing on the matter from Defence Ministry officials.

But despite the campaign against him, Najib remains the favourite candidate to become the next Umno president.


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