1MDB scandal a case study of the failure of Umno’s one-party rule
(Malay Mail Online) – Explosive allegations of corruptions involving 1 Malaysia Development Berhad (1MDB) and Prime Minister Datuk Seri Najib Razak illustrates the pitfalls of Umno’s one-party rule in Malaysia, the Wall Street Journal (WSJ) said today.
The US paper, which alleged on Thursday that some US$700 million (RM2.6 billion) was moved through companies linked to the state-owned fund before ending up in Najib’s accounts, said in an editorial that the size of the claimed diversion was shocking, but noted that the abuse of public entities for private gain was not unusual in Malaysia.
“Umno has ruled Malaysia for a half century by keeping the Malay majority loyal with racial preferences and patronage,” WSJ said in the opinion piece published yesterday titled “Scandal in Malaysia”.
“As the country’s middle class has grown, awareness has spread of the true cost of the system and the ruling coalition’s electoral machine has begun to falter,” the paper added.
WSJ noted that Najib had helped set up 1MDB in 2008 as the deputy prime minister then to bring in investment from the Middle East, but the state-owned fund soon amassed US$11 billion in debt as it purchased energy and real estate assets.
The US paper also reported last month that after 1MDB had purportedly overpaid for assets from Genting, a Genting subsidiary donated US$10 million to a charity linked to Najib that featured during campaigning in Penang at the 2013 general election .
WSJ said an important part of the 1MDB story was the allegation that the state-owned fund underpaid for public assets like land, but overpaid for private assets purchased from influential Malaysians.
1MDB then sold some assets at “suspiciously high” prices to other public entities when the company was forced to delay debt repayments, said WSJ.
“This is a familiar story. A government investment scheme is launched with grandiose promises of moving up the value chain and other economic jargon. Then the asset stripping begins.
“If the project goes reasonably well, the ruling party has an accomplishment to point to, with the high costs conveniently forgotten. If it fails, public money bails it out in some form, with the state-owned oil monopoly Petronas the ultimate backstop,” said WSJ.
The US paper noted, however, that the trouble is that plunging global oil price has depleted Malaysia’s public funds, from which the politically-connected are “used to feeding”, which has led to internal strife within the Umno elite.
Former prime minister Tun Dr Mahathir Mohamad has been pushing openly for Najib’s resignation, citing the controversy surrounding the debt-laden 1MDB.
“But many in the government remain loyal to the prime minister out of fear that if he goes, the whole system could come crashing down,” said WSJ.
“If the allegations against Mr. Najib prove true, Mr. Mahathir and others are right to call for his resignation. But incompetence and greed won’t be rooted out until Malaysia’s democracy matures into a true multiparty system,” the paper added.
Malaysian authorities are currently investigating the alleged money trail between 1MDB and Najib, who has denied taking public funds for personal gain.
Najib is also expected to sue the WSJ over its report tomorrow.
