Economist Jomo Sundram claims money for 1MDB, ECRL diverted to BN election war chest

(MMO) – Mega infrastructure projects undertaken during the previous Barisan Nasional (BN) government were actually a front to raise funds for its election campaigns instead of for Malaysia’s economic benefit, prominent economist Jomo Kwame Sundaram said today.

Speaking at the “GE14 and the Year Since: Analyse and Perspectives” seminar at the International Islamic University Malaysia here today, Jomo said the most blatant example was the diversion of money meant for sovereign investment fund, 1Malaysia Development Berhad (1MDB).

“I think we cannot begin to fully appreciate the circumstances which brought about the regime change if not for the fact for 1MDB.  If you think about 1MDB and the whole creation of 1MDB, it is clear that 1MDB was an attempt to provide a certain degree of political financing not for the party but for the leader of the party.

“I think this is very important in terms of understanding what came about to the fusion of the prime minister position and the finance minister position,’’ he said, referring to Datuk Seri Najib Razak who both portfolios at that time.

Jomo was formerly a member of the Council of Eminent Persons, the quasi-official advisory panel for Prime Minister Tun Dr Mahathir Mohamad formed in the immediate aftermath of Pakatan Harapan’s victory in the general election last year.

He also claimed the original East Coast Rail Link (ECRL) deal was approved by the previous BN administration to raise funds for the 14th General Election.

“The whole point of ECRL was precisely to raise money for the last election. Consider how it was rushed through Cabinet at the end of 2017. In January 2018, ECRL started operations. Of the estimated cost of the first phase of the project, it would cost RM45 billion.

“Eximbank of China was prepared to finance up to 85 per cent of the cost. But we don’t need to pay for the first seven years, so in that time, the interest becomes the part of the principle.

“This means we are passing it down to the younger generation. This is the pattern in so many schemes and it shows such a grossly irresponsible administration but this is how the country was being run,’’ he said.

Jomo then stated that the practice of money politics had worsened over time, especially following how badly BN performed in Election 2008.

This, he claimed, drove the creation of “new BN leaders” who prioritised political funding.

“If you begin to think the timing and sequence of what happened to 1MDB, the timing is basically due to the perception of the last prime minister is that why BN did badly in 2008 election was because they didn’t have enough money, thus the slogan ‘cash is king’.

“What happened over the decade is that increasingly, how much was for political purposes and how much for individual use was becoming murky,’’ he added.

“What we have seen is the emergence of money politics and it didn’t begin in the last 10 years but it began much earlier,” he said.

Jomo noted that older Malaysians might remember the time when Dr Mahathir was prime minister for the first time being prompted to explain why the North-South Expressway (NSE) contract was given to UEM, which was then controlled by Umno, and not to Hasbudin, another company that had a more attractive offer.

“He said how else was he going to fund PWTC? But even then it was for the party,’’ the economist said, referring to Dr Mahathir’s remarks in 1987 regarding the construction of the NSE.

Jomo explained that the change in government following the historic May 9 polls last year provided the rakyat with an opportunity to conduct critical reforms to public institutions that will provide a clear check and balance towards the executive branch.

Jomo also added that the change of regime could also bring about the end of a “certain type of money politics and cronyism”.

“So we have a real possibility of bringing an end to a certain type of money politics and a certain type of cronyism. All this is very urgent and immediate and there needs to be some sort of cooperation across party lines,’’ he said.