Malaysia’s UMNO Drama Unfolding Further


Latest development: Former PM Najib Razak detained on 3 July
at 3 p.m. by the Malaysian Anti-Corruption Commission (MACC)
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Partyforumseasia: The fall of Malaysia’s National Front (Barisan Nasional) coalition after nearly 61 years in power is revealing more and more dubious secrets of its business model. The advantages of being the incumbant for so long, and having practically unlimited control of the country’s rich financial resources, had led to a network of the leading UMNO and the smaller component parties with huge flows of cash, donations, and bribes. Details are being revealed one by one, all but two component parties have defected, heads are rolling, but maybe most symptomatic for the “money-politics-disease” are the astonishing amounts of valuables found in the different dwellings of defeated party president and prime minister Najib Razak. The list of confisated items so far looks unreal to say the least.

                    The current exchange rate is four Malaysian Ringgit for one USD.

Najib’s explanations are manifold: He was not aware of the jewellery items of his wife. Many pieces are not his own and must be returned to the jewellers.  Najib 1Accepting gifts is not illegal. Most of the money was for the party, etc. He has asked his lawyers already to start legal procedures to get the confiscated items back. Nevertheless, Najib claims that his party has to reform itself and abolish money politics and payments for internal elections. But the investigations are going on, and bank accounts belonging to Najib as well as UMNO’s party accounts are being frozen. The “new – broom – governmant” under returned Prime Minister Mahathir Mohamad is trying to sweep as clean as possible.

The Najib portraits show the changes from the self-assured election winner and unassailable party leader to the loser threatened by the Malaysian anti-corruption agency with prosecution and eventually a Najib scepticalprison term. His attempt to leave the country immediately after the election defeat was thwarted by concerned citizens, followed by an official travel ban.
Investigations into the billions lost in the 1MDB scandal are intensely going on, so far 408 bank accounts are frozen, and more indictments can be expected. It all started in 2015 with the 682 million US$ found in Najib’s private accounts making waves internationally. AAznfO4.imgThe investigations go back to hundreds of transactions to “a party”, individuals, and organizations since 2011. There is hope that at least part of the lost funds can be recovered for the state budget, though experience with the Marcos and Suharto billions in the Philippines and Indonesia are not encouraging.

Meanwhile UMNO tries to pick up the pieces and convince the voters that they have understood the verdict of the voters and are serious about reforming themselves. The internal elections over the last weekend have produced mixed results, though. Najib’s former deputy Zahid Hamidi has won the presidency, in his own view to guarantee the continuity, criticized by others as hara kiri of UMNO. “Young turk” and former youth leader Khairy Jamaluddin was first runner-up with respectable 61 branches (out of 191) voting for him against 99  for Zahid.

For an overview on party funding and money politics in Southeast Asia see our new book, available at https://www.worldscientific.com/worldscibooks/10.1142/10726

10726.cover

15 Years Not Enough? Setya Novanto Finally Sentenced


Partyforumseasia:  The corruption and embezzlement case around former house speaker Setya Novanto has come to a close. 15 years imprisonment, IDR 500 million (US$35,880) in fines and restitution of US$7.3 million, meted out by the Jakarta Corruption Court, is a landmark decision against one of the top politicians considered to be untouchable before. For many Indonesians, especially graft watchdog Indonesia Corruption Watch (ICW), the punishment is disappointingly lenient. They had preferred a life sentence, arguing that the restitution of the $7.3 million he obtained was only 22.69 percent of the total state losses caused by him. The $7.3 million was only his personal share of what the conspiracy deducted from a huge 2009 project of introducing electronic identity cards for the 266 million Indonesians. Novanto hid the money transfers through several corporate accounts at home and overseas. Novanto 1

Is the difference in expectations the normal difference between rule of law and justice, which often results in critical views of court decisions? On one side it certainly is, but the court is also raising the benchmark against the widespread impunity of top politicians who organize the funding of their parties and election campaigns. One of the usual instruments, in Indonesia and neighboring countries alike, is the skimming or scalping of government projects, normally reducing the amount which reaches the target groups or project purpose by about 30% on average. Since the lawmakers have the discretion to decide on project funding, especially in certain financially crucial committees, secret deals with the bureaucracy and affiliated commercial enterprises are more than common. The system in Indonesia is ubiquitous and not really a secret, however, party activities and elections have become excessively expensive, and candidates must invest heavily in their election or re-election campaigns. One recent research paper on vote buying in Indonesia found that poor candidates never win a mandate.

Will the final fall of Setya Novanto, who got away with a couple of other corruption cases before, set a precedent for Indonesia and possibly some of the neighboring countries? Punishing even Politbureau members in China or Vietnam has done rather little against the daily corruption of miserably paid policemen and other civil servants. But the top level convictions in Korea, Taiwan, and now Indonesia, may contribute to the visible nervousness of the Najib– government in Malaysia which is going to the polls on 9 May. Obviously, the 1MDB scandal has not been forgotten by the voters, 

 

Corruption in Southeast Asia


Partyforumseasia: Transparency International has published its newest Global Corruption Barometer (GCB), based on interviews with 21,861 people in 16 countries, regions and territories across the Asia Pacific region between July 2015 and January 2017. (Link)

Here are the most important results for Southeast Asia:

Among the ASEAN countries, Indonesia, Malaysia, and Vietnam seem to have the biggest corruption problems in the perception of their citizens. Malaysia obviously because of the festering and unresolved 1MDB scandal with a major involvement of Prime Minister Najib Razak who is also chairman of the ruling UMNO party, and Vietnam with the rampant daily petty corruption which tarnishes the ruling Communist Party though it tries to reduce it. Asked whether corruption has recently increased, the Indonesian respondents are even more critical than the Malaysians and Vietnamese, probably because of the ongoing corruption saga with the Golkar party and its chairman Setya Novanto.

The low rating for Thailand seems to be one of the positive points in favor of the military regime which is otherwise heavily criticized for its lack of democratic credentials, especially on the international scene.

Looking into the perception of the citizens vis-a-vis the institutions, the ratings for the police are on top. In most countries of the region, the rank and file police officers are not well or not sufficiently paid, which is a root cause for their constant attempts to solicit bribes as petty as they may be. Much more frightening, however, is the image of legislators and government officials who come immediately behind the police on top of the ratings. These assessments are certainly not conducive for the consolidation of the different democratic experiments in Southeast Asia.

NB: Laos, known for high corruption, and Singapore, known for very low corruption, are not covered by the GCB.

Political corruption and the funding of political parties and election campaigns
is indirectly highlighted in the table on institutions above but is not treated in more details in this GCB report. The answers of the respondents, though, are visibly influenced by their  perception of the political scene. While 59% of the Malaysians see an increase in corruption, only 23% say that they have paid bribes for basic services in their country.

The Political Partyforum Southeast Asia is working on a comprehensive survey on political party and campaign financing in the ten ASEAN countries minus Brunei Darussalam. We will inform our readers once it is published. 

 

 

Malaysia: Mahathir’s or Najib’s War of Attrition?


King

Tuanku Abdul Halim Mu’adzam Shah, King of Malaysia

Partyforumseasia: So far, Prime Minister Najib Razak has managed to weather the months of heavy political head winds with remarkable cold blood. His former mentor turned nemesis, Dr. Mahathir Mohamad, so far, has been the driving force in a sort of “Oust-Najib-Movement” and recently brought together a group of Najib enemies described in the Malaysian media as “strange bedfellows”, especially because Mahathir’s earlier victim, Anwar Ibrahim, has joined from behind bars. He has been imprisoned under Mahathir and is now serving a five year term under Najib, again for alleged sodomy and again perceived as politically motivated.

Last Monday, 7th March, in a speech at the opening of parliament, Malaysia’s 88-year-old King, Tuanku Abdul Halim Mu’adzam Shah, “told Malaysian legislators that they should stop playing politics of narrow interests, as this has gone on for so long that it has become stressful for the people and the government.” (Asia One).  Given the circumstances of the entrenched war between the PM and his domestic foes, the king’s admonition sounds rather in support of Najib and very probably won’t end the war of attrition by Mahathir and partners including the opposition. But Mahathir has a credibility problem himself. Many Najsee him guilty of starting the level of money politics he is accusing Najib of, only that Najib with the hundreds of millions in his private accounts has pushed it to unprecedented levels and triggered international suspicion.

Money politics under Najib: If the king may not wield much political influence, there are other strong arguments for the Prime Minister’s supporters in the UMNO party hierarchy to keep the number of defectors relatively small. “He didn’t invent the system but Najib has perfected the art of sleaze”, writes the AsiaSentinel on 2 March (Link), and continues with very concrete figures:

“Once a month, each of the 191 loyal district chiefs that make up the hierarchy of the United Malays National Organization receives RM50,000 for “expenses.” It doesn’t come from Malaysia’s fiscal budget. It comes from Prime Minister Najib Razak’s personal accounts at Ambank in KL. Multiplied out, that totals RM114.6 million annually (US$27.498 million). It is a system that has sustained party loyalty through several premiers for 35 years, if Najib is to be believed, and it points to the deep, long-running corruption of the entire Malaysian political system. It is just part of what keeps Najib in power against the combined investigations of five countries on allegations of money laundering, fraud and bribery.”

The Wall Street Journal is also in the forefront of questioning PM Najib’s personal finances by publishing beginning of March new estimations that he has more than a billion US$ in his personal accounts and that much of it originates from the mismanaged and debt-ridden 1MDB investment fund whose board of advisers happens to be chaired by Mr. Najib.

In regional comparison money politics and patronage are common and sophisticated. Members of parliament as well as local office bearers of political parties are expected to “help” their voters, from waving parking tickets to funding businesses. But it seems that relatively rich Malaysia has reached levels which a majority of voters is no longer prepared to condone. Najib seems to be in control so far, not least because the opposition is divided, but the scandals may change the public mood so much against UMNO that Najib will be more of a liability than until today.
Strategy-wise, though, Najib follows the (immoral) textbook prescriptions: Business as usual, deny everything until you can’t deny it any more and in thin slices, attack the attackers, and eliminate your internal enemies.