By WILLIAM PESEK
February 3, 2016
While Swiss and Singapore officials turn up the heat, Prime Minister Najib Razak hides his head in the sand.
I don’t know who Najib Razak’s friends are in Saudi Arabia, but I sure want a few.
Who wouldn’t covet a pal or two willing to toss you $700 million as a “gift,” no strings attached? That’s at least the Malaysian prime minister’s story, and he’s sticking to it. Politicians overseas, meanwhile, would sure love to have Najib’s electorate. Since the Wall Street Journal broke news of his good fortune, Najib has displayed a fatalistic willingness to take an entire economy down so he can stay in office. And his party harbors little fear of losing power.
There’s the “Twilight Zone” and there’s the “Malaysia Zone,” and just try discerning the difference. Najib-gate grew even more surreal last week when Malaysia’s attorney general suddenly cleared him of criminal or corruption charges. In a hastily-arranged press conference, Mohamed Apandi Ali said Najib had returned all but $61 million of that “donation” from the Saudi royal family. Somehow, Apandi kept a straight face as he declared the matter closed.
But Swiss authorities couldn’t. On Monday, they detailed allegations that a state fund Najib controls may have misappropriated about $4 billion from state companies. Malaysia responded with outrage – outrage the Swiss dared bring transparency into the Malaysia Zone. “By making a public statement, in my opinion, it is not good because it not only strains ties between the two countries, but also creates bias in media reports,” Deputy Prime Minister Ahmad Zahid Hamid said and, yes, with a straight face.
Respect, Switzerland. Respect. It’s never easy to be a whistleblower, but that’s especially so when your main industry is helping the rich camouflage wealth. Reputational risk couldn’t stop Bern from shaming a Malaysian government used to pulling the wool over the eyes of its 30 million people. Not all Malaysians, of course, but those keeping Najib’s United Malays National Organisation in business.
Yet Malaysia Inc. went too far in the camouflage department for Swiss officials. Ditto for the U.S. and Singapore. U.S. officials are probing Goldman Sachs’s role as an advisor; Singapore seized a series of accounts amid investigations into money laundering and other alleged offenses related to 1Malaysia Development Bhd., the fund Najib created in 2009. Ostensibly, 1MDB was set up to spur economic growth. Instead, it’s emblematic of why Malaysia is becoming a smaller blip on investors’ radar screens.
The $700 million scandal is merely a symptom, albeit a gargantuan one, of a more important number: 54. That’s Malaysia’s ranking in Transparency International’s 2015 corruption perceptions index, and it’s down four levels from a year earlier. In 2014, Saudi Arabia trailed Malaysia five places. By 2015, Najib’s supposed benefactor leapfrogged ahead of Malaysia, ranking in the 48th percentile. The perception corruption has worsened on Najib’s watch (a Swiss one, perhaps?) can be found in everything from stock and currency gyrations to foreign-direct-investment trends to divergent political dynamics in Asia.
Indonesia, for example, jumped 19 places on Transparency International’s tables since 2014, even besting the Philippines (another nation cleaning up its act). The difference between Jakarta and Putrajaya? Indonesian President Joko Widodo’s methodical focus on eradicating graft, putting more government functions and services online and recruiting credible deputies is paying off. As Jakarta reduces opacity, Putrajaya is increasingly shrouding itself from the global media, local activists and its people.
THE TIDBITS THAT DO ESCAPE NAJIB’S FIREWALL are of the you-couldn’t-make-this-stuff-up-if-you-tried variety. In December, we learned the Federal Bureau of Investigation is eyeing Najib family assets in connection with Leonardo DiCaprio’s “Wolf of Wall Street” film (a company set up by his stepson produced it). Don’t forget perpetual efforts to imprison opposition leader Anwar Ibrahim on sodomy charges from the late 1990s. Hence jokes that CBS’s next crime-scene investigation series should be “CSI: Malaysia.” Or about the irony of a government that can’t find a Boeing 777 having no trouble locating Anwar’s body fluids two decades later.
The controversy surrounding MH370, missing since March 2014, and 1MDB stem from the same problem: a political elite that cares about staying in power, not the people. That charge could be lobbed at the Liberal Democratic Party in Japan or America’s Republicans. But neither has held power continuously for six decades, as UMNO has. When the world looked Malaysia’s way amid the greatest aviation mystery since Amelia Earhart, the government was woefully unprepared for primetime. It should’ve learned then that circling the wagons and shutting the world out is a losing strategy.
Only, it didn’t. Najib’s team repeated similar mistakes with 1MDB. First, it dismissed the Journal’s July 2015 report following 1MDB money into Najib’s account personal accounts as some conspiracy to undermine Malaysia. Then, after Putrajaya could no longer ignore the storm, it effectively said “Oh yeah, that. It was a gift. Trust us.” Then, awkwardly, the attorney general whitewashed the crisis. The matter, Najib declared after the ruling, “has been comprehensively put to rest.”
Hardly, Swiss prosecutors retorted this week. Burying such a global scandal is no longer possible in a globalized world in which Malaysia competes for investment. The growing number of foreign probes -– and escalating ones at that –- risk denting Malaysia’s standing. They’re also as clear an explanation as any for why Malaysia is being left behind as Indonesia, the Philippines and other neighbors zoom ahead.
Thing is, Malaysia is an amazing and unique place and I urge anyone who hasn’t visited to check it out. Its breathtaking physical beauty is only rivaled by the energy of its multiethnic population, a thriving culinary scene second to few and enviable geographical placement as China, India and Southeast Asia blossom and change the world. Sadly, it’s run by a government that claims all’s well when the rest of the world knows something’s rotten in Najib’s Malaysia. And with a straight face.