Investigate Why Malaysia Has Attained World Ranking in Illicit Outflows

by Dr. Lim Teck Ghee

I refer to a report by Washington financial watchdog Global Financial Integrity which found that Malaysia lost US$291 billion or RM889 billion through illicit outflows between 2000-2008.

The report written by GFI economists Karly Curcio and Dev Kar, who is a former senior economist at the International Monetary Fund is deserving of attention from everyone in the country – the Prime Minister to the lowest of our citizenry.

This finding of massive illicit capital outflow for Malaysia is the strongest confirmation of sustained capital flight from the country during the past decade, even if one wants to dispute the definition of “illicit” used. What is especially worrying is that the outflow has tripled in the short period of eight years from 2000-2008

There can be no dispute that a major part of this outflow is due to financial gains accumulated through corruption, kickbacks and other illegal means. How much is due to various causes can be disputed and can only be determined by a thorough investigation such as through the establishment of a Royal Commission to determine the extent and the reasons for the outflow. Without an independent panel or Commission looking into this and having access to banking and other financial data, there will be no end to finger pointing and needless speculation as to who are the parties implicated in these outflows.

No country can afford the outflow that Malaysia is experiencing. It will bankrupt the country, impoverish the general population and lead to social and political instability and chaos.

Should the Government choose to maintain silence on this issue or attempt to spin it in other ways, then it will be a monumental error which will come back to haunt it forever through accelerating the decline – and ultimate downfall – of the country.

  1. #1 by Not spoon fed on Sunday, 23 January 2011 - 10:26 pm

    That is why we have to uproot the 50+old tree (Barisan Nasional). With much money outflow, how a nation develop healthily? Transparency International states this too that when a nation is corrupted, that nation’s development could be hindered. No Malaysia state or federal government has evered received a praise from Transparency Internationsl since 1957 except Penang who received a praise from TI in 2009!

  2. #2 by yhsiew on Sunday, 23 January 2011 - 10:34 pm

    Being a responsible premier, Najib must explain how such colossal outflow of illicit funds occurred and what measures the government would take to prevent such wastage of funds from happening again.

  3. #3 by yhsiew on Sunday, 23 January 2011 - 11:01 pm

    Which developed country in the world has such huge illicit outflows?

    Malaysia’s claim of developed nation status by 2020 will only be a laughing stock to the world if such illicit outflows are not reined in by then.

  4. #4 by tak tahan on Sunday, 23 January 2011 - 11:02 pm

    Najis will say”i got say,you got no say”Aiseh you tak tau gua say ah?”Say say say ying ga po reng gei by lionel ritchie.I just went to thaipusam to say say say to effect my bigger figure than Lord Murugan.You want to say some more.i say you man.

  5. #5 by tak tahan on Sunday, 23 January 2011 - 11:53 pm

  6. #6 by sheriff singh on Sunday, 23 January 2011 - 11:58 pm

    It looks like foreigners know more than what we domestically do.

    They know more about our leakages and our corruption than our domestic gate-keepers, regulators and government do.

    How come?

    Are we going now to blame George Soros or the Jewish lobby?

    Why is there no prosecution for the illegal money transfers by UMNO politicians and their cronies through money changers as was exposed last year in the media?

  7. #7 by tunglang on Monday, 24 January 2011 - 12:17 am

    Billion Ringgit Question To Leadership of Malaysia:
    How much more illicit outflow are you prepared to allow before and after the GE13?
    Note: If not, please clarify to the nation and take decisive, punitive action now rather than say “I know.”

  8. #8 by -ec- on Monday, 24 January 2011 - 12:17 am

    nr passed the ball to dr zeti to comment on the matter (bernama 1/21). i would wonder how such an irresponsible person could be the pm. the finance minister and a parliamentarian making law for this country.

    according to the central bank of malaysia act 2009, this type of illegal and illicit transactions are not explicitly provided as the functions of the bank (s5). however if it is interpreted as activities affecting the financial stability, it would still be covered by bnm.

    but… if you look at the powers of bnm, bnm could only give directives, guidelines and impose requirements to the related supervisory parties (s41, s43, s77) or even report suspected offence (s88)

    but… any sane person would know if you want to do the above, you must be able to investigate and you have have facts. then how bnm would know any details as bnm has no power to investigate? ops, then there is s30 which provides that bnm could request information from any governmant agency and supervisory authority regarding this suspicious ‘persons’ who performed the illicit transactions. so who is this authority? probably the police.

    yes, dr zeti should report police!

    but… dr zeti must be cognisant that the ministry (yes, the finance ministry that nr is overseeing) has the power to exempt “any particular person or any class, category or description of persons, from all or any of the provisions of this Act, for such duration, and subject to such conditions, as the Minister may specify in the order. (s96)”. and then this would be classified under the official secret. end story.

    so yes, dr zeti should report police, knowing that it will not get her anyway further.

  9. #9 by Jeffrey on Monday, 24 January 2011 - 12:26 am

    No way the govt would consider a Royal Commission to determine the extent and the reasons for the outflow: which govt faced with huge outflows and a trickle of inflows would broadcast to public its own failures? Denial is best option. They would question accuracy of GFI’s methodology and recording procedures. How could illicit capital of US$291 billion (RM889 billion) moving out be so easily measured? Crooks will tell you? There some truth in this.

    However if the recording procedures of GFI economists Karly Curcio and Dev Kar are inaccurate, they are more likely to under-estimate than over-estimate the outflows. Malaysia is 5th global top losers of capital but in proportionate terms we may well No. 1!

    If anecdotal evidence were to be believed, private wealth bankers in S’pore keeping a tap on the pulse of such movements say that ruling politicians are moving their illicit capital out these few years in unprecedented rate (after TDM stepped down). It is not sure whether its due to intensified intra party feuding & factionalism or inter coalition concerns that Pakatan Rakyat might win power in next GE or GE after next that might precipitate 2 undesirable outcome – (a) disturbances if ruling party refuses to concede or (b) if it concedes and when PR comes to power unleashes MACC on the corrupt or PAS may think of chopping off hands of public theives!

    Besides politicians with substantial ill gotten gains, the other suspected class engaging in capital flight are ordinary businessmen and investors of some financial substance. Only the well to do can participate in capital flight. The ordinary have insufficient to participate! Some of the wealthy edge the risks – it is always a function of risks versus returns – and decide not to over concentrate all their eggs in basket of Ringgit assets whether cash, property or shares. They will be foolish to do so.

    The Govt prime prunes and injects government stimulus – financed by a persistently large budget deficit – and then again the allocation of project is racially biased per the NEP.

    To conform to NEP they have to finance the 30% equity stake of their Bumi partners. So some of the Non malay wealthy would prefer relocating their capital elsewhere in which such restriction is absent. And the reason why their capital leave intersect with reasons why FDIs are not coming in as well in this respect.

    Money put in S’pore or even Australia may not give high yields but at least they are much more stable (political & economic) systems. There is mistrust between the some capitalists and the ruling elites. The former don’t think that the latter could sustain the peace for long, let alone improve economic performance when they show weakness by pandering to racial and religious bigots making a mockery of their claims to pluralistic politics.

  10. #10 by Jeffrey on Monday, 24 January 2011 - 12:28 am

    Continuing from above – When perception – whether true or not – is that the country is sliding like Titanic beneath the wave so fortune, it is natural they take a position against Ringgit assets. They borrow maximum here maybe in vain hope that when it comes to a crunch banks will take haircut, whilst their own money they take out. One can’t take money out when there’s borrowings – there also ECM rules enforced by Bank Negara – so they use money changers they trust to effect contemporaneous swap and park the money as Sg$ or AUD which is perceived more stable …To extent undeclared what they do comes under illicit as well.

    But its not just illicit money going out. So is illegitimate capital: Robert Kuok’s PB Oil parks its assets in Wilmar S’pore, and took its 80% stake out from Jerneh Insurance; YTL invested in Wessex Water plc, in UK. Even Petronas spends its billions in profits around the world as it attempts to become a major global player. Of course Sime lost its moneys in Qattar!

    What about the exodus of money going out along with exodus of talent as highly skilled persons seek PR and migrate elsewhere having lost faith in the future of the country for their children??? Even if they don’t migrate they send their children overseas to study having lost faith in education system here. Their children studying overseas affords the pretext to send their capital over there (legitimately) via the banking system by telling Bank Negara they are buying property over there for their children to stay whether or not they are actually doing so! Others more sophisticated use off shore bank transfers and swap arrangements to effect the transfers….

    Bottom line it’s a lack of confidence that is the cause. Capital flight is the Rich’s perception of and a response to the perceived unhealthy domestic policies, lack of credibility of policies and institutions, and imminent political instability of a given country….

    It is something the country can ill afford because at flight is the resident capital – the very financial resources – essential for financing economic growth of a country that is suffering a double whammy of shortage of FDI inflows for the very same reasons!

    However it is not something that a class of ruling elites concerned of the govt’s image and their need to get votes could admit when they are not in the position to do anything to ameliorate the factors that cause this flight.

  11. #11 by dagen on Monday, 24 January 2011 - 12:30 am

    The grandson of kutty mamak will say that the outflow was and still is being caused by the opposition. Well. Somehow. That is also to say, without the opposition there will be no such outflow. So I guess, we should just stop voting the opposition. Otherwise we too would be guilty of causing the outflow. A very bad wrong act indeed, kerismuddin bin lembudin would say.


  12. #12 by ENDANGERED HORNBILL on Monday, 24 January 2011 - 12:33 am

    “Vote for me on Sunday; then come to my office on Monday and colect the cheque.”

    Who said that and to whom?

    Has this anything to do with RM889billion missing?

    889 billion = RM889,000,000,000 = 8.89 x 10 to the power of 11-lah!!!

  13. #13 by Jeffrey on Monday, 24 January 2011 - 12:34 am

    Typo correction “…..But its not just illicit money going out. So is Legitimate (not illegitimate) capital: Robert Kuok’s PB Oil parks…etc”

  14. #14 by ENDANGERED HORNBILL on Monday, 24 January 2011 - 12:39 am

    Jeffrey, what you have written is the equivalent of a run on the bank, man!

    So if so many Malaysians, politicians and businessmen alike, have so little confidence in Najib and his cahoots, this then becomes a run on the country, is it not???

    So does this mean Malaysians r now becoming marathon runners?

  15. #15 by -ec- on Monday, 24 January 2011 - 12:49 am

    the word illicit reminds us csl’s vcd…

  16. #16 by monsterball on Monday, 24 January 2011 - 6:44 am

    The government choose to be silent over this matter because the government knows exactly who are the culprits and why so too.
    It is like finding relatives stealing and cheating.. …and you expect the father to report to the police?
    Yes we do……but the government is not a father with dignity nor principles in life.
    Furthermore..the father is a crook too.
    Like father…….like sons.
    Money laundering is nothing new.
    It is like bribery…happening all over the world.
    But in such huge amount for a small country like Malaysia…out of balance and logic..Dr. Lim have said it all.
    No way will the government or Najib will act.
    It is like expecting a murderer …robber ..thief to confess willingly.
    The cobweb built by UMNO B government is well knit to protect them…but holes and weaknesses are seen by people out to clean the filth and dirt..or else the whole country population will fall sick and suffer..with all sorts of diseases.
    Choose your life.

  17. #17 by Godfather on Monday, 24 January 2011 - 9:25 am

    What lah, you people from Pakatan always object for the sake of objecting. Attaining world ranking is a major achievement, and we should be proud. We should be giving full KPI marks to Bank Negara for putting us on near level terms with China.

  18. #18 by TheWrathOfGrapes on Monday, 24 January 2011 - 9:31 am

    In absolute terms, China has the highest outflows for the period 2000-2008 at US$2,176 billion. However, it also has the second biggest economy in the world with GDP (ppp) of 9,865 billion.

    Malaysia has the fifth highest outflows in the world for the same period at US$291 billion. Its latest GDP (ppp) is US$416 billion.

    The original ranking of outflows in absolute terms are China (2,176), Russia (427), Mexico (416), Saudi Arabia (302) and Malaysia (291).

    However, the ranking of illegal outflows as a percentage of GDP are Malaysia (70%), Saudi Arabia (49%), Mexico (27%), China (22%) and Russia 19%).

    Malaysia is world number ONE in siphoning out illegal money in relation to its economy. Is this the meaning of ONEmALAYSIA?

  19. #19 by dagen on Monday, 24 January 2011 - 9:38 am

    Illicit capital outflow per head – recalculation.
    China (pop 1.3b) — US$1,670
    Russia (pop 142m) — US$3,000
    Mexico (pop 107m) — US$3,890
    Saudi Arabia (pop 25m) — US$12,080
    Malaysia (pop 27m) — US$10,780 (RM33,000 approx)

    Revised ranking table
    1) S.A.
    2) Malaysia
    3) Mexico
    4) Russia
    5) China

    Aiyah, we missed the no 1 spot. We have got the suzuki cup already. I thought maybe we can now get the (wot?) mazuki cup (???) for being no.1 in illicit capital outflow. Heck. Jib really ought to fire zeti for doing her job and thereby throwing spanners in all our good work. Otherwise according the jib the illicit outflow from malaysia ought have been substantially larger. The champion spot is really ours. And another holiday ought to be enjoyed by all malaysians for having each contributed substantially more than RM33,000 to the illicit outflow.

    What a sad day for malaysia. Lets start a campaign to get rid of zeti for losing our mazuki cup.

  20. #20 by k1980 on Monday, 24 January 2011 - 9:52 am

  21. #21 by Thor on Monday, 24 January 2011 - 10:02 am

    Investigate what???
    Even with the findings, who is gonna charge and prosecute those buggers?
    The whole country’s law and system are run by these crooks and you expect them to kick their very own butt?
    One way to teach these buggers is to pray hard that they drop dead one by one.
    That will depend on whether god is willing.
    Another way is wallop them hard in the next GE till they’re completely “dead”.
    That’s more logical to me!

  22. #22 by limkamput on Monday, 24 January 2011 - 10:10 am

    Have you noticed BN/UMNO hardly talked about endemic corruption, abuse of power and wastage of public fund nowadays? These are enough indications they are corrupted to the core, abusing their power to the keel and wasting public money blind. Instead, they only talk “shaking hands”, Singapore as bogeyman, slogans and more slogans, and hot air transformation projects one after another. Goodness me, they can’t even talk about illicit sex, what else you can expect them to talk about illicit outflows.

    The most important thing is whether fellow citizens on the ground really know what is going on in this country. So long as a tin of Milo, some biscuits, t-shirts, and RM50 ringgit angpow can satisfy their needs, I think it is almost useless we talk eloquently here.

  23. #23 by Thor on Monday, 24 January 2011 - 10:19 am

    See the resemblance of Ben Ali and our current PM!
    Not much difference eh!
    Only difference is, when will we be like Tunisia or worse?

  24. #24 by limkamput on Monday, 24 January 2011 - 10:29 am

    I have a few questions and I hope this author and others could help to enlighten me.
    1. So much of our money have flowed out, how come the external value of our ringgit has not substantially weakened.
    2. If Robert Kuok sold his Plantation and parked the money in Wilmar, in what way it has affected the wealth, the well-being and the growth of the Malaysian economy?
    3. I just don’t understand anymore the flows of fiat money all over the world. What is the problem, the government can always print it, so long as it is not excessive, am I right? For example, Sing$ is now so strong and stable – can the government create a couple of billions and buy more real assets in Malaysia? Please don’t treat these questions as nincompoop questions. I am not being sarcastic also.

  25. #25 by Godfather on Monday, 24 January 2011 - 12:37 pm

    You Pakatan supporters are really crazy. We go down the world rankings and you complain, we go up the world rankings and still you complain. Aren’t we all proud of this achievement to be mentioned in the same breath as China ?

    Pakatan should support the BN move to award full KPI marks to Bank Negara.

  26. #26 by ENDANGERED HORNBILL on Monday, 24 January 2011 - 12:47 pm

    Did GFI include the Scorpene payouts as ‘illicit flows’?

    Or are such payouts sanitized and baptized into legalised commissions?

  27. #27 by tak tahan on Monday, 24 January 2011 - 12:56 pm

    Godfather,with hindsight we PR are proud to have these free bullets to shoot BN and goons randomly in GE13!

  28. #28 by boh-liao on Monday, 24 January 2011 - 2:41 pm

    No point complain here
    Express dis mesej in a FORM understood by voters in cities, towns, villages, kampung, long houses, n voters who work as polis, civil servants, askar, etc + self-employed too
    Use Youtube, sketches, manga, cartoon, sms, twitter, Facebook, DVD, faxes, etc
    Start a revolution against UmnoB/BN, be encouraged by what occurred in Tunisia
    VOTE 4 PR 2 kick UmnoB/BN OUT

  29. #29 by k1980 on Monday, 24 January 2011 - 3:10 pm

    Soilek sings this whenever he sees Mala’s gloved hand

  30. #30 by johnnypok on Tuesday, 25 January 2011 - 6:10 pm

    Investigate all the PMs and CMs first, and send all the guilty ones to hell.

  31. #31 by tak tahan on Wednesday, 26 January 2011 - 12:40 am

    Ok.Investigating now,please take you seat and relax in your home.We will announce when the time is ripe or right.All the big big and the biggest one will be roped in on malaysian time 24 hours and no unnecessary delay more than 10 years.Ok you kaliau no worry to tell you ar..everthing thing ok sure bloody sure ok

  32. #32 by Taxidriver on Wednesday, 26 January 2011 - 1:09 am

    In-ves-ti-gate? Something wrong with you? You know of anyone investigating himself?

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