4 August 2015

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Asia Times

Malaysia’s stock market was down over 10 percent at end-July after Prime Minister Najib Razak, fighting to extend his six-year tenure in the wake of the 1MDB debt and campaign funding scandal, sacked his deputy and other cabinet members openly challenging him.

His public approval rating at 45 percent has suffered since the United Malay party won re-election last year, despite the opposition getting a larger vote total.

His predecessor Mahathir Mohamed did not think he deserved another term for lack of economic and political vision, as the household debt burden, which soared to 85 percent of GDP through government programs to boost consumption, is no longer sustainable to offset falling oil exports.

Foreign investors, with respective one-third and one-quarter ownership in the local bond and equity markets, were once enthusiastic about early promises to change the state-dominated business and financial sector model. But the results were meager and with the currency now at a 15-year low as the region’s worst performer, aversion is spiking as in the Asian financial crisis aftermath.

The sovereign wealth fund investigation into $11 billion in accumulated debt has also begun to scapegoat international finance houses as during the early 2000s. Goldman Sachs has been singled out for high bond underwriting fees and the aggressive style of its Asia head.

The son of a wealthy Malaysian business executive, who started a fund in New York and expanded 1MDB’s portfolio into luxury real estate, has been accused of shady foreign practices and steering $700 million into Najib’s account.

As a central bank task force examines such conspiracies, asset sales to other government-linked companies, with stock exchange heavyweight Tenaga Nasional just bidding for a power unit, will be the main channel for servicing obligations and staying afloat.

GDP growth may be only 4 percent this year as the PMI manufacturing index fell below 50 in June, and April introduction of a goods and services tax to narrow the chronic 3-percent range budget deficit caps domestic demand.

Property and construction after a long upswing have stalled as bank credit growth drops to single digits, with personal non-performing loans rising.

The central bank has held rates despite ringgit depreciation to 3.8/dollar to discourage a further borrowing binge, which has been the main factor cited by ratings agencies for a likely sovereign downgrade.

Fitch Ratings last month maintained an ‘A’ grade on the prospect of household deleveraging amid the allegations swirling around the prime minister. To allow banks to handle workouts, short-term Islamic government securities issuance, which soaked up liquidity, has been stopped, effectively halving the global ‘sukuk’ universe to $50 billion in 2015, according to Standard & Poor’s.

External accounts show a dwindling current account surplus to 1.5 percent of GDP as both high tech and natural resource exports sputter. International reserves have dropped 20 percent this year to just over $100 billion as they are used for currency intervention, and domestic and foreign-based capital outflows accelerate.

In May, a $2 billion sovereign bond was placed to boost holdings, but fund flow tracker EPFR shows steady debt and equity exit since the first quarter. Outward FDI from both private and state companies is a strong trend, as they diversify risk and react to slim infrastructure pickings in Najib’s ambitious Economic Transformation Program now compromised by debt and political baggage.

These elements are also pervasive in Thailand where the stock market was off the same 10 percent at end-July on the MSCI index. It is tied with Malaysia for ASEAN’s greatest household debt, which was pushed by the Yingluck administration’s rice farmer and auto buying schemes before she was ousted by the military.

The generals postponed the election timetable into late 2016 as a new constitution is drafted and former government officials face trial for misconduct, including in agricultural credit.  Informal money lenders and external corporate and financial institution borrowing add to the debt load which altogether is estimated at 125 percent of GDP. Balance sheet bloat in both countries regardless of criminal intent remains scandalous, and investors need to see that fiscal and political houses are equally in order.

4 August 2015

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South China Morning Post

Can the prime minister weather a full-blown wealth-fund scandal and a fractious party?

Malaysia’s deputy prime ministers have rarely had it easy. To play the role of the utterly loyal number two while hinting at one’s potential as a future number one requires extreme political adroitness.

Most have failed and faded into ignominy as also-rans. Others are now fierce critics of the government.

So when Muhyiddin Yassin was booted out of the cabinet on Tuesday for his attacks on his embattled boss, Prime Minister Najib Razak – who is fighting allegations that he took money from the 1MDB state wealth fund – it seemed like history repeating itself.

An already polarised country is being thrown into deeper turmoil with the capital Kuala Lumpur swirling with ominous rumours of arrests and more sackings, including that of well-respected central bank governor Zeti Akhtar Aziz, all because she is investigating the 1MDB scandal.

Charge sheets allegedly showing that Najib was about to be prosecuted for corruption surfaced on Thursday. Public prosecutors have denied their existence.

The government has also had to come out to say it is not planning to arrest Muhyiddin. Meanwhile, civic groups are planning to launch street protests.

Above all, many Malaysians are still in shock at the ruthlessness of the sacking. To some, it was un-Malay, alluding to the gentle, softer manners of the majority race.

Muhyiddin also told the media that he learned about his firing an hour before it was announced. When asked if he was about to be sacked, his boss merely nodded, Muhyiddin said while mimicking Najib’s gesture, to derisive laughter.

It was only two days earlier that Muhyiddin had voiced his strongest criticism yet of the 1MDB scandal that has ensnared Najib, who is chairman of the fund. The deputy prime minister said he, too, did not know the answers to so many questions about the debt-laden fund and The Wall Street Journal report that US$700 million from the fund had been funnelled into Najib’s personal accounts.

His statements were mild compared with the salvos unleashed by former prime minister Mahathir Mohamad. But the sacking came swiftly. Sources told the South China Morning Post that Muhyiddin’s camp did not see it coming.

Muhyiddin is now the second deputy prime minister in the history of Malaysian politics to be sacked from the cabinet. Anwar Ibrahim, dismissed in 1998 after disagreeing with Mahathir’s handling of the Asian financial crisis, is in jail over a sodomy conviction.

Muhyiddin remains deputy president of the Malay-centric Umno, the largest party in the ruling coalition. He has said he does not intend to rock the boat. But nobody expects calm waters ahead.

The two men came together in a marriage of convenience. One is from a pedigreed political family; the other rose through the ranks steadily at the state level in Johor, the birthplace of Umno.

Najib is the son of Malaysia’s second prime minister and secured the top job by waiting patiently in the wings as deputy prime minister for several years, and even after the ruling coalition’s massive losses in the 2008 election. He took over from PM Abdullah Badawi only a year later.

Muhyiddin, who was the chief minister of Johor for nearly a decade until 1995, had appeared as if he was in no hurry to assert himself.

But the 1MDB scandal proved too hard to resist taking on. Along with Muhyiddin, Najib sacked other ministers who had also been vocal about 1MDB. Attorney general Gani Patail, who was involved in the investigation into the wealth fund controversy, was also fired.

Since the firings, a leaked, undated video has emerged online, showing Muhyiddin, in a private conversation, reporting that Najib had told him that he did take the US$700 million.

Najib has denied taking any money for “personal gain”, rejecting the accusations as malicious lies to force him out of office.

With the sackings, he has shown he is bent on staying on until the next election, due by 2018. But can he last that long and will Umno stay united?

The Malay ground in Malaysia is in strife. Umno has lost favour with vast sections of the urban Malay middle class that has abandoned it in droves since the 2008 election, when the ruling coalition lost its two-thirds majority in parliament.

But broad swathes are also disillusioned with the opposition alternatives of Anwar’s party, Parti Keadilan Rakyat (PKR) and the Partai Islam Se Malaysia (PAS). PAS is now being torn apart, with defectors rumoured to be setting up a new political party in the coming months.

In the past, when two deputy prime ministers left the cabinet, the ensuing infighting left Umno in shreds.

In 1986, after quitting as deputy to Mahathir, Musa Hitam joined forces with another Mahathir nemesis, Tengku Razaleigh Hamzah, to challenge the top leadership post of Umno. Both lost, but the bruising battle split the party for several years, into Semangat 46, or “Spirit of 46”, harking to the founding year of Umno, and Umno Baru, a newly constituted party.

In 1998, when Anwar was sacked, he launched the Reformasi protests against his former boss. Umno again split as defecting members joined Anwar to form PKR.

But Umno may not suffer such a fate this time. Like many Asian countries, Malaysian democracy is rife with the politics of patronage. And Najib has ensured the loyalty of the Umno rank-and-file: at a party meeting in March, more than 160 out of 191 division chiefs pledged their endorsement of him.

Sources told the Post that Najib also has the support of most members of the supreme council, the highest leadership body in the party and, barring other more damaging evidence, can ride out the storm until the party elections next year.

For Umno unity to come undone, some mighty machinations and even more money would be needed to establish a whole new source of patronage.

Few expect Najib to survive the current crisis, but for now, it would appear he has done enough to pacify the different “warlords” who control the different sections of the grass roots.

When this reporter interviewed him in 2009 soon after he took office, I asked Najib how he would deal with them. He waved aside the question and quipped: “Don’t forget, I am the biggest warlord.”

With the sackings, he has ensured his opponents will not forget.

4 August 2015

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TMMO

Founder and editor of whistleblower website Sarawak Report (SR) Clare Rewcastle-Brown has questioned Prime Minister Datuk Seri Najib Razak’s failure to explain from the very beginning that the RM2.6 billion found in his accounts had come from “donors” and not from 1Malaysia Development Berhad (1MDB) as previously suspected.

Defending SR’s reports on the funds, the Sarawak-born British journalist pointed out they had been based on information obtained from the investigation on 1MDB, which she said had suggested the possibility of a link between Najib and money from the troubled state investor.

“Gosh! How come the PM didn’t clear all that up immediately on Day 1 then? What we said was that the information had come from the investigation, because it was believed by investigators to be linked.

“How else would we have obtained it?” she wrote in an email reply to Malay Mail Online yesterday.

Rewcastle-Brown also suggested that these donors come forward and reveal their identities.

The London-based journalist did not contest the conclusion that the RM2.6 billion had not come from 1MDB although she noted that it was made by the Malaysian Anti-Corruption Commission (MACC) after the series of arrests of some of the agency’s own leading investigators.

“People can reach their own conclusion about this latest MACC statement,” she added.

She went on to question the purpose of the donation, saying that if it had been used as suspected for Barisan Nasional’s Election 2013 campaign, the ruling pact would have broken election laws by exceeding the legal limit for political funding.

Yesterday, former prime minister Tun Dr Mahathir Mohamad had made a similar point in his blog.

Rewcastle-Brown also took a swipe at Najib, asking him if it was okay for “white foreigners” to influence to outcome of the federal polls, after alleging that the funds had originated from an Abu Dhabi bank.

Last weekend, Najib had said in a speech during an Umno divisional meeting that “white people” should stay out of Malaysia’s administrative affairs.

As an example, the prime minister had singled out Rewcastle-Brown’s whistleblower site.

Other than SR, several other international media organisations have written extensively on 1MDB and Najib’s alleged involvement in the state owned fund.

An article by the Wall Street Journal (WSJ) recently claimed that US$700 million (RM2.6 billion) was funnelled through 1MDB into Najib’s private account.

Najib has not directly denied the claim, but has repeatedly said that he has never taken 1MDB money for personal gain.

A special government task force comprising officials from the Attorney-General’s Chambers, the MACC, Bank Negara Malaysia and the police was set up to investigate the allegations in WSJ.

Some of the key investigators from the task force however have been hauled up by the police for a separate investigation on information leaks.

– See more at: http://www.themalaymailonline.com/malaysia/article/why-didnt-najib-explain-rm2.6b-donation-from-day-1-sarawak-report-editor-as#sthash.TCzm4uMY.dpuf

4 August 2015

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WSJ

Anticorruption group says money was from ‘donor contribution’ but doesn’t identify donor

KUALA LUMPUR, Malaysia—Malaysia’s anticorruption agency said Monday that 2.6 billion ringgit (about $700 million) was deposited into Prime Minister Najib Razak’s personal account and that the money was from a “donor contribution,” not from 1Malaysia Development Bhd, a state investment fund also known as 1MDB.

The Malaysian Anti-Corruption Commission didn’t say, however, who the donor was, nor the purpose of the contribution. MACC officials didn’t immediately respond to further queries.

“Results of the investigation found that 2.6 billion ringgit alleged to have been deposited into an account belonging to the Prime Minister was a donor contribution and not from 1MDB,” the commission said in a statement.

On July 2, The Wall Street Journal reported that Malaysian investigators had traced nearly $700 million of deposits into what investigators believe were Mr. Najib’s personal bank accounts after the movement of cash among agencies, banks and companies linked to 1MDB. The Journal has reported that the original source of the money was unclear and that the government investigation hadn’t detailed what happened to the money that allegedly went into Mr. Najib’s personal accounts.

The prime minister’s office didn’t immediately respond to a request for comment. Mr. Najib, who heads 1MDB’s advisory board, previously has denied any wrongdoing or taking any money for personal gain.

Authorities so far have detained eight people and are currently seeking two former 1MDB executive directors to assist the investigation into the activities of 1MDB, which had racked up more than $11 billion in borrowings while facing a cash crunch.

3 August 2015

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WSJ

Malaysian Prime Minister Najib Razak is trying to contain fallout from investigations into the troubled state investment fund 1Malaysia Development Bhd., which has amassed $11 billion in debt. Here are five things to know.

1:

Why is Mr. Najib under scrutiny?

In addition to questions raised about Mr. Najib’s oversight of 1MDB, investigators looking into the fund have traced nearly $700 million of deposits into what they believe are his personal bank accounts, The Wall Street Journal reported. The original source of the money is unclear and the government investigation doesn’t detail what happened to the money that allegedly went into Mr. Najib’s personal accounts. The turn marked the first time Mr. Najib had been directly connected to the 1MDB probes. Mr. Najib denied taking any money for personal gain.

2:

Why did Mr. Najib shake up his cabinet?

Mr. Najib dismissed five ministers—including his deputy, Muhyiddin Yassin—and a deputy minister. Mr. Muhyiddin had publicly raised questions about the government’s decision to suspend two local publications over their reporting on 1MDB. Mr. Najib said the cabinet change was needed for “strength and unity.” Wan Saiful Wan Jan, chief executive of Malaysia-based think tank Institute for Democracy and Economic Affairs, said of the shakeup, “instead of providing good answers to the many criticisms, the prime minister has chosen to remove his critics.”

3:

Why were the two newspapers closed down?

The Edge Weekly and The Edge Financial Daily, both owned by The Edge Media Group, have been reporting on the troubles faced by 1MDB. Mr. Najib’s new deputy premier, Ahmad Zahid Hamidi, suspended the publications for three months because the extensive reporting on 1MDB was deemed to be “prejudicial or likely to be prejudicial to public order.” The company said it will launch a court challenge.

4:

Has anyone been charged with a crime?

Authorities have detained five people, none identified or charged, to assist in the investigation. The central bank is also seeking two former 1MDB executive directors to assist in the investigation while a bipartisan parliamentary committee probing 1MDB’s activities has also summoned Low Taek Jho, a young Malaysian financier who helped set up the fund. Mr. Low previously has denied wrongdoing and has said he never had a formal position at 1MDB, characterizing his role as an occasional adviser.

5:

What is ahead for parliament’s probe?

The committee hearings have been halted after Mr. Najib appointed four members from the committee to his cabinet, meaning they can no longer be on the panel. The committee will have to appoint new members in October before proceedings can continue. The committee was scrutinizing an interim report on the fund prepared by the auditor-general and was scheduled to interview 1MDB top executives in August.

30 July 2015

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The Diplomat

The country suspends two newspapers.

Malaysia’s Home Ministry has suspended two newspapers for three months after the latter published a series of reports exposing corruption in a government-managed investment company that implicated Prime Minister Najib Razak. Meanwhile, a news website was blocked in the country last week after a government agency found it guilty of publishing unverified information in relation to the similar corruption issue.

The licensing permit of The Edge Financial Daily and The Edge Weekly was suspended because their 1MDB reports were deemed by the Home Ministry to be “prejudicial or likely to be prejudicial to public order, security or likely to alarm public opinion or is likely to be prejudicial to public and national interest”.

The 1MDB issue refers to the controversial financial transactions of the company that allegedly benefited some politicians, including the prime minister. Early this month, the Wall Street Journal published a report linking Najib to a bank money transfer totaling $700 million. The government is currently investigating 1MDB as Najib denies the allegations. Some opposition leaders including former Prime Minister Mahathir Mohamad have called for the resignation of Najib over the 1MDB scandal.

The Edge is challenging the suspension order by filing a judicial review. It emphasized that its reports were based on hard evidence and that it has already handed over bank documents to government investigators.

“Our report is based on evidence corroborated by documents that include bank transfers and statements. How can the work that we have done be deemed as a political conspiracy?”

Meanwhile, the Malaysian Communications and Multimedia Commission (MCMC) has ordered the blocking of the Sarawak Report “based on complaints received from the public” that it is spreading misinformation about the 1MDB issue. Sarawak Report described the order as a “blatant attempt to censor our exposures of major corruption.” It dismissed the “strong arm, anti-democratic media clamp-down” as a futile attempt of the ruling party to hide the truth about the financial mess.

The blocking of Sarawak Report and the suspension of two papers of The Edge were viewed by many as an attack on Malaysia’s media sector. “Blocking a website and threatening critics with prosecution will not make the firestorm over alleged government corruption go away,” said Brad Adams, Asia director of Human Rights Watch.

The Center for Independent Journalism asserted that the blocking of Sarawak Report “without a clear, legitimate purpose and without reference to a proper law authorising such blocking of content is a breach of the guarantee to freedom of expression.”

Meanwhile, uman rights group Suaram urged the government to uphold truth and transparency.

“This latest action by MCMC is totally against its own mission statement which is “providing transparent regulatory processes to facilitate fair competition and efficiency in the industry”.

The Lawyers for Liberty group reminded authorities that “journalism is not a crime.” It added that “Press freedom is an indispensable component of any modern and democratic society as it functions as a form of check and balance against government excesses. Such authoritarian behaviour unfortunately sends a chilling message to the press to self-censor on issues such as 1MDB or else they may invite retaliation.”

But Datuk Abdul Rahman Dahlan, who is the urban wellbeing, housing and local government minister and director of strategic communications of the ruling party Barisan Nasional, defended the suspension order issued by the government against The Edge:

“The government suspended The Edge publications because there was a real possibility that the contents of their reporting were not authentic.  If this possibility turns to be true then the impact on the government and the economic stability due to irresponsible reporting cannot be understated.”

Aside from condoning corruption, the government is now accused of silencing the press. Reacting to the perceived media persecution, five local media networks have banded together and are planning to hold a public rally on August 8 to assert the right the free speech.

30 July 2015

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The Telegraph

As David Cameron arrives to talk trade, Malaysian prime minister Najib Razak’s bank accounts, his wife’s handbags and her son’s Hollywood deals are making the headlines

David Cameron might have hoped that his few final hours in Malaysia at the end of a four-day, four-state whirlwind trade tour of South East Asia would have been the chance to start winding down before heading home.

Instead, he finds himself flying in to a deepening controversy on Thursday as a multi-billion dollar scandal engulfs his host Najib Razak, the prime minister of the former British colony.

Nor is it just Mr Najib who is under attack from his foes in Malaysia amid allegations that he ended up with $700 million in his personal accounts from a state investment bank that he founded.

The Malaysian leader’s wife Rosmah Mansor has been derided for her alleged penchant for luxury and free-spending ways – claims that her husband has dismissed as political assaults.

And Riza Aziz, her son from her first marriage and Mr Najib’s step-son, is also a staple in the gossip as well as financial pages.

He has emerged as a major Hollywood film producer with multi-million property deals in Manhattan and Los Angeles since becoming close friends with a Malaysian playboy investor during their education in London.

So who is Najib Razak?

He’s the 61-year-old scion of Malaysian political royalty with UMNO, the Malay nationalist party that has ruled the country since independence from Britain in 1957. His father was the country’s second prime minister and his uncle its third. Mr Najib inherited his late father’s seat as an MP at 23 and later rose through the party ranks as chief minister of his home state and the serving in the Cabinet portfolios of education, defence and finance as well as deputy prime minister.

It is an impressively lifelong dedication to public service that has coincided with his family becoming one of the country’s richest. His personal profile was low until he married his second wife in 1987.

And Rosmah Mansor?

Ms Rosmah has repeatedly been criticised for her love of the good things in life. Earlier this year, she said she was the victim of “wildly exaggerated” allegations, published by the Sydney Morning Herald, describing her the “first lady of shopping” after reports that she had spent $75,000 on a single trip to a designer boutique.

She was also widely assailed for a reported claim that she lamented about having to pay $300 for a house call by hair stylist. And series of photos showing her holding at least nine Birkin handbags – items that normally sell for between $10,000 and $150,000 each – went viral on social media.

And she has denied allegations that she ever intended to buy a diamond ring worth $24 million that was shipped under her name to Malaysia in 2011 but then returned to the US jeweller. Mr Najib also went public to deny that that his wife bought the diamond ring for his Kazakh in-laws or that they had any links to the “Russian mafia”, as a regional media outlet had claimed.

And the Hollywood connection?

Riza Aziz, his British-educated step-son, has emerged in the film business as a major Hollywood player with his production company Red Granite Pictures (most notably with The Wolf Of Wall Street blockbuster).

He has also made the headlines in the US over complex property deals reportedly conducted with Jho Low, a Malaysian financier whom he met while studying at the London School of Economics and who became famous for sharing jeroboams of champagne with the likes of Paris Hilton.

As the New York Times documented, Mr Low began making some very expensive property deals in the United States in 2010. Those deals included acquiring a $24 million apartment in Manhattan that three years later was sold to a shell company controlled by Mr Aziz for a reported $33 million, according to the newspaper.

A similar transaction was playing out on the West Coast, the investigation continued. “Mr Low bought a contemporary mansion in Beverly Hills for $17.5 million, then turned around and sold it, once again to the prime minister’s stepson.”

And what about 1MDB?

That is the state investment fund that Mr Low encouraged Mr Najib to found and oversee. He helped channel Arab investment into a series of deals with the Malaysian government.

And how’s that going?

1MDB has reported debts of $11 billion. And $700 million of its funds allegedly ended up in Mr Najib’s personal accounts, according to a Wall Street Journal investigation that has been widely reported elsewhere. Mr Najib has consistently denied any wrongdoing or making any financial benefit from the operations of 1MDB.

This week, he sacked his deputy prime minister for breaking ground and saying publicly that the scandal was damaging their party He also replaced his attorney-general who was overseeing the investigation into the allegations.

So why does the family seem to be doing so well financially?

Mr Najib’s office, in a statement, told the New York Times that the prime minister does not track how much Mr Aziz earns or how such earnings are reinvested. As for the prime minister himself, the statement said he had “received inheritance”.

It noted that the family’s lifestyle was not unusual for a person of the “prime minister’s position, responsibilities and legacy (of) family assets”.

No allegations of wrongdoing have been confirmed against Mr Najib. But it is not the first time that he has been the subject of intense questions about his finances as political opponents have previously focussed on a long-running bribery inquiry in France involving a submarine order that Mr Najib commissioned while he served as defence minister.

Didn’t Mr Cameron just speak out on corruption during his Asian tour?

He did indeed, during a speech in Singapore on Tuesday delivered just a few hours after Mr Najib purged his government ranks of officials raising questions about the 1MDB scandal.

The British prime minister warned that foreign fraudsters and corrupt officials can no longer “stash dodgy cash” in London’s luxury property market as he announced a major review of ownership rules.

He said that the international community has “looked the other way for far too long” when it comes to corruption“, which he called “one of the greatest enemies of progress in our time.

He continued: “We simply cannot afford to side-step this issue or make excuses for corruption any more. We need to step up and tackle it.”

So will he be “side-stepping” such allegations in Kuala Lumpur on Thursday?

Malaysian opposition MPs have urged the British prime minister to use his visit to press Mr Najib on the allegations, warning that otherwise the trip would appear to be a vote of support for the beleaguered leader. Privately, one senior opposition figure told The Telegraph that the timing of the visit was “nuts” and “boggled the mind”.

But this tour is all about the realpolitik of international trade for Mr Cameron. He is visiting Malaysia to try and drum up British business deals and secure Malaysian co-operation in security measures to combat Islamic radicals. And he knows he won’t get far with that if he embarrasses his host, however embattled he may be.

30 July 2015

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The Guardian

Clare Rewcastle Brown, editor of a Malaysian news website, complains to the police about harassment by men she says are employed by Malay political party

A journalist who claims that she has been followed around London by “teams of stalkers” engaged in “illegal harassment” has made a complaint to the Metropolitan police.

Clare Rewcastle Brown, founder and editor of Sarawak Report, an investigative news website devoted to reporting on Malaysian politics, believes the stalkers are employed by the United Malays National Organisation (UMNO), the ruling party in Malaysia led by its prime minister, Najib Razak.

The news comes ahead of controversy over this week’s visit to Malaysia by prime minister David Cameron at a time when Razak is embroiled in a corruption scandal that Rewcastle Brown’s website has been in the forefront of reporting.

Rewcastle Brown has called on Cameron to cancel his visit. In a separate item an article on Sarawak Report, she describes two men who, she claims, “took photographs of her in broad daylight in Hyde Park” while “other individuals have followed her car.”

On 20 July, her website was blocked for a period in an apparent hacking attempt which, according to the Committee to Protect Journalists, was ordered by the Malaysian government’s media regulator.

Home minister Seri Ahmad Zahid Mamidi was reported on Friday as saying that Rewcastle Brown could be extradited from London to Kuala Lumpur on charges that her reporting had violated Malaysia’s sovereignty.

Rewcastle Brown, a British citizen who was born in Sarawak, is married to the younger brother of the former prime minister, Gordon Brown.

Her Sarawak Report site has regularly reported on the troubles faced by a debt-laden state investment, 1Malaysia Development Bhd (aka 1MDB), which is closely linked to Razak.

Reports on the topic by two Malaysia-based newspapers resulted in them being banned on Friday from publishing for three months by Razak’s government.

The suspensions were imposed on The Edge Weekly and The Edge Financial Daily. The group’s chief executive, Ho Kay Tat, announced that he would challenge the legality of the ban. Meanwhile, his group would continue to publish online.

“This is nothing more than a move to shut us down in order to shut us up,” Ho was quoted as saying by the Associated Press. He has also been subjected to a travel ban in company with two opposition politicians.

The CPJ pointed out that The Edge is only the latest news outlet to be harassed. The Wall Street Journal reported on 2 July that $700m of the 1MDB fund’s cash had ended up in Razak’s personal bank accounts.

A week later, Razak’s lawyers threatened to sue the newspaper and its publisher for defamation, although no action has yet been taken.

The Journal’s publisher, Dow Jones, says its articles “speak for themselves” and the paper stands by its reporting.

Earlier this year, Razak’s government cracked down hard on critical commentary about the trial and conviction of political opposition leader Anwar Ibrahim on sodomy charges.

The political cartoonist Zulkiflee Anwar Ulhaque, known as Zunar, now faces a possible 43 years in prison on multiple sedition charges for raising questions about judicial independence. His trial is scheduled to begin on 9 September.

But the clamp on media should be seen in the context of Malaysia’s brief, rich history of suspending newspapers, according to The Malaysian Insider website.

It says the suspension of the Edge titles “marks the government’s continued tradition of clamping down on print media, a practice which began nearly three decades ago.” It goes on to list scores of examples.

29 July 2015

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TIME

Washington is having serious trouble finding dependable allies in Southeast Asia

The U.S.’s “rebalancing” toward Asia has two main pillars: being a counterweight to China and securing a free-trade deal called the Trans-Pacific Partnership. If Washington is to succeed on both fronts, it needs as many friends in the region as it can win. The U.S.’s newest ally is Malaysia, this year’s chair of the 10-member Association of Southeast Nation, collectively a growing market, and, on the surface, a modern, democratic, Muslim country. In April 2014 U.S. President Barack Obama paid an official visit to Malaysia, the first sitting President to do so in decades, and, later in the year, played golf with Malaysian Prime Minister Najib Razak when both were on holiday in Honolulu. This November, Kuala Lumpur will host the next East Asia Summit and Obama is due to attend.

But recently, all the news coming out of Malaysia is negative. After becoming embroiled in a corruption scandal, Najib on Tuesday sacked his deputy and Malaysia’s attorney general in an apparent purge of critics. British Prime Minister David Cameron is facing a domestic backlash for pushing forward with a visit to Kuala Lumpur this week despite the snowballing controversy. Here are five reasons why Obama might want to break from Cameron by giving Najib a wide berth.

  1. 1MDB — A Wall Street Journal report has alleged that Najib’s personal bank accounts received nearly $700 million in March 2013 from 1Malaysia Development Berhad (1MDB), a government-owned development fund. Najib has protested his innocence and threatened legal action against the Journal. “I am not a thief,” Najib told Malaysian media on July 5. “I am not a traitor and will not betray Malaysians.” The police, the local anticorruption agency, the attorney general’s office and the central bank are investigating the allegations. On July 8, the police raided 1MDB’s office in Kuala Lumpur and took away documents. Even before the latest news, 1MDB was an embarrassment for Najib, who chaired the fund’s advisory board as debts of $11.6 billion were accrued. Such are the suspicions of malfeasance that former Prime Minister Mahathir Mohamad, who ran the country from 1981 to 2003 and has long been considered Najib’s mentor, has repeatedly called for his protégé’s resignation over 1MDB’s alleged mishandling.
  1. Anwar Ibrahim — Najib’s main political rival is once again in prison for a sodomy conviction. Human Rights Watch deemed his five-year sentence handed down Feb. 10 to be “politically motivated proceedings under an abusive and archaic law.” This is the second time Anwar has been jailed for sodomy.
  1. Hudud — Stoning for adultery and amputation for theft are not the kind of punishments meted out by the progressive state that Malaysia purports to be. Yet Najib’s United Malays National Organisation (UMNO) is supporting attempts to introduce hudud Islamic law in the Pan-Malaysian Islamic Party’s (PAS) heartland state of Kelantan, where nightclubs are forbidden and men and women are designated separate public benches. Why is UMNO supportive of recognizing hudud under federal law? Largely because PAS is part of a three-party Pakatan Rakyat coalition that is UNMO’s chief challenger. The other partners — Anwar’s Keadilan, or People’s Justice Party, supported by middle-class, urban Malays, and the Chinese Malaysian–backed Democratic Action Party (DAP) — are strongly against hudud. Many analysts accuse UMNO of cynically fostering a radical Islamic bent to widen rifts in its political opponents.
  1. Shaariibuugiin Altantuyaa — In 2002, when Najib was Defense Minister, a $1.25 billion contract was signed to purchase two Scorpène submarines from French firm DCNS. Altantuyaa was a Mongolian woman who, knowing French, facilitated negotiations as a translator, and then allegedly attempted to blackmail Abdul Razak Baginda, one of Najib’s aides with whom she was also having an affair, for $500,000 over “commission” payments he had allegedly received. Two policemen posted to Najib’s bodyguard detail were convicted of murdering Altantuyaa on Oct. 18, 2006. Najib denies any involvement.
  1. Prevention of Terrorism Act — Najib campaigned on scrapping the controversial Internal Security Act (ISA) but then immediately replaced it with the equally sweeping Prevention of Terrorism Act (POTA) and Security Offences (Special Measures) Act, or SOSMA. The POTA includes practically the same powers as ISA, including two-year detention without trial, and was dubbed a “legal zombie arising from the grave of the abusive [ISA]” by Human Rights Watch. Najib also vowed to repeal the similarly maligned Sedition Act but reneged after his election in 2013. In fact, in April his government extended the maximum jail term under the Sedition Act from three to 20 years.

28 July 2015

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The Guardian

Malaysian prime minister Najib Razak sacks deputy and country’s top attorney after questions over claims he took millions from government investment fund

British prime minister David Cameron is facing criticism for pushing ahead with a visit to Malaysia this week at a time when the south-east Asian nation’s leader is embroiled in an escalating corruption scandal and has stepped up a crackdown on dissent.

Malaysian premier Najib Razak has been urged to resign after media reports alleged some US$700m linked to a troubled state investment fund had ended up in his personal bank accounts.

Razak has denied taking any public funds for personal use, and his government has lashed out at criticism by mounting a crackdown on dissent that has seen two newspapers suspended and a British-based whistleblowing website blocked.

On Wednesday, the Malaysian premier removed his deputy Muhyiddin Yassin, who has openly criticised him over the scandal, just hours after the government sacked the country’s top attorney, who had been leading an official investigation into the corruption allegations against Najib.

Politicians and activists who have criticised the government have also been hit with travel restrictions, with one prominent opposition MP barred from leaving the country.

“There could have been a better time for the visit,” Wan Azizah Wan Ismail, Malaysia’s opposition leader, told the Guardian ahead of Cameron’s arrival in Kuala Lumpur on Thursday, the final stop of a four-nation tour of south-east Asia.

The MP, who is also the wife of jailed opposition politician Anwar Ibrahim, called on Cameron to raise the scandal and human rights issues when he holds talks with Najib, and said he should also meet opposition parties to get “a better idea” about the political turmoil engulfing the former British colony.

“He must not only meet with the government but the opposition as well,” she said.

“He should talk about freedom, the suspension of the newspapers and the use of the sedition law – something that is so repressive – and the welfare of the former opposition leader [Anwar].”

Liew Chin Tong, a lawmaker from the opposition Democratic Action party, said Cameron must tell Najib categorically to “respect the rule of law as well as human rights”.

Cameron is hoping to boost trade ties between the UK and the region during his visit that also includes stops in Indonesia, Singapore and Vietnam. Efforts to fight jihadist group Isis are also on the agenda during his stops in Muslim-majority Indonesia and Malaysia.

Michael Buehler, a south-east Asian expert at London’s School of Oriental and African Studies, said Cameron would not be “entirely honest” if he ignores the corruption claims during his visit, as business and politics remain closely linked in the region.

“One cannot talk about business without also mentioning the political conditions in these countries. Cameron’s visit is indeed untimely, given the escalation of the corruption scandal in the country,” Buehler said.

Writing in the Daily Mail last week about the trip, Cameron himself vowed to put the fight against graft top of his agenda after claiming critics were “wrong” to say the UK should avoid doing business with countries with barriers to trade, including corruption.

“Many in South East Asia have led the battle against corruption, which costs the global economy billions of pounds a year.

“Britain is joining them in that fight – I’ve put the issue at the top of the global agenda,” he wrote.

Najib’s move against the deputy premier came in an unexpected cabinet reshuffle just two days after Muhyiddin broke ranks and openly urged Najib to tell “real facts” over the scandal and answer questions over whether he received the money.

Announcing the decision, Najib said “differences of opinions shouldn’t be expressed openly” among his cabinet members, according to the Malay Mail Online website.

The cabinet reshuffle was seen as an attempt to shore up support for the beleaguered Najib in the cabinet, as an internal tussle within the ruling party in the coming days could put pressure on the Malaysian leader to resign.

26 July 2015

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Malaysia’s prime minister battles claims of corruption
25 July 2015

WHATEVER the truth of them, the accusations levelled against Najib Razak, Malaysia’s prime minister, have astonished a country that some had thought inured to scandal. In early July the Wall Street Journal reported that it had seen documents produced by government investigators suggesting that nearly $700m from companies linked to a troubled state-backed investment fund had been paid into what they believed to be Mr Najib’s personal bank accounts. With worries about an oil-dependent economy, the controversy is the last thing Malaysia needs.

The allegation is that the money was received shortly before the general election in 2013, in which a coalition dominated by Mr Najib’s party, the United Malays National Organisation (UMNO) scraped home, despite narrowly losing the popular vote. The prime minister helped launch the fund, known as 1MDB, in 2009 and chairs its board of advisers. It has acquired land and power plants, yet has struggled to service debts of around $11 billion. The firm’s affairs were already the subject of official investigations, but until this month no one had claimed to have evidence that the prime minister himself had received any money.

Mr Najib has vigorously denied wrongdoing, including ever having used public money for personal gain. He called the allegations “political sabotage” and blamed Mahathir Mohamad, a nonagenarian UMNO grandee who was prime minister from 1981-2003, for waging a campaign against him. For months Dr Mahathir has been calling for Mr Najib’s resignation, warning that under him, UMNO—which has ruled Malaysia since independence in 1957—may lose an election due by 2018.

The opposition has demanded that the prime minister step down until a special task force, now investigating the allegations, has finished its work. Campaigners known in the past for organising big protest rallies against Malaysia’s heavily gerrymandered electoral system are thinking of calling for fresh demonstrations against the prime minister. But Mr Najib says he is not budging. Outwardly at least he appears still to have his party’s support. A government agency has warned Malaysians against discussing the allegations on social media and has started blocking an indefatigable British website, the Sarawak Report, which has written a lot about 1MDB. Police say they are conducting an inquiry which may uncover the source of the Wall Street Journal’s report.

A boon for Mr Najib is the paucity of obvious substitutes within UMNO. One possibility is Muhyiddin Yassin, a deputy prime minister who had been tipped for the top job when it fell vacant in 2009. Another replacement might be Hishammuddin Hussein, the defence minister and Mr Najib’s cousin (who for now appears loyal). But neither man seems any more likely than Mr Najib to find the vim required to rejuvenate UMNO, which has grown quarrelsome and complacent after six decades in power—and which, in stemming its ebbing popularity, has taken to exploiting old fears among ethnic Malays that their prospects are threatened by Malaysia’s Chinese and Indian minorities.

As for the opposition, it is in disarray. Since its leader, Anwar Ibrahim, was imprisoned on a dubious sodomy charge earlier this year, the opposition coalition has been torn apart by tensions between the DAP, an ethnic-Chinese party, and PAS, a Malay Muslim one, over the latter’s efforts to enforce strict sharia punishments in Kelantan state in the north. Some in PAS now look minded to mend fences with their old foes in the ruling party. Hadi Awang, PAS’s leader, has argued that Islam requires that the Wall Street Journal should produce four witnesses to support its reporting.

All this has distracted attention from Malaysia’s pressing economic problems. Hobbled by low oil prices and slowing Asian economies, the value of the ringgit has sunk to a 16-year low against the dollar. Meanwhile, politicians of all stripes have scrambled to deny that race played a role in scuffles this month in Kuala Lumpur, when a mob of mostly Malay youths confronted the largely ethnic-Chinese employees of an electronics mall—all sparked, apparently, by an instance of shoplifting.

Even if Mr Najib is cleared of wrongdoing, the brouhaha is sapping his standing among ordinary Malaysians. It was already hurt by the recent imposition of a disliked value-added tax. If his popularity keeps sliding, it is difficult to imagine UMNO sticking by him until the next general election. The end of Ramadan, which concluded in Malaysia on July 17th and during which Muslim politicians are supposed to avoid unseemly squabbles, may bring fresh attacks from dissident factions. But Mr Najib is rumoured to be mulling a cabinet reshuffle, presumably to silence critics there. If he can blast through this crisis his opponents may well wonder what, if anything, will bring him down.

http://www.economist.com/news/asia/21659770-malaysias-prime-minister-battles-claims-corruption-soldiering

24 July 2015

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Why I’ve chosen to stay and continue the fight for peaceful, democratic reform from my prison cell.

By ANWAR IBRAHIM
Updated July 23, 2015
Selangor, Malaysia

Since Prime Minister Najib Razak’s 2013 electoral victory, which was plagued by widespread allegations of gerrymandering, fraud and voter intimidation, Malaysia has taken a turn for the worse. Mr. Najib, who once promised democratic and economic reforms and pledged to allow “the voices of dissent” to be heard, has doubled down on political repression.

A former deputy prime minister of Malaysia and leader of the opposition, I am now in the fifth month of a five-year prison sentence that has been roundly condemned by governments and human-rights groups around the world. I spend my days in solitary confinement in meditation and in the company of the few books that are allowed into my cell. Meanwhile, allegations of corruption at the highest levels of Malaysian government have surfaced.

In 2012, the draconian Internal Security Act was repealed by the Najib government with much fanfare, only to be replaced by the Prevention of Crime and Prevention of Terrorism Acts, which are equally, if not more, repressive. Beyond encroaching on Malaysian citizens’ fundamental liberties, these new laws rob judges of their discretionary sentencing powers.

Instead of abolishing the outdated and much-abused Sedition Act of 1948 as promised, Mr. Najib’s government has deployed it as a weapon of mass oppression. In the past 18 months, more than 150 Malaysians have been arrested and many charged with sedition for an array of activities including accusing the government of voter fraud and criticizing the verdict in my trial. The arrested include students, professors, journalists, cartoonists, activists, human-rights lawyers and opposition politicians.

Mr. Najib’s finance ministry’s “strategic development fund,” 1Malaysia Development Bhd., or 1MDB, founded by Mr. Najib in 2008, is under intense scrutiny. As this newspaper reported on July 2, Malaysian investigators “have traced nearly $700 million of deposits into what they believe are the personal bank accounts of Malaysia’s prime minister, Najib Razak.” Neither the original source nor ultimate destination of the money is clear.

A few weeks earlier, on June 18, this newspaper reported that during the 2013 election 1MDB “indirectly supported Prime Minister Najib Razak’s campaign.” The fund paid what appeared to be an inflated price for assets acquired from a Malaysian company; the company then contributed to a Najib-led charity that announced projects, such as aid to schools, that Mr. Najib was able to tout as he campaigned.

After these two stories were published, Mr. Najib’s office put out a statement that “there have been concerted efforts by certain individuals to undermine confidence in our economy, tarnish the government and remove a democratically-elected prime minister.” It called the Journal articles a “continuation of this political sabotage.” Not surprisingly, foreign investors are increasingly wary. Malaysia’s currency, the ringgit, recently fell to a 16-year low.

Meanwhile, the Najib government sows communal and religious animosity among the Muslim ethnic Malay majority and the country’s large ethnic Chinese and Indian minorities. Mr. Najib’s ruling coalition blamed a “Chinese tsunami” for its losing the popular vote in the 2013 parliamentary elections, regardless of a study showing this to be false. And despite Mr. Najib’s claims of moderation internationally, the state-run media have vilified Shiite Islam. Last summer the prime minister urged his ruling United Malays National Organization members to be “brave” like Islamic State fighters in Iraq, causing him to later explain he doesn’t support Islamic State or its radical brand of Islam.

Such actions undermine the fragile fabric of Malaysia’s multiethnic and multireligious society. In four decades in public service I cannot recall a time when racial and religious sensitivities have become so inflamed, and at the same time so poorly managed by the country’s political leadership.

Yet I stayed put in Malaysia to face a difficult third bout of unjust incarceration because we in the opposition believe in a brighter future made possible by good governance and the rule of law. We believe in the dismantling of Malaysia’s system of race-based privileges that has devolved into nothing more than rent-seeking for the privileged few. We believe that corruption is a slow bleed that robs future generations of the education and business opportunities that will make them prosper.

Most important, we are joined by a new generation of young, millennial Malaysians with a commitment to building an inclusive, democratic and economically vibrant country.

Still, there is real danger ahead. Middle-income nations like Malaysia—after several decades of economic mismanagement, opaque governance and overspending—can devolve into failed states. The irresponsible manner in which the current leadership is handling religious issues to curry favor from the extreme right is fueling sectarianism. Increased political repression may drive some to give up on the political system altogether and consider extralegal means to cause change, thus creating a tragic, vicious cycle.

Yet there remains a clear path out of this mess: a return to the underpinnings of the Malaysian Constitution, which preserves and protects the rights of all Malaysians; a devolution of power from the executive, whose role now resembles that of a dictator more than a servant of the people; elections that are truly free and fair; and a free media unafraid to challenge authority.

Malaysia is ready for change. This is why, rather than flee my country, I chose to stay and continue the fight for peaceful, democratic reform from my prison cell. This is not easy and puts a tremendous burden on my family. I am grateful for their love and commitment. While I am physically behind bars my spirit remains with them, the people of Malaysia, and people all around the world who continue the struggle for dignity and for freedom.

Mr. Anwar, a former deputy prime minister of Malaysia (1993-98), is a former member of parliament for the People’s Justice Party and until April was leader of the opposition.

http://www.wsj.com/articles/malaysias-growing-opposition-cant-be-silenced-1437692741

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