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Could Malaysia’s Political Feuds Let the 1MDB Scandal’s Architect Through the Cracks?

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From gifting Basquiat paintings to Leonardo di Caprio to pouring millions of dollars in champagne over himself and Paris Hilton, allegations of outrageous exploits and profligate spending surrounding fugitive Malaysian financier Jho Low are being read about across the globe—but not in the UK.

That is because Low’s lawyers have used Britain’s notoriously strict libel laws to effectively muzzle Billion Dollar Whale, a new book from investigative journalists Tom Wright and Bradley Hope that describes the playboy banker’s alleged role in siphoning off more than $4 billion from Malaysian sovereign investment fund 1MDB. Even though the book was released amid critical praise on September 18th, anyone in the UK will be hard-pressed to find a copy in their local independent bookstore— or even on the UK websites of Amazon, Waterstones, or WH Smiths. Not a single UK-based publisher agreed to take on the book due to fears over libel suits.

The Guardian published an expose this week detailing the efforts of London-based law firm Schillings to suppress the book’s sale in Britain. Low’s lawyers have tried to head off the book’s distribution by sending intimidating letters threatening to sue booksellers across the world. Outside of the UK, however, this legal campaign has failed to curb the book’s launch. The Australian owner of Boomerang Books, for example, simply rejected the threat as lawyers “blowing smoke“ and refused to take the book off shelves.

While his attorneys threaten booksellers, Low has also launched a website proclaiming his innocence and disputing allegations of his involvement in corruption, going so far as to claim his astounding wealth—at one point, Low may have had access to more liquid cash than anyone in history—comes from inheritance. A staggering inheritance is less likely than Billion Dollar Whale’s assertion that Low managed to get Goldman Sachs to transfer $3 billion of Malaysian state funds into a private Swiss bank account. Low allegedly used the stolen money to, among other things, bankroll the film Wolf of Wall Street and purchase a $250 million superyacht.

Low’s alleged role as mastermind in the 1MDB scandal may be the focus of Billion Dollar Whale, but nonagenarian prime minister Mahathir Mohamed has instead zeroed in on predecessor and onetime protégé Najib Razak. Last week, Najib’s lawyer Muhammad Shafee was detained on money laundering charges. Najib himself was then arrested on September 19th and is now awaiting trial on more than 20 counts, with anticorruption agency officials hinting at more charges still to come.

The 93-year-old Mahathir has previously stated that he has the “almost perfect case” to convict his disciple-turned-enemy. As Mahathir’s young government has moved against them, however, Najib and Shafee have pushed back. Najib has repeatedly insisted that he believes Mahathir’s focus on his role in the corruption scandal is politically motivated. He also claims the $681 million bank deposit at the heart of the money laundering accusations against him was a donation from the Saudi royal family, an assertion the Saudi government backed in 2016. Shafee revisited the details of the funds transfer this week following Najib’s arrest, pointing out that the former PM returned the vast majority of the $681 million and disputing the money laundering charges against his client as “illogical.”

While Mahathir doggedly pursues Najib, he seems to be making less of an effort to pursue or apprehend Jho Low and the billions the financier allegedly pilfered. Why the discrepancy? The answer likely lies in Mahathir’s own past as a member of the same class of strongman as the Philippine’s Ferdinand Marcos and Indonesia’s Suharto, as well as his personal history with Najib.

Mahathir may have only come to power in May, but he has already served a nearly two-decade term as Prime Minister that earned him an international reputation for ugly ethnic politics and strongarm tactics. He ushered in the “Malaysia Inc.” policy that tried to follow the Japanese model of nationalizing certain industries, but is best known for the failed nationalization of the automotive industry and the Malaysia-produced Proton car. He is also known for throwing another potential successor, Anwar Ibrahim, out of power and into prison on sodomy charges suspected to be politically motivated.

Ironically enough, Mahathir retook power this year by campaigning on the return of rule of law and an end to corruption – and is once again pointing to Anwar as his anointed successor. More than a few observers suspect Mahathir’s aspirations to return to office were born less out of any interest in saving his country, and more from a desire to wreak political vengeance on his former ally. Najib, who came to power in 2009, oversaw the reversal of many of Mahathir’s policies. Steps such as rolling back import tariffs on automobiles to the detriment of the Malaysian Proton led Mahathir to perceive Najib as undoing his political legacy.

With this personal animus playing out in the Malaysian press over the past few years, Mahathir’s current persecution of Najib risks crossing the line separating a fair judicial process from the jailing of a political rival. Asian affairs analysts have raised the specter of Mahathir using Najib as a scapegoat to avoid genuine reform. It was, after all, under Mahathir’s previous tenure that shady backroom dealings and authoritarian behavior became the norm in Malaysia.

With that track record, it certainly seems illogical to hope the man most emblematic of Malaysia’s old guard will steer the country back towards democracy after finishing with Najib. Mahathir will allegedly hand off power after two years per the terms of his agreement with Anwar Ibrahim. Two years is a long time in the context of Malaysia’s unpredictable politics and the rumblings of discontent with the arrangement within the ruling coalition.

In the interim, the new government’s single-minded focus on Najib could help Jho Low fly as low under the radar in Malaysia as he has in the UK.

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Southeast Asia

France returns to Laos

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The geographical location of Laos, a small landlocked state surrounded by China, Thailand, Myanmar, Vietnam and Cambodia, has made it imperative for this country to pursue a well-balanced multi-faceted foreign policy that hinges on the development of a mobile system of economic and political counterbalances.

Regional integration is key to the economic development of Laos. A major integration mechanism is ASEAN, of which Laos has been a member since 1997. 99% of Laos’ residents believe that their country’s membership in this organization yields tangible economic benefits; 92.5% say it has improved their personal financial standing.

As a member of ASEAN, Laos is committed to developing relations with China, Thailand and Vietnam but pursues a preferential policy as regards each of them.

China remains number one investor in the Laotian economy ($ 8.5 billion) with the bulk of the finances channeled into the mining, transport infrastructure and energy sectors. In 2016, trade turnover between the two countries reached $ 2 billion , a significant amount for Laos with its less than 7 million population. The largest Chinese-Lao project is the railway from Kunming Province (PRC) to Laotian capital, Vientiane. China is ready to inject more than $ 6 billion in the project

Meanwhile, Laos has been stepping up cooperation with Vietnam, which maintains a wait and see position in relation to China. Laos views Vietnam as a political and ideological counterweight to China. Cultural ties with Vietnam serve as an additional means of preventing the transformation of Beijing’s economic influence into the ideological one. Members of the ruling People’s Revolutionary Party of Laos receive training in Vietnam.

With a view to diversify foreign economic and foreign policy relations, Laos is developing contacts with France, whose colony it used to be in the past. Paris is seen as a remote neighbor of Laos, a partner in the economic and cultural spheres. Since 1991 Laos has been a member of the international organization for the cooperation of the francophone states “Francophone”. According to the French Embassy in Vientiane, the number of Laotians who speak French amounts to 3% and has been increasing over the past 12 years.

Laos is home to two branches of the Institut Francais du Laos (IFL) – an organization that promotes the French language and culture abroad; the French language is on the curriculum of three of the country’s five universities. In March 2018, Laos was visited by leaders of “Francophone”, and in May 2018 – by representatives of the Francophone University Agency. The official mission of the latter is to create a new French-language communication and educational space. The visits resulted in the signing of agreements on further cooperation with both organizations.

The period that saw a catastrophic fall in the demand for the French language in Laos since the mid-1970s is coming to an end. Nevertheless, the Lao Ministry of Education has designated English as a compulsory subject in schools for the 2019 academic year. The decision was prompted by the currently prevailing position of English worldwide and Vientiane’s intention to develop economic ties not only with the Francophone, but also with the Anglosphere.

Along with the cultural influence, France is trying to build up its economic presence in Laos. In May 2018, a French delegation led by French Ambassador Claudine Ledo visited a special economic zone in the province of Savannakhet to examine the prospects for French investment. For Laos, France is the ninth largest trading partner accounting for only 0.2% of the Lao market but it holds top position among non-Asian countries in the volume of investment.

Trade turnover between Laos and France has been fluctuating in recent years between $ 34 and $73 billion. France is prepared to invest in the Lao economy but the volume of investment is determined by the extent of Vientiane’s openness to foreign investment flows and the ability of the Lao economy to ‘digest’ them.

The year 2019 will mark greater cooperation within ASEAN for Laos. Last year, economic issues within ASEAN prevailed over political ones in connection with trade conflicts between the United States, the European Union and the People’s Republic of China. ASEAN countries are planning to launch the Regional Comprehensive Economic Partnership program (RCEP).

If the program is fulfilled, it will become the largest trade agreement in the world. The cumulative GDP of the countries participating in it makes up 25% of the global GDP, the population accounts for 45%, and the trade turnover amounts to 30% (5). Australia, New Zealand, Japan, South Korea may all be attracted to the program. This will provide Vientiane with more opportunities to diversify foreign economic relations amid China’s growing financial presence in Southeast Asia.

France was the first European country to sign a partnership agreement with ASEAN. Paris regards this organization as key to its policy in the Indo-Pacific region and a major economic partner. The volume of French investments in the ASEAN economy in 2017 reached € 16 billion. France’s share in the ASEAN market is 1.6%. This figure has not changed for ten years.

Paris aims to give cooperation with ASEAN a new impetus, which will impart more momentum to French-Lao relations.

First published in our partner International Affairs

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Southeast Asia

On Refugees… And Myanmar: It’s Not Just The Rohingya

Dr. Arshad M. Khan

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… And my life’s cold winter that knew no spring; Of my mind so weary and sick and wild,  Of my heart too sad to sing.  — Paul Laurence Dunbar

The world now has more refugees than at any time since after WW2, more than the population of Britain.  They are often the consequence of wars usually instigated by great powers directly or through proxies.  Civil strife accompanied by the demonization of minorities, killing and expulsion is another reason.  Such is the story of the Rohingya in Burma, or Myanmar as it now likes to be known.

It is a country with the river Irrawaddy as a central artery.  Bordering it is the heartland, peopled by the Bamar who make up 68 percent of the population and are Buddhist.  The Rohingya are Muslim, look different and have lived in Rakhine state for at least five centuries.  During WW2 they supported the British while the Buddhist Burmese supported the Japanese, their coreligionists.  It brought lasting enmity.  After years of propaganda and vilification, the Rohingya were stripped of citizenship.  Not unlike Nazi Germany targeting Jewish people, new restrictive laws curtailed liberties, marriage rights, even children — limited to two.  The vilification turned most neighboring Buddhist villages against the Rohingya, and those attacking and burning their villages were often these neighbors when not the military.

In this latest violence, 90 percent of the Rohingyas were driven out and about three-quarters of a million sought refuge across the border in Bangladesh.  The story does not end with the Rohingya for there are other threatened minorities in Burma occupying the periphery in the north and south:

In northern Shan state, a simmering conflict with the Taang National Liberation Army dating back to 1963 has displaced 300,000.  The army emboldened by the relatively meek response to the assault on the Rohingyas have intensified their efforts also against the ethnic Kokang’s  Myanmar National Democratic Alliance Army.  The consequence is an addition to the tens of thousands that had streamed from earlier conflicts over the border into China.  Also in the north the largely Christian Kachin minority formed the Kachin Independence Army to defend their villages.   The ongoing conflict has displaced more than 135,000 internally.  And in the south the conflict with the Karen (Buddhist, Animist and 15 percent Christian) resulted in over 100,000 refugees … this time in Thailand, plus a 100,000 diaspora to the rest of the world including some 65,000 in the US.  Myanmar’s perverse antipathy towards all its minorities makes a mockery of the Nobel Peace Prize awarded to Aung San Suu Kyi, its leader.  Is meaningful censure an answer, or is innate tribalism an unconquerable primitive amygdala response?

The top five refugee hosting countries might also come as a surprise.  Amid all the news of Angela Merkel’s generous offer to accept everyone entering her country, Germany is not one of them.  Shortly thereafter her party lost by-elections and she is departing.  The actual figures are Turkey (3.5 million), Pakistan (1.4 million), Uganda (1.4 million), Lebanon (1 million) and Iran (0.98 million).  The chaos in countries adjoining them (think of Afghanistan, Iraq, Syria and Somalia) explains why, and the great power with a finger in each pie, when not actually baking it, is also not difficult to discern.

Imagine being forced to flee with just the clothes on your back or just a bag.  A word here also for the people who had to do just that to escape wildfires.  They all have our heartfelt sympathy, often taking a concrete form through donations to help.  A happy new year to everyone and a better one for the unfortunate among us.  We can try to make it so.

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In Thailand, Mahathir offers a hypocritical take on ASEAN unity

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“The stability and prosperity of our region,” Malaysian premier Mahathir Mohamad claimed earlier this week, “rely heavily on a united and integrated ASEAN.” The call for regional unity came as Malaysia’s prime minister was conferred an honorary doctorate in Thailand in the field of social leadership, entrepreneurship and politics, an occasion that marked Mahathir’s second visit to the country since winning a landmark election in May this year. His earlier visit saw him pledge to facilitate peace in the southern border provinces of Thailand amid a persistent separatist insurgency.

While his speech may have been stirring, Mahathir’s grandiose vision of a more unified ASEAN community does not extend to his own government’s policies, at least judging by the escalating border dispute Putrajaya has ignited in recent weeks with neighbouring Singapore. The same Mahathir that called for regional unity in Thailand is refusing to remove ships from disputed waters, while a senior member of his party threatened Singapore with “pain by a thousand cuts”. The provocative language harkens back to the long and tense relationship between the two countries since their 1965 split, with boundary issues typically flaring up in parallel with domestic politics.

This latest dispute straddles two sets of issues. On the maritime side, Malaysia’s October claim to extended limits of the Johor Bahru port has been rejected by Singapore on the grounds that the new boundaries exceed previous claims. In terms of airspace, Malaysia has voiced opposition to the Instrument Landing System (ILS), an assisted navigational aviation facility for Seletar Airport. Malaysia protests the system’s implementation on the grounds that it infringes on national sovereignty and creates adverse impacts on flight paths and shipping in Pasir Gudang.

Mahathir’s renewed aggression toward Singapore marks a notable about-face from predecessor NajibRazak’s efforts to build stronger ties between Malaysia and the city-state. Najib sought to increase mutual trust through cross-border infrastructure and education projects. “We certainly do not want to return to the era of confrontational diplomacy and barbed rhetoric between our two countries,” he declared earlier this year in a barely-veiled barb at Mahathir’s preceding stint in office. “It was an era that we want to forget.”

That attitude was echoed by international observers, who held high hopes for bilateral relations upon Mahathir’s election as PM in May despite his widely-known frosty attitude towards Singapore. A few months in, those hopes have given way to somber disillusionment. The tensions of the past several weeks have revived uncomfortable memories of cross-causeway relations during Mahathir’s first stint in power, when he ruled Malaysia with an iron fist from 1981 to 2003.

One focal point of tensions is Mahathir’s so-called 2001 “crooked bridge” plan, designed to replace the causeway linking the two countries with a bridge to allow ships to cross the Johor Strait. Singapore refused to back the project, declaring the bridge unnecessary as long as the causeway was in good condition. Mahathir’s insistence on building Malaysia’s end of the bridge, and more recent attempts to revive project discussions, have confirmed fears that his return to power would revive old issues previously laid to rest.

It’s difficult to determine exactly why Mahathir is so blatantly after confrontation with Singapore. Two main theories have emerged to explain the PM’s enmity towards Malaysia’s tiny neighbour. According to the first theory, the idiosyncratic Mahathir holds a grudge from his university days in Singapore, where he faced anti-Malay prejudice and condescension from Singaporeans.

Mahathir does indeed have a history of holding grudges. Long before the Seletar airport issue and the revival of the Johor Strait bridge project, Mahathir had one-time protégé Anwar Ibrahim thrown in jail on trumped up sodomy charges after they disagreed over financial policy in the wake of the 1997 Asian Financial Crisis. Anwar, who has since re-emerged as a critical political ally for Mahathir, was just one of a long list of political opponents to suffer similar fates during Mahathir’s first tenure.

That trend has carried over into the premier’s second term. Having already spoken at length of his soured impression of successor Abdullah Badawi, the newly reinstated leader is now going after predecessor Najib. Arrested in July in connection with the billion-dollar corruption scandal surrounding state investment fund 1MDB, Malaysia has also filed criminal charges against Goldman Sachs for its involvement in the embezzlement of large sums of money. The unfolding case against Najib is being held up as a litmus test of Mahathir’s commitment to justice. The supposedly “bitter” Mahathir is unlikely to disappoint.

The second theory, however, may offer a more straightforward explanation. It suggests Mahathir is using this latest spat with Singapore as a means of drawing attention away from domestic problems. A Nikkei Asian Review report released earlier this year held Mahathir’s government responsible for a rapidly declining ringgit, with the new administration lacking in substantial new economic policies and failing to curb capital outflow.

Mahathir’s economic woes are compounded by rising concerns over Malaysia’s ballooning debt. In the wake of the 1MDB scandal, realizations that government debt exceeds RM1 trillion – more than $238 billion – are ringing national alarm bells. The benchmark FTSE Bursa Malaysia Kuala Lumpur Composite Index has fallen nearly ten percent since Mahathir took office.

Amid rising debt, dubious economic policies, and broken election promises, Mahathir’s comments in Thailand earlier this week belied what could very well be a conscious strategy of exploiting regional tensions to maintain domestic control. While ASEAN unity almost certainly is the only path to shared regional prosperity, Mahathir does not seem to be to be listening to his own advice.

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