Even as signs of an election were building up in Singapore over the last few months, an incomparably absorbing story was unfolding to our north in Malaysia. However, the scandal at the sovereign wealth fund One Malaysia Development Berhad (1MDB) speaks to our election too. It shows how the lack of sufficient checks and balances is a bread-and-butter issue.
In early June when I last visited Kuala Lumpur, I exchanged Singapore Dollars for Malaysian Ringgit at a rate of approximately SGD1.00 = MYR2.74. Last Friday (28 August 2015) it was SGD1.00=MYR2.98. There has been a 9% devaluation in less than three months. Considering that the Singapore Dollar has also fallen against the US$, the Malaysian devaluation against the greenback is even worse. In early June it was USD1.00 =MYR3.70; on Friday, it was USD1.00= MYR4.17, a 13% devaluation.
Lots of imported goods that the typical Malaysian aspires to, from mobile phones to apples, cheese and BMWs, will cost significantly more. Dream holidays and honeymoons have to be scaled back. Parents supporting children attending foreign universities will have to do their sums again; some sons and daughters may find their hopes dashed.
It should be said that the collapse in oil prices played a major part too. As an oil-producing country, Malaysia has been hit. But oil prices have been on a downward trend since July 2014, with a particularly weak patch in January 2015 (see chart below). Yet the swooning of the Ringgit has happened only more recently. The currency fall appears better correlated with the series of exposés about 1MDB, and Prime Minister Najib Razak’s part in it, starting the second quarter of 2015.
This scandal has had several phases already, each more damaging than the last. First, the outcry was over MYR42 billion (about US$11 billion) missing from 1MDB. How can a sovereign wealth fund, supposed to protect and wise invest a country’s accumulated wealth, end up in debt?
Then evidence appeared claiming to show how a good chunk of the original funds ended up in private accounts of individuals, or privately-held companies, some Malaysian, some Arab.
In its third iteration, about US$682 million were demonstrated to have been deposited in a bank account in Najib’s personal name. Najib denied that any of it was from 1MDB; he also said he did not personally benefit from it. But he didn’t deny that huge sums of money went into his account. Instead, he explained that the money was a donation from an anonymous Arab source to help fund ruling party UMNO’s 2013 election campaign. Funny thing: no other senior UMNO leader has acknowledged he knew anything about such largesse at the party’s disposal, nor has any of them decried what such an ‘explanation’ by Najib must surely imply: that the 2013 election was in effect stolen by an anonymous foreign funder.
The hole has gotten bigger and bigger.
At every turn, Najb has used the wide executive powers in his hands to stymie investigation. Journalists and bloggers have been harrassed and arrested. The Edge, a business-oriented newspaper, had its licence pulled. When the mountain of evidence grew so huge that the otherwise sycophantic Anti-Corruption Commission could no longer be relied on to totally whitewash the whole affair, its investigating team was interfered with, and now it is back to issuing anodyne statements about process. When the evidence given to the police began to pile up, an unexplained fire broke out on one floor of the police headquarters at Bukit Aman – and it happened to be the floor where white collar crimes are pursued. A considerable number of records were reportedly lost.
When the Attorney-General – supposedly an independent officer under Malaysia’s (and Singapore’s) politico-legal system – moved to finally do his job and draw up corruption charges against Najib, he was sacked. As was Jessica Gurmeet Kaur, a Singaporean working in the Malaysian Attorney-General’s Chambers on the case. Unidentified people were watching her residence very suspiciously. Also sacked: the Deputy Prime Minister who failed to offer a whole-hearted defence of Najib in various public speeches.
Yet it appears that the majority of UMNO members are still behind Najib. If, as alleged, their political jobs had depended on the bounty so generously provided in the 2013 election, it is hard to see them biting the hand that feeds them.
In sum, the institutions that are supposed to keep Malaysia’s house clean have one by one been neutered. In the short term, it appears that the only viable route to cure the rot is through street agitation. In the medium term, maybe an election upset overthrowing UMNO might do the trick, but seeing how opposition leader Anwar Ibrahim has been jailed and all sorts of new rules turn the screws on dissenters, a democratic route cannot be taken as always open. Moreover, the next election is not due till 2018, three suffering years away. In any case, if UMNO members cannot benefit from generous funding to win the next election, they might well back Najib in some sort of extra-constitutional power grab, so as to remain in power.
It is this kind of political uncertainty and quite dire scenarios that have spooked the markets. With the currency fainting, it’s a bread and butter issue now for Malaysians.
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As signalled at the top, this essay is actually not about Malaysia. It’s about the coming Singapore elections. Too often, people make a false distinction between “bread and butter” issues and issues like institutional independence and integrity, political openness, checks and balances.
You can’t separate the two. The latter values make for a more transparent and responsive system that self-corrects in a more timely fashion, instead of allowing problems to grow and fester, and then be suppressed by expansive executive power, only to get worse. These values create the space for law and accountable government to flourish. It is worth remembering that even as we speak adoringly of ‘rule of law’, we must first defend the space for law to operate (including the space for evidence to surface).
Consider this: Malaysia’s UMNO-led coalition isn’t as dominant in that country’s political landscape as the PAP is in Singapore’s. UMNO and its Barisan Nasional partners do not even have a two-thirds majority in parliament; BN does not run all the state governments. There is a far more active civil society there than in Singapore. Malaysian sultans are not appointed by the government and have had a history of tension with it. Despite these handicaps, Najib has been able to block investigations, sack those who stood in his way, and issue the most asinine of ‘explanations’. We thus cannot naïvely assume that, should a future scandal brew under the surface in Singapore, where currently the government remains even more dominant than that in Malaysia, truth will out and wrongdoers punished.
A year ago, no one could have imagined the crisis of confidence that has since engulfed Malaysia. The thing about rot is that it can remain invisible for a long time, only to be exposed and turn dangerous very late in the day.
A year ago, my Malaysian friends were making jokes about Rosmah. Najib’s wife was widely ridiculed for her shopping frenzy. Yes, there was excess, there was some corruption, there was some authoritarianism and dirty politics, but life for the average Malaysian was pretty good. Ha ha ha. Let’s have another beer.
Rosmah jokes are not funny anymore. Ordinary people are paying the price for excess. They’ll see it in the shops, on online airfares and vacation prices, maybe in future careers and good jobs as investors take fright.
When candidates in our election speak about the need for checks and balances, let this example show why we need to take the message seriously. But when others around you say a little authoritarianism is good, a bit of dirty politics all in the name of the game, and an overwhelming majority for one party makes for greater efficiency and prosperity – for after all, has not life in Singapore proven to be relatively good? – look soberly north.