Friday, May 25, 2018

Lim Guan Eng - cutting his own nose to spite his Finance Minister's face

Star Online - Malaysia needs tactful handling of 1MDB mess (from Bloomberg):


MALAYSIA’s new finance minister is taking a sledgehammer to 1MDB. A less blunt tool would do the job just as well, probably better.

Lim Guan Eng is busy telling the world about the shocking state of affairs at the scandal-ridden state fund. But that won’t sate the Malaysian public’s desire for justice.

Investors, meanwhile, are uneasy about things getting out of hand. Already, foreigners have sold out of the nation’s stocks for 13 consecutive days.

For Lim to declare in his first press conference that government debt has exceeded 1 trillion ringgit ($251 billion) because of a sly public bailout of 1MDB gets him full marks for honesty, but not for tact.

The amount, 45 percent higher than previously reported, could have been disclosed when Lim had a firm plan to pay it down.

But the new government is suddenly short of revenue: Lim’s boss, Prime Minister Tun Dr Mahathir Mohamad, has gotten rid of the unpopular goods and services tax to thank voters for returning him to power after 15 years.

That’s all well and good. But the three-year-old GST fetched $11 billion for the exchequer last year, or 3.3 percent of GDP. Replacing it with another type of consumption tax will have to wait for the new parliament to convene, which won’t be until the end of June or early July.

Why does Lim want to risk leaving investors with an uncertain fiscal outlook until then? With U.S. interest rates firming, all emerging economies are under pressure. Malaysia, too, has seen foreigners pull out about $800 million from its bond market.

Can Lim keep a lid on negative sentiment? This week’s events give cause for doubt.

On Tuesday, Lim issued a harsh press release after meeting officials connected to 1MDB, which the U.S. Department of Justice believes was the epicenter of a multibillion-dollar scheme of plunder and money laundering.

1MDB is insolvent, the minister said, citing directors. Well, investors have long suspected that to be the case.

The existence of as much as $2.5 billion of the fund’s overseas assets is in doubt, Lim said. Even that tallies with facts.

Why else would public money be used to prop up 1MDB if it had liquid assets offshore? In fact, Lim has himself provided a list of payments made by the Ministry of Finance to 1MDB creditors.

Starting last year, they add up to almost $1.75 billion.

Give him the benefit of the doubt. Maybe he’s preparing the ground to justify use of public money to make another $36 million interest payment on May 30. But then Lim went on to say that he had found Arul Kanda, the 1MDB president, to be “utterly dishonest and untrustworthy.”

Kanda retaliated by calling the remarks potentially defamatory. The minister had left out the context of his answers and made him look bad, he said in a statement, adding that he was seeking legal advice.

The colorful language against Kanda is jarring in an official press release. Malaysia isn’t a banana republic, but a sovereign rated A3 by Moody’s Investors Service.

Lim is no longer an opposition politician, but an important part of a new government that can initiate legal proceedings against any 1MDB officials or directors. Corruption in high places was the reason Malaysians voted out the Barisan

Nasional coalition that had ruled for six decades – including for 22 years under Mahathir.


Kanda’s honesty isn’t what interests them. They’re waiting for Mahathir to make good on his promise to bring charges against his predecessor, Najib Razak.

The very institutions in Malaysia that have to ensure economic stability are under stress.

After the Wall Street Journal reported that proceeds from a land deal involving the central bank were used to pay an Abu Dhabi state fund – a 1MDB creditor – the central bank had to issue a statement saying it had bought government land at fair value.

The situation is delicate enough for Lim to pull back a little.


His desire to blow the lid off the 1MDB scandal is understandable.

But for the finance minister to pursue that goal at the expense of his day job – of keeping the economy in good shape, and investor
s reassured – would be inexcusable. - Bloomberg


19 comments:

  1. I don't think Bloomberg would want to be given dodgy financial data. Most financial journalists want the Truth, the Whole Truth and nothing but the Truth, so they can make wise investment choices. But Andy Mukherjee's preferred song is "Tell Me Lies" by Fleetwood Mac.

    Chorus: [Christine McVie]
    Tell me lies
    Tell me sweet little lies
    (Tell me lies, tell me, tell me lies)
    Oh, no, no you can't disguise
    (You can't disguise, no you can't disguise)
    Tell me lies
    Tell me sweet little lies

    Is he selling snake oil or what?

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    Replies
    1. “I see little to get exuberant about the same old political characters with risk of fiscal indiscipline. It’s not a new dawn for Malaysia.”
      - Anonymous SG fund manager

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  2. Huh? Telling facts as its is wrong.....cheebye kaytee....

    Kaytee will surely die without a coffin. And yes go to hell. Plus his body will be eaten by dingos in the australia outback

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  3. A lousy piece of write-up from Bloomberg!

    Typically 'proposing' a very traditional manner of only 报喜不报忧 (reporting only the good news)!

    How to be 'tactful' when the ship is already in dire strait after so many prolong coverups about the real situation?

    Especially when the world has already long factored in the multibillion-dollar scheme of plunder and money laundering in their M'sia portfolio.

    Perhaps, this Bloomberg writer NEVER understands the real economic debacle causing the financial meltdown à la carte Greece - cover-up follows by cover-up to prolong the state of made believes happy time!

    Negative sentiment has long bathed investors with an uncertain fiscal outlook when U.S. interest rates r firming, ALL emerging economies are under pressure.

    The heighten tension in South China Sea, the North Korea nuclear missile tests & the looming trade wars between US&China R spoofing the weakened regional investment appetites.

    The BEST approach is to take the bull by the horn & stating the ACTUAL diabolical financial situation caused by 1MDB.

    Why still want to play 'tactically' & irresponsible dressing ups when it's already a known secret?

    The veiled f**ked up defence for Arul (Kanda’s honesty!!!) is revolting to all the reporting professionals!

    It would be a TOTAL act of misplaced official duty for the finance minister – of keeping the economy in good shape, and investors reassured – if the 1MDB malfeasance is not been made transparent quickly.

    This piece of shit proves that not all anmokauxai news reportings r knowledgeably thought out. Perhaps, it's just a piece to meet dateline for a slobbery job done!

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  4. i prefer a fm who knows whats happening n tell the truth rather than one that tell us he dun know the market price of a bangalooo.

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  5. We need the truth to be aired in Malaysia, no matter how painful it is.

    The former Prime Minister and Finance Minister administered a web of lies and deceit, a network of secret Black accounts which any crooked businessman would be proud of.

    Many of these were previously suspected, but being officially denied, they were dismissed as Fake News.

    Or Najib apologists like Ktemoc kept accusing that there was "no evidence".

    Yes, Stock Markets often just want stability and often will happily accept a Kleptocracy, as long as it is stable.

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  6. By the way, I have Millions of Ringgit of hard-earned money invested in the Bursa Malaysia.
    I don't care about the temporary gyrations.
    The truth about the BN-Najib Kleptocracy MUST be exposed.

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  7. Keeping investors reassured?

    As to what sort of news?

    Hidden, undisclosed, unknown financial and economic facts or full disclosure and transparency of facts.

    After investors have digested the option then it's up to the investors to invest or to pull out based on the facts presented.

    The question a serious investor should ask is

    "Is the Malaysian Finance Minister presenting facts or lies or cooked up data?"

    "Do you have any lingering doubts about the facts presented"

    What hogwash is a Financial newspaper talking about image (how financial news are to be presented by FM) as reassuring investors?

    Are we talking about popularity contest or what?

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  8. This Bloomberg article is so.... May 8 2018.

    In the bad old days, the Mainstream Economic establishment in Malaysia was in cahoots with the Najib Kleptocracy.

    I personally know a few of them, and they are either fully coopted beneficiaries of the Kleptocracy or ball-carriers.

    They waxed lyrical about Najibnomics, and 100% of them predicted a BNajib win - which they of course considered a Jolly Good thing.

    Some of them have gone quiet, knowing well the earth has moved, and their pretty little world , with its certainties has been overturned.

    But beware, some of them will actively work to undermine the majority Malaysians' desire for a more open society and economic system.

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  9. “utterly dishonest and untrustworthy.”

    Quite blunt but certainly nothing compared to things The Donald or Duterte utter all the time, or even Nazri.
    Being politic is not really in LGE's character.

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  10. There's one very good write up which deserves to be viral-ed to all :

    "Moody’s doled out AAA ratings to 30 mortgage-backed securities every day. When the 2008 subprime crisis finally hit the United States, 83% of those first class securities became junk – they were downgraded. The funny part was – Lehman Brothers’ own debt still had an investment grade rating when it filed for bankruptcy protection.

    But Moody’s Investors Service wasn’t alone in scamming investors. Together with Standard & Poor’s and Fitch Ratings, the big three credit-rating agencies were all guilty for not only failing to warn investors of the dangers of investing in many of the mortgage-backed securities at the epicentre of the financial meltdown, but benefiting by not pointing out deficiencies.

    Everything was rigged. Thanks to major lawsuits by the San Diego-based law firm Robbins Geller Rudman & Dowd, documents revealed that the U.S.’ two top ratings companies – Moody’s and S&P – have for many years been shameless tools for the banks, willing to give just about anything a high rating in exchange for cash.

    An exposed email written by one Standard & Poor’s executive says – “Lord help our fucking scam … this has to be the stupidest place I have worked at.” Another high-ranking S&P analyst confessed – “As you know, I had difficulties explaining ‘HOW’ we got to those numbers since there is no science behind it. Let’s hope we are all wealthy and retired by the time this house of cards falters.”

    Two days ago, the Moody’s lectured Malaysian new government after 93-year-old Prime Minister Mahathir Mohamad announced the abolishment of the highly unpopular 6% Goods and Services Tax (GST), and the reinstatement of the 10% Sales and Services Tax (SST). Moody’s threatened to slap the country’s sovereign credit ratings with “negative” unless the government is able to cushion the revenue loss.



    In fact, S&P (Standard & Poor’s) was sued by the U.S. Department of Justice over its despicable role. Those credit-rating agencies were working hand-in-glove with investment banks in the marketing of risky mortgage-backed securities, also known as collateralized debt obligations, which helped bring the U.S. financial system to its knees 10 years ago. ( to be continued in next post ...)

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  11. "Does Moody’s, and other rating agencies for that matter, care about the fact that the people were suffering and businesses were plunging due to GST, introduced by ex-prime minister Najib Razak? Don’t be silly. They don’t care that the world’s biggest crook was driving the country to bankruptcy. If they didn’t care about their own country in 2008, why should they care about Malaysia in 2018?



    As of January 2018, S&P Global Ratings’ credit rating for Malaysia stands at A-’ with a ‘Stable’ outlook, while Moody’s Investors Service Inc and Fitch Ratings Inc have fixed credit rating of ‘A3’ and ‘A-’ respectively, with a ‘Stable’ outlook. Yes, despite knowing that Mr. Najib had plundered and stolen at least US$4.5 billion, they continued decorating his regime with stellar credit ratings.



    It didn’t matter to the credit rating agencies that the previous Najib government debt which was below the self-imposed ceiling of 55% of gross domestic product (GDP) was actually a half-baked figure with more debts hidden under “red-files”. They were happy with Najib’s GST simply because the tax provided a good source of income to the government, and that was all that matter.

    Actually, if the crooked Najib was willing to pay the right price, the “Big Three” Moody’s and S&P and Fitch would be more than happy to rubber-stampMalaysia credit rating to a triple-A rating. If they had conspired with America’s investment banks leading to the 2008 Great Recession, they can certainly do it again with Malaysia’s corrupt government.



    But the three big credit-rating agencies were not the only boys who were shocked by the stunning defeat of coalition Barisan Nasional, which had ruled the country for 61 years since independence. Now, Bloomberg‘s Andy Mukherjee isn’t happy because the new government decides to practice transparency. It appears that Bloomberg’s definition of transparency is rather different from that of Malaysia’s.



    Malaysia new Finance Minister Lim Guan Eng has finally unveiled the truth – that the country’s total debt and liabilities as of Dec 31, 2017 was RM1,087.3 billion (80.3% of GDP, Gross Domestic Product). That confirms the RM1 trillion debt announced earlier by Prime Minister Mahathir Mohamad. The revelation is the purest form of transparency the country has ever seen.

    Strangely, not many people are impressed with such transparency. While it’s understandable why ex-PM Najib Razak was furious that the new finance minister exposed the RM1 trillion debt accumulated by his regime, it’s quite puzzling why Andy Mukherjee was offended by Finance Minister Lim’s remarks against 1MDB President and CEO Arul “Anaconda” Kanda Kandasamy.

    It’s a fact that snake oil salesman Mr. Arul has been deceiving and misleading investors and financial markets by lying through his teeth since 2015 regarding the 1MDB financial health. Interestingly, Andy Mukherjee took offence that Mr. Lim called Mr. Arul a “dishonest and untrustworthy” person. The Bloomberg columnist thinks Mr. Lim should not say that because he is no longer an opposition politician.

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  12. "Well, what did Mukherjee expect Lim to say after Arul made a complete 180 degrees turn after it was revealed that taxpayers have been “secretly” bailing the 1MDB “Ponzi Scheme” from April 2017 to the tune of RM6.98 billion? As 1MDB President and CEO, Arul, whose Muslim name is Azrul Kanda, had misled and deceived the financial markets into thinking that everything in the 1MDB garden was rosy?
    Like the U.S. credit rating agencies, Mukherjee, an award-winning Indian journalist, was also critical of Malaysia new government pulling the plug on GST, supposedly a major revenue driver for the government. He argued that slashing the tax would reduce revenue collection, which generated an eye-popping RM43.8 billion in 2017.

    The gullible Bloomberg’s columnist was, of course, couldn’t explain why the country could “prosper without GST” since its independence in 1957, until Najib introduced the tax in 2015. Obviously, this so-called award-winning Indian journalist was clueless of how corrupt Najib regime was. The loss of revenue in scrapping GST could easily be compensated by plugging corruption.

    Like the world’s biggest crook Najib Razak, Andy Mukherjee appears to suggest that Lim Guan Eng should not expose any further skeleton hidden in the closet of the shocking state of affairs at the scandal-ridden state fund 1MDB. For the sake of local stock market, the finance minister should shut the heck up, suggested Mukherjee.

    Suddenly, transparency has to take a back seat. 1MDB is insolvent and even a director of the state fund admitted it was nothing but a scam from the beginning. And thanks to Najib’s incompetency, the country is saddled with RM1 trillion in debts, partly contributed by the 1MDB scandal. To cover the massive debts, Najib unleashed the GST in 2015 to save his skin, not the country.

    So, how much tactful Andy Mukherjee wants Lim Guan Eng to be? Had Mr. Lim refused to disclose the actual level of debt now, just to prevent a temporary stock market setback, the new government of Pakatan Harapan would be blamed, not Najib regime, for the RM1 trillion debts. For the sake of transparency, it was a necessity to tell all and sundry the mess the new government has inherited."



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  13. Just my speculation, I guess Andy Mukherjee likely would have met and be very impressed by Arul Kandasamy and carries his phone numbers but probably never know who is LGE before this. So he is writing a piece most people would write the same way, "slightly" sympathetic towards his "pal" Kanda.

    But Andy Mukherjee wrongly attributed the "confirmation" of the 1 trillion Ringgit debt by LGE as a revelation which in fact was 1st declared by Tun.

    LGE's remark of Arul as “utterly dishonest and untrustworthy” would be a fair statement based on so many press statements (lies about solvency of 1MDB) that he had made. So there is no justification for Andy Mukherjee's desperate sanitizing of Arul with the sorry description of "The minister had left out the context of his answers" and "Kanda’s honesty .....", what context? Having said that I do agree with LGE could have been more tactful in his dealing with that.

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    Replies
    1. When all 3 anehs together (Arul Kandasamy, Andy Mukherjee and ktemoc) anything also can

      I was warned to kill aneh like kaytee when I see one

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    2. The biggest baddest aneh is your PM now. Oops... I mean new Malaysia's PM.

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  14. Is Ktemoc going to publish Leslie Lau's rebuttal of the Bloomberg article ?

    Or he's only interested in 1 side of the story ?

    https://www.malaymail.com/s/1634850/a-less-blunt-tool-for-lim-guan-eng-really-mr-mukherjee

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    Replies
    1. Kaytee does not have the balls to publish la. Well, Kaytee's dick only 3" long ma

      Delete
  15. Najib apologists kept repeating "No evidence of wrong-doing"

    Then when the evidence is now starkly presented , they now sing "Lim Guan Eng - cutting his own nose to spite his Finance Minister's face".

    Podah.

    ReplyDelete