How Malaysia is borrowing USD50 billion without borrowing
Posted by: Raja Petra
THE CORRIDORS OF POWER
Raja Petra Kamarudin
On 15 June 2006, Reezal Merican Naina Merican wrote a letter to Datuk Zamani Abdul Ghani, the Deputy Governor of Bank Negara Malaysia. The letter is about an amount of USD50 billion required by Malaysia to fund its national development. In case you may have forgotten, Malaysia recently launched its Ninth Malaysia Plan or Rancangan Malaysia Kesembilan (RMK9). The RMK9, which runs from 2006 to 2010, is going to cost the nation RM200 billion. What many do not know, however, is that Malaysia does not actually have the money to finance the RM200 billion RMK9.
Now, who is Reezal Merican and what authority does he have in instructing the Deputy Governor of Bank Negara? Reezal Merican is one of the ‘Tingkat Empat’ boys and the Political Secretary to the Finance Minister, who by chance also happens to be Malaysia’s Prime Minister. Reezal Merican is not there because of his abilities but because Khairy Jamaluddin, the Prime Minister’s son-in-law, wants to keep an eye on things and Reezal Merican plays the role of Khairy’s eyes and ears.
Reezal Merican’s job is not only to report everything to Khairy and to be the minder for the Finance Minister II and keep him under control, but also to ensure that Khairy gets to read all reports and letters before it falls onto the desk of the Finance Minister II. By the time any documents reach the table of the Finance Minister II, it would already have instructions etched on them about which project and which contract is to be awarded to which company. In short, the jobs are apportioned out even before the Finance Minister II gets to see the papers.
Just to digress a bit, prior to Abdullah Ahmad Badawi tabling the RMK9 in Parliament for debate and approval, a copy had earlier been sent to the Finance Minister II. On this particular early-bird copy, against every project listed in the RMK9, Khairy had etched in his own handwriting which company was going to be awarded which project. Abdullah Badawi tabled the RMK9 for Parliament’s approval only as a formality. Some projects such as in East Malaysia had in fact already started work. The contractors were already working even before Parliament had approved the projects.
It was reported that the Finance Minister II was flabbergasted. Nevertheless, with people like Reezal Merican hovering over him, there was nothing he could do to resist. Doing so would mean he would have to retire once his term expires. So now you know why he managed to get an extension of service. It is because he was smart enough not to resist Khairy but instead complied with whatever Khairy wants. This is the secret on how you get to keep your job.
And that is why everyone aspires to walk through the corridors of power. It comes with immense power and the licence to get away with murder (and in Malaysia this saying is not merely a figure of speech but can be taken literally, if you know what I mean).
Anyhow, that is another matter. What we want to talk about today is the letter of 15 June 2006. Reezal Merican said in that letter of 15 June 2006 that he is under instructions of the Malaysian Prime Minister cum Finance Minister, Abdullah Ahmad Badawi. And the letter refers to the USD50 billion funding requirement to finance the RM200 billion Rancangan Malaysia Kesembilan (RMK9) or Ninth Malaysian Plan.
The USD50 billion is being procured from 25 prime banks but will be channelled through a private limited company, Asasatu Technology Sdn Bhd. The name Ir. Hj Zubir bin Hj Ahmad is mentioned in that letter as the Managing Director of the company. It appears that the USD50 billion will be channelled through a private limited company and not directly to the Malaysian government. This would mean, officially, Malaysia is not borrowing any money. The money is being borrowed by a private limited company.
Now, what is most interesting about this whole arrangement is, according to the Registrar of Companies, Asasatu Technology Sdn Bhd, a company based in Permatang Pauh in Penang, is in the process of being wound up. That’s right, the company that is arranging the USD50 billion for the Malaysian government is a company that is being wound up. Now that is very interesting indeed. How can a company that is being wound up be the front for the Malaysian government in negotiating a very important matter like funding the country’s RMK9?
The last filed accounts for Asasatu Technology Sdn Bhd is 31 December 2000. There are no accounts filed since then. In 2000, the company’s fixed assets were shown as RM542,248.00 with current assets of RM1,976,421.00. But it had current liabilities of RM1,071,641.00 and long-term liabilities of RM321,756.00. The profit for the year was RM39,512.00 with accumulated profits of RM125,272.00. This is certainly not the kind of company Malaysia should be using to raise USD50 billion for the purpose of funding such an important matter like the RMK9.
We do not know what the latest financial figures are but since the company is being wound up we can only assume that since 2001 it cannot have been doing very well. Ir. Hj Zubir bin Hj Ahmad mentioned in the 15 June 2006 letter is a Director of the company and holds 1,980,000 shares while Rosni binti Rahmat, the other Director, holds 20,000 shares.
What is even more interesting is that the agent who will arrange the financing is named in that letter as Union Financial Services Corporation of Sydney, Australia, and the address is listed as PO Box A2286. So there is no way of confirming whether this company is just a ‘PO Box’ company or a legitimate fund manager. Considering that we are talking about Malaysia’s funding requirement for the five years until 2010, this makes it very dicey indeed. In a way, this USD50 billion is going to be Malaysia’s lifeline and the whole matter is being handled through a PO Box in Australia and a private limited company in Malaysia in the process of being wound up.
Two weeks earlier to that 15 June 2006 letter, on 30 May 2006, Asasatu Technology Sdn Bhd had written Abdullah Ahmad Badawi a letter offering the USD50 billion and mentioning in that letter that their partner is Union Financial Services Corporation. The letter was signed by Ir. Hj Zubir bin Hj Ahmad. A person by the name of Roland Bleyer is also mentioned as the President of Union Financial Services Corporation. Reezal Merican’s 15 June 2006 letter is in response to this letter of 30 May 2006.
Even earlier to that, on 22 February 2006, a company called Project Equity Services Group from Singapore had written to the Prime Minister and the Bank Negara Governor referring to a meeting in Bank Negara on 25 October 2005. The letter mentions all those present in the meeting.
What should be noted here is that the 22 February 2006 letter mentions that the whole arrangement must be done through Ir. Hj Zubir bin Hj Ahmad, the Managing Director of Asasatu Technology Sdn Bhd. It also mentions that this is according to the request by Bank Negara. Therefore, Bank Negara was the one that stipulated Asasatu Technology Sdn Bhd would be fronting for the Malaysian government.
The USD50 billion will have to be paid back within ten years and carries an interest rate of between 2.88% to 3.5%. And it would of course have to be paid back in US Dollars and subject to whatever the exchange rate at that time would be. This means the USD50 billion is exposed to currency fluctuations and exchange risk.
Reading the three letters together, it is clear that Bank Negara has agreed that a private limited company currently in the process of being wound up is to be used as a front to borrow USD50 billion and that this company will act as a front for the Malaysian government so that it will not be seen that Malaysia is borrowing USD50 billion from overseas.
Secondly, the whole package was brokered by a Singapore outfit, but so as not to reveal that Singapore is involved, lest fingers start pointing to the prime Minister’s son-in-law, they shall put the whole thing through an Australian PO Box that will front as the ‘partner’ for the Malaysian outfit.
Thirdly, the Malaysian government will not officially borrow the money and the borrower will instead be a small mama-papa private limited company called Asasatu Technology Sdn Bhd. This will keep the Malaysian government ‘clean’ of any foreign borrowings.
Finally, it is clear that when the Malaysian government announced the RM200 billion RMK9 in Parliament, they did not have the money to finance it. However, not wanting it to appear like the country is borrowing interest-bearing US Dollars, plus is subject to currency fluctuations, to finance its development plans, they used a small private limited company as a front which again used an Australian PO Box company which in turn is backed by Singapore.
In short, through many layers or levels of front companies and PO Box companies, Singapore is funding Malaysia’s development proudly touted as the Rancangan Malaysia Kesembilan or RMK9.
Further information on Asasatu Technology Sdn Bhd is as follows:
Address: No.1, Jalan Arowana 4, Kawasan Perniagaan Arowana, Permatang Pauh, P. Pinang
Tel: 604-3973211, 604-3974211