Prime Minister Muhyiddin Yassin must not squander chance to reboot his leadership
It is debatable who has had the better week: Malaysia’s Judge Mohd Nazlan Mohd Ghazali or U.S. investment bank Goldman Sachs.
The former proved his mettle — and independence — by sentencing former Prime Minister Najib Razak to 12 years in prison for looting a state fund, two years after the scandal brought down his government. Many worried that the current leadership might let Najib wiggle free. Instead, Malaysia opted for closure on a sordid episode that sparked probes from Washington to Zurich and included a cameo role for Leonardo DiCaprio.
Goldman, too, did well. The investment giant lived up to its “vampire squid” street reputation in spades in Kuala Lumpur, earning $600 million in fees for helping to raise $6.5 billion for 1Malaysia Development Berhad, a fund Najib and his cronies set up in 2009. Prosecutors allege billions were stolen from 1MDB, with some of the spoils ending up in Najib’s personal accounts. Yet, Goldman has managed to walk away relatively unscathed.
The bank agreed to pay $2.5 billion in cash — and has guaranteed that Malaysia will receive at least $1.4 billion from the sale of seized assets that were acquired with money stolen from 1MBD. That’s much less than the $7.5 billion Malaysia initially demanded. Even better, Goldman gets to pretend it did nothing wrong.
But give the win to Malaysia here. Goldman merely succeeded in doing what it does best. After the 2008 global crisis, the bank got called out for selling swamp gas in the form of mortgage-backed securities and derivatives. It made a mint from Greece’s debt crisis, earning it Rolling Stone‘s memorable 2009 characterization as a “great vampire squid wrapped around the face of humanity, relentlessly jamming its blood funnel into anything that smells like money.”
Malaysia, though, has room for a reboot as Prime Minister Muhyiddin Yassin banks the political capital from ensuring Najib faced justice. A low bar, admittedly, but count the ways Tuesday’s verdict could have gone differently.
Muhyiddin, remember, is a Malay nationalist backed by the corruption-tarnished former ruling party. His rise to power in March was as sudden as Najib’s downfall.
Malaysian politics has been a chaotic scene of late. In May 2018, Najib’s nine years in power came screeching to a halt when his former mentor Mahathir Mohamad, then 92, shocked the world and handed the United Malays National Organization a drubbing. Mahathir, though, lasted only two years, before being replaced by Muhyiddin.
This newish government has a great deal to prove, starting with Najib’s fate. His conviction on seven charges is the first of five related criminal cases. There will be aggressive appeals by the Najib crowd, who still dream of a return to power.
There is also the question of Jho Low, the international fugitive who roped so many Hollywood actors and celebrities into this caper. He is the alleged mastermind of the $4.5 billion theft from 1MDB, plowing the money into movie projects such as The Wolf of Wall Street, a $250 million superyacht, jewelry gifted to model Miranda Kerr worth $8 million. Even the odd Picasso.
Just as Goldman Sachs is the investment world’s Forrest Gump, showing up at virtually every crisis, Jho Low also keeps making headlines. Last month, his Time Warner Center penthouse in New York sold for $23 million. Then came reports that two public relations companies to which he is tied scored buckets of U.S. coronavirus stimulus cash. Bringing Jho Low to justice must be a priority.
Muhyiddin must not squander this moment. Najib’s verdict strengthens his hand to root out corruption once and for all. The political capital he amassed this week could go a long way to help turn a razor-thin parliamentary majority into a pro-reform groundswell.
First, he must safeguard growth as COVID-19 fallout darkens Malaysia’s 2020 prospects. Between January and March, the economy grew the slowest since 2009, the year Najib took power. He should also dismantle the affirmative action system that advantages Malays.
For decades, dating back to Mahathir’s earlier stint as Prime Minister that ended in 2003, Malaysia’s leaders have promised to roll back the perks afforded to ethnic Malays such as access to plum jobs, education, property, and government contracts. The system stymies productivity and innovation and sends all too many ethnic Chinese and Indian Malaysians fleeing to more meritocratic pastures.
His biggest challenge will be taking on the vested interests blocking structural change. China is moving upmarket at the same time Southeast Asia is changing at bewildering speed. The more Malaysia’s leaders protect the status quo, the greater the chance Indonesia, the Philippines, Vietnam, and others will grab the market share that Malaysia takes for granted.
Fun fact: the Najib verdict came five years to the day he sacked Muhyiddin, then his deputy, for asking too many questions about 1MDB. Naked revenge or the Malaysian establishment’s way of saying brighter, more competitive days lie ahead? Let us hope it is the latter.
By : William Pesek – ASIA NIKKEI REVIEW
William Pesek is an award-winning Tokyo-based journalist and author of “Japanization: What the World Can Learn from Japan’s Lost Decades.”