There is an interesting time line with regard to events at Malaysia’s once revered and trusted Central Bank.  Late in November last year, one of the remaining figures of the ‘Old Guard’ who had been in place when Najib Razak became MOF/PM, the Deputy Governor Dr Sukhdave Singh, resigned.

Sarawak Report wrote about this early exit at the time, given that his statement in a departure email sent to colleagues was so worrying in what it said:

“All I can say is that my life in the Bank has been based on certain professional expectations, and when I find myself put in circumstances where those expectations can no longer be met, there could have been no other decision for me”

explained the departing Dr Singh, leaving the world to wonder what on earth was going on at the bank?  In particular, what were the circumstances where expectations of professional behaviour were not being met?

In the Sarawak Report comment we pointed out the vulnerability of institutions like the Central Bank and indeed several other once solid and well-managed public savings and sovereign funds in Malaysia, to corruption in high places.

Although Prime Minister Najib Razak assumed office of a country with a stable economy and secure reserves, there is over-centralisation of political power and lack of institutional independence that allows the man who occupies the joint positions of MOF and PM far too much power.  What if that individual is not to be trusted with access to so much money?

What Troubled Dr Singh?

A few short weeks later developments have signalled what might have been the cause of the Deputy Governor’s plainly grave concern.

On 4th January Bank Negara announced that it had forked out a massive RM2 billion to buy 55.79 acres of land from the federal government, for the alleged development of a new financial education hub.

The announcement of this huge expenditure caused consternation and criticism all round. DAP’s Finance Spokesman and 1MDB whizz, Tony Pua, crystalised those concerns in a statement put out three days back, questioning why the bank would buy government land at top competitive market prices for a public project?

Pua also noted some dates and some figures.  The date of the purchase, was just days after the resignation of Dr Singh and it was also just days before the payment of the remaining debt owed by 1MDB (and by extension the Ministry of Finance, which had guaranteed 1MDB’s debts) to the Abu Dhabi sovereign fund IPIC due on the last day of the year.

And it was not only the timing but also the amount that rang bells around Putrajaya and beyond.  Pua pointed out that it was utterly indefensible that the Bank of Malaysia should have had to pay out market rates to fund a public project on public land. With that in mind, the amount paid went a long way towards what the bankrupt 1MDB was struggling to pay IPIC!

Says Pua:

It.. does not escape notice that the timing of the transaction and payment coincided with the time 1MDB had to make its US$600 million second instalment payment to IPIC at the end of last year.
Despite questions being asked by the media, analysts, critics and even Members of Parliament, both 1MDB and the Ministry of Finance (MoF) have refused to clarify the source of funds for the above payments by 1MDB. The question is very important because we all know that 1MDB is effectively insolvent and Malaysians have the right to know if the MoF utilised tax-payers’ funds to further bail out 1MDB.

What everyone knows is that, despite all the claims that no money was lost from 1MDB, that fund is penniless and could not make the payment.  The Finance Ministry has claimed that it is not liable as a guarantor, but it has been clearly established that it is and therefore the Government of Malaysia was going to have to come up with the money awarded to IPIC by the arbitration court in London.

Theft and lies at the heart of government appear to be the drivers of this sinister situation where huge sums of money are being pushed around without adequate explanation.  Only full disclosure and transparency will suffice to convince Malaysians otherwise.