WILL 1MDB’S MO1 NAJIB ORDER EPF, KHAZANAH TO BUY STOCKS IN TRUMP-LINKED FIRMS WHEN THE U.S. STOCK MARKET BUBBLE BURSTS?

THE meeting between President Donald Trump and Prime Minister Najib Razak finally happened.

When it did, the initial meeting, which was the main highlight, lasted a mere six minutes in the White House – that’s not counting the small, rather big talk that Trump tries to hoist on his every host that under him, “America is Great” again!

Apparently, the rhetoric has rubbed off on Najib. Under him, Malaysia has become the “greatest”. How?

First, Malaysia, it is alleged, through intermediaries, paid a lobbyist named Healy Baumgarder-Nardone, who had served as a Trump campaign aide through her registered lobby for Malaysia entity The 45 Group, a limited liability company that was formed in January, a fee of US$250,000 (RM1.05 million) for the meeting to happen. That is slightly US$42,000 per minute.

In The 45 Group’s Foreign Agents Registration Act filing, Baumgarder-Nardone reported that she was paid US$250,000 on May 1 by a British Virgin Islands-registered entity, Godfrey Group Ltd, but listed as an address in Johor Bahru, Malaysia.

BVI entities are like a magnet to Najib’s administration.

Under six minutes, Najib further assured Trump, whose economy stands at nearly US$18.57 trillion last year, that Malaysia would strengthen the US economy and invest in Trump’s infrastructure programme.

Now, what is the size of Malaysia’s gross domestic product? US$296.4 billion last year.

Can a Malaysian economy, dwarfed by the US by some 62.65 times, strengthen the economy of the US significantly by investing in the infrastructure programme of the US?

It is like Najib will go to Brazil next to offer our football expertise to strengthen Brazil’s national team!

Trump boasted that both Najib and him were working on a very huge, deal giving an example of “one deal where between US$10 billion and US$20 billion worth of Boeing jets are going to be purchased”.

Wow! Talking about big talk!

Najib reciprocated this big talk by stating that “we are committed to 25 planes of the 737 MAX 10, plus eight 787 Dreamliners. And there is a strong probability that we will add 25 more 737 MAX 10 in the near future, and within five years, the deal will be beyond US$10 billion”.

This is a perfect tango in big talk between two leaders who are under federal investigation.

Indeed, how would Malaysia even come up with the staggering billions to pay for the 787 Dreamliners built by Boeing?

Yet, this is precisely the promise given by Najib to Trump, when Malaysia Airlines just broke even last year after hiving off most of its assets.

Thus, instead of calibrating Malaysia’s strategic relationship with the US, to make it less subservient to China in the South China Sea, for instance, Najib has ended up promising to buy loads and loads of Boeings to butter up the US.

The US$10 billion and beyond Boeing purchase by a government-linked company like MAS, that has already retrenched more than 6,000 cabin crew just in June last year, about a year and three months ago, is shocking.

RED INK STILL AT MAS, HOW TO FINANCE NAJIB’S JETS TO PLEASE TRUMP

Indeed, MAS has had several rounds of retrenchment since 2015. It is not in the black yet.

Despite the financial bloodletting, it is a surprise that Najib continues to believe that he can dictate a government-linked company to splurge on more aircraft in the US, without nary a thought to the legacy carrier’s sustainability.

Not forgetting the intense competition in the aviation sector, particularly from low-cost carriers, which is driving down margins razor thin.

Brendan Sobie, chief analyst at independent aviation research firm CAPA Centre for Aviation, cautioned that there were government-owned airlines, including MAS, that decided to buy airplanes that were not really required or sustainable.

In this case, he pointed out that the timing of the order, alongside Najib’s visit, raised concerns of potential political influence over the purchase. He is being polite.

It is also important to ask how MAS will propose to finance the purchase of these aircraft.

Another series of sukuks or bonds guaranteed by the government? Does this means another high possibility of creating another series of contingent liabilities for the government? Will these contingent liabilities evolve into a pile of debts, and the government and people will have to bail it out again?

EPF, KHAZANAH NOT SPARED

More importantly, Najib claims that government-linked companies like Khazanah Nasional Berhad and the Employees Provident Fund (EPF) have already invested heavily in the US.

EPF has invested nearly US$7 billion in the US stock exchange and will invest another US$3 billion to US$4 billion in US infrastructure.

While Khazanah has invested US$400 million in high-tech companies, it will set out to invest more. That more is coming.

Malaysians are surely hoping that all these new investments will be made after stringent due diligence with good governance and best practices, as opposed to what we saw in Felda and 1Malaysia Development Berhad.

Now, the US stock exchange may have been in a bull run since November last year. But, the Federal Reserve Bank (Feds) has warned repeatedly that it will increase the interest rates in the US this year.

All these are signs to rein in the speculative nature of the stock bubble.

Why should Najib, who has already bungled under his watch on 1MDB to the tune of allegedly US$11 billion, be expected to make more investments in Wall Street? Shouldn’t the prime minister, if he is not responsible for the bungling in 1MDB, be asking the US Department of Justice to release all the seized assets?

If they are not released, and are, in fact, recovered by the DoJ, one third of all Malaysian assets would be kept by the US government. Only two thirds would be returned to the Malaysian people.

If Najib wants to invest in the stock exchange, indeed, to buy the planes, shouldn’t he be asking for the assets to be released so that Malaysia has the cash to make the forward purchases?


Indeed, Najib made no mention of the threat posed by China in the South China Sea, too, especially along the coasts of Sabah and Sarawak.

Be it illegal fishing or submarines, China has encroached on the sovereignty of Malaysia many times over, knowingly or unknowingly to Malaysian authorities.

Yet, Najib made no mention of the dangers posed by China. Nor did Najib pledge his support to the US Freedom of Navigation exercises in the South China Sea, the sole act that can neutralise the risks of the Nine-Dash Lines, where China seeks to claim almost the entire South China Sea.

Instead, he averred that the Islamic State or Daesh, al-Qaeda and Abu Sayaf were the enemies of Malaysia, just as they were the enemies of the US.

Now, if Malaysia and the US share a common cause in the eradication of radical and extremist Islam, does this imply that Malaysia and the US are also united in their cause against Hamas and the Muslim Brotherhood?

Yet, this clearly is not the case.

1MDB SWEPT UNDER THE RUG

In fact, the meeting between Najib and Trump was a farce. Instead of unlocking the money seized by the DoJ, Najib made zero mention of it.

Instead of equipping the Malaysian Navy with P3 Orion anti-submarine and maritime surveillance aircraft, which can do a sweep of intruding submarines in Malaysia’s waters, Najib ignored the importance of US-Malaysian joint reconnaissance completely.

With a leader like Najib, it is little wonder that the US-Malaysia relationship will go south, despite having marked its 60th anniversary.

There is another anomaly, too.

CROSSING THE LINE WITH AIRASIA

Najib, in an off-the-cuff statement, averred that he would encourage AirAsia, which is a publicly listed company, to buy from General Electrics (GE). Even here, Najib has crossed the line.

AirAsia is not merely a publicly traded company, but a carrier that was allowed to start under former prime minister Dr Mahathir Mohammad.

If Najib claims that Dr Mahathir has made Malaysia a failure, ardently a false claim, why did he latch on to the legacy of an airline spawned under the leadership of Dr Mahathir?

For all that Najib so generously offered to Trump, what did he get in return for Malaysia? Nothing. Zilch. Except the word “great” (three times), gratitude over Malaysia’s “massive” investments in the US, praise for Malaysia’s stand against IS, and of course, Trump commended Najib for not doing business with North Korea.

This simply means that this whole US visit must be the most expensive photo opportunity for domestic politics, ever, in the history of Malaysia.

And in the coming weeks and months, stories of this historic meeting will be spun to the tilt in government-owned mass media and by government-friendly cyber troopers.

Will there be a heroic reception upon Najib’s return to Malaysia to celebrate this “nothingness”? Most likely there will be one to milk the most expensive photo opportunity in Malaysian history.

So, look forward to huge placards stating “We love PM”, “PM our valiant and true hero” or “PM Najib conquered President Trump”.

But as they say, lies sprint, truth marathons. – September 14, 2017.

* Dr Rais Hussin is a Supreme Council member of Bersatu. He also heads the party’s policy and strategy bureau.

– https://www.themalaysianinsight.com

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