A COLOSSAL 21st CENTURY KELPTOCRACY

April 14, 2019 – 5:27 am

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“False”. Check. “Misleading”. Check. “Manipulative”. Check. “Reduces public confidence in government”. Check. “Incites hatred or ill will”. Check. “This is fake news”. Too bad when Najib Razak lost the 2018 Malaysian election, his fake news law was also taken down. Now he is in court to face the music. By Kenneth Surin.

Modern mega-kleptocracies are certainly not as rare as the “Asian unicorn” (Pseudoryx nghetinhensis), the latter only ever seen four times in the wild according to the World Wildlife Federation.

They may be dead, but in the memories of many will be Mobutu Sese Seko (1930-1997) of Zaire (now reverted to its former name of the Congo), Ferdinand Marcos (1917-1989) of the Philippines, and Suharto (1921-2008) of Indonesia.

These individuals treated as absolutely coextensive - their country’s treasury and their own bank accounts.

Certainly, there are others, not typically regarded in the west as kleptocrats, who do not likewise observe any distinction between their personal coffers and the nation’s wealth - cases in point would be the Saudi and Gulf sheikhdoms, as well as the Sultan of Brunei, the latter much in the news for his decree mandating the stoning to death of anyone allegedly engaging in homosexual activity.

The dividing line between the two sets of cases (Mobutu et al vs the Arab sheikhs and the Sultan of Brunei) seems opaque and difficult to define - the mega-kleptocrats a la Mobutu “stole foreign aid” among other things, but what if the foreign money is deposited directly into the personal coffers of a despot, as is the case with the several Arab sheikhdoms (19 of 21 Arab states scored below 50 in the Corruption Perceptions Index 2017, which surveys levels of corruption in the public sector).

You are a kleptocrat if you syphon-off foreign monies donated as “development aid”, or loot your country’s treasury, but seemingly aren’t if those foreign monies, purpose unknown, are deposited directly into your personal Swiss bank accounts? Some will say there is a distinction between money destined for a national treasury and one intended for a personal banking account, but in countries where rulers don’t differentiate between the two, this distinction is moot.

Najib Razak is accused of fleecing US$681m from 1MDB, which he founded in 2009, saying at that time it would be used to “prime the pump” of Malaysia’s economy.

But nearly all the sums putatively involved in these cases pale in comparison to those concerning Najib Razak, prime minister and finance minister of Malaysia between 2009 and 2018.

Najib appeared in court last week, facing seven corruption charges over his role in the looting of Malaysia’s 1Malaysia Development Berhad (1MDB) US$4.5 billion sovereign wealth fund. There will be three other 1MDB-related trials later this year, involving a further 42 charges - in total Najib is accused of fleecing US$681m from 1MDB, which he founded in 2009, saying at that time it would be used to “prime the pump” of Malaysia’s economy.

At last week’s trial Malaysia’s Attorney General Tommy Thomas used his opening statement to provide a sense of the life of luxury led by Najib and his wife Rosmah Mansor. To quote The Guardian:

“A hint of the kinds of lifestyles Najib and his associates are accused of funding came in Thomas’s opening argument. After reeling off a list of bank deposits Najib allegedly received, the attorney general said a payment of $130,625 was made with Najib’s credit card in a Chanel shop in Honolulu in 2014.

An even bigger hint came before the trial, when the Malaysian government announced it had sold the superyacht Equanimity to the casino operator Genting Group for $126m. The sale of the yacht, which features a cinema and gym and was allegedly previously bought by [Jho] Low [a Najib associate now a fugitive in China], marked the most valuable single asset recovery from the 1MDB scandal so far”.

According to ABC News, Najib and his wife “were barred from leaving the country and grilled by anti-graft officials, and their properties raided. Truckloads of luggage stashed with cash, jewelery and hundreds of expensive designer bags worth a staggering 1.1 billion ringgit ($270 million) were seized from their home and other properties”.

Rosmah Mansor is widely derided in social media as “Imelda Marcos 2.0”.

As to be expected, looting on this scale, involving complex transactions home and abroad, can only be undertaken with the aid of financial institutions possessing a global reach. The massive sums involved in such looting will almost certainly have to be money-laundered, and as became clear in the aftermath of the 2008 financial crash, several major financial houses and banks have expertise in this area.

In addition to the Malaysian authorities, those in the US, UK, Australia, $ingapore, Abu Dhabi, among others, are continuing their investigations into 1MDB.

Malaysia has filed criminal charges against Goldman Sachs, which says it is cooperating with authorities.

Goldman earned $600 million in fees for facilitating the issuing of bonds on behalf of 1MDB. In 2015, these bonds were downgraded to junk status by the ratings agencies Standard and Poor’s and Fitch.

According to Business Insider:

“In February 2016, the US FBI began probing the connection between Tim Leissner, a top regional executive of Goldman Sachs, with former Prime Minister Najib Razak. Leissner has since pleaded guilty in the US to conspiracy relating to money laundering and bribery. It’s alleged that Leissner had a cozy relationship with Malaysian officials and may have used bribes to further Goldman’s business in the country.

Another former Goldman executive, Roger Ng, was also charged with corruption and money laundering in Malaysia”.

Ng, currently detained in Malaysia, is due to be extradited to the US, where he will appear in court.

As to be expected, looting on this scale, involving complex transactions home and abroad, can only be undertaken with the aid of financial institutions possessing a global reach. The massive sums involved in such looting will almost certainly have to be money-laundered, and as became clear in the aftermath of the 2008 financial crash, several major financial houses and banks have expertise in this area.

Meanwhile, Najib (who denies all the charges against him) blames Goldman for the missing 1MDB funds. The Malay Mail quotes Najib as saying:

“We have put up a system. There is a system there to take care of our investment.

If they [Goldman Sachs] fail, then they have to take the responsibility, because they were appointed and paid by 1MDB to take care of our interests,” he told reporters”.

It will be interesting to see how Najib explains the connection Goldman has to the $270 million in truckloads of cash and luxury goods seized from his home and other properties.

Goldman’s line of defence is predictable. Its CEO David Solomon said the bank had conducted “due diligence before every transaction” with regard to 1MDB, thereby implying that its employees Tim Leissner and Roger Ng had gone rogue in order to line their own pockets.

The skeletal outline of a chain of denial and self-exculpation is emerging: Najib has already blamed Goldman, and Goldman in turn looks as though it is poised to throw its “rogue operators” Lassiter and Ng under the bus.

Lassiter and Ng are likely to get reduced sentences if they cooperate with prosecutors, which almost certainly puts pressure on them to implicate Najib and his associates, and any allegedly complicit higher-ups in Goldman.

When the shit hits the fan, the pressure really is on the excrement-showered thieves to claw each other’s throats to shreds.

Note: Kenneth Surin teaches at Duke University, North Carolina. He lives in Blacksburg, Virginia. The above article was posted at CounterPunch.

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