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2 Anti-graft war backfires in
Malaysia By Ioannis Gatsiounis
KUALA LUMPUR - It has become evident to
many Malaysians that Prime Minister Abdullah
Badawi's war on graft never really got started.
But few would have predicted that three
years on, Abdullah and his family would become the
target of a mounting chorus of accusations, linked
to the same allegations of corruption, nepotism,
and abuse of power that the once-reform-minded
premier has so publicly campaigned against.
Much attention has focused on the meteoric
rise of Abdullah's
only
son, Kamaluddin, and his son-in-law, Khairy
Jamaluddin - both for the most part political and
business unknowns before Abdullah assumed the
premiership in 2004. While their role cannot be
overlooked in what increasingly has the markings
of a family business empire in the making,
Abdullah's approach to managing the country has
done little to break the endemic patronage that
has long hobbled Malaysia's political and economic
progress. Indeed, his style of governance may in
fact be encouraging it.
A turning point in
Abdullah's premiership arguably came last October
in the run-up to the general assembly for the
ruling party he heads, the United Malays National
Organization (UMNO). At the time, Abdullah's
promise to battle corruption "without fear or
favor" was meeting resistance among the
conservative party's old guard. Then, on the eve
of the assembly, in an apparently unprecedented
move by a Malaysian prime minister, Abdullah
reportedly distributed RM3 million (more than
US$856,000) to each division chief for
"development" purposes.
Opposition critics
at the time said the gesture smacked of
vote-buying. Abdullah for his part has denied any
foul play. At the very least, the gesture signaled
to the party's old guard that Abdullah is as
committed as his predecessor - former premier
Mahathir Mohamad - to oiling UMNO's patronage
machine. And even where the UMNO elite have not
benefited directly from Abdullah's style of
governance, they have been able to take stock in
what appears to be a man being swallowed by the
system he had earlier promised to change.
Most recently, Abdullah was accused of
procuring a new $50 million jet for his personal
use. The plane, he explained, was being leased
from a government company for use by top
officials, including the king. Either way,
Abdullah's administration has shown a special
fondness for the country's royal sultanates. His
government directly awarded a RM400 million palace
project to two little-known companies, Kumpulan
Seni Reka and Maya Maju.
In response to
the contract, opposition leader Lim Kit Siang
asked in Parliament: "Who are [the companies]? Are
they a crony company? Why wasn't there an open
tender? Why wasn't there a contract? Why do we
need this new palace?" Those questions are still
being debated, but the opposition is making much
hay of the allegations for its own political
benefit.
Meanwhile, Abdullah's own family
members have during his term likewise, fairly or
unfairly, found themselves at the center of
controversy. His son Kamaluddin's business
activities, including his position as leading
shareholder of Scomi Group, a local oil-and-gas
company, have come under particularly sharp
scrutiny. Scomi's share price skyrocketed 588%
four months after listing on the local bourse in
May 2003.
While the growth of Malaysia's
energy industry has since certainly played a role
in pumping up the company's shares, Kamaluddin's
family clout is also thought to have inflated
investor confidence. Mahathir, now a vocal
Abdullah critic, estimates that Scomi has secured
RM1 billion worth of government contracts during
Abdullah's tenure. Industry analysts, meanwhile,
are perplexed as to how Kamaluddin, 38, could
suddenly be worth an estimated $90 million.
More controversially, a Scomi subsidiary,
Scomi Precision Engineering, was fingered in 2004
by US and European intelligence officials for
supplying dual-use centrifuges to Libya, which
allegedly could have been used in the country's
covert nuclear-weapons program. The company was
hastily cleared of any wrongdoing by both the
Foreign Ministry and police, even as the United
States was applying pressure for full disclosure
about Scomi's business dealings.
Defending family
honor Meanwhile, Abdullah has stoutly
defended his son's independence as a businessman,
saying that Kamaluddin "has never abused his ties
with me ... He has never asked help from the
government or anything that required a bailout for
him." Abdullah has likewise defended his
son-in-law Khairy's recent advances in politics
and business, which have drawn opposition
scrutiny.
Khairy, deputy chief of UMNO's
youth wing, has been described in some political
circles as "Malaysia's most powerful 31-year-old".
Several of Khairy's closest confidantes are also
known to be close to Abdullah, including
businessman and newspaperman Kalimullah Hassan,
whom the premier appointed editor-in-chief of the
UMNO-controlled New Straits Times newspaper.
Both Khairy and Hassan have been linked to
controversial financial dealings at ECM
Libra-Avenue Capital. On December 27, 2005, ECM
chairman Hassan along with two other company
co-founders announced that they would each sell 1%
of their shareholdings in the company to Khairy in
a deal that was transacted at 71 sen per share,
for a total of RM9.2 million. Khairy is on record
saying that the deal was financed through the
company, but many viewed his invitation to join
ECM as a way to earn the company valuable
political connections.
Soon thereafter,
ECM acquired government-linked financial company
Avenue Capital Resources and reportedly was not
required to raise any outside capital to make the
multimillion-dollar acquisition. Critics,
including most prominently former premier
Mahathir, say the deal lacked transparency. ECM
has persistently denied any foul play.
Khairy has also been loosely linked to
Khazanah Holdings, the state-run investment arm
that Abdullah chairs and which manages an
estimated RM25 billion worth of government funds.
Two years ago, Khairy was widely tipped to become
Khazanah's chief operating officer, but amid a
public outcry the appointment didn't go through.
However, Ganendran Sarvananthan, 29,
Khairy's close friend during his time in school in
England, was in February 2006
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