1MDB: A Beautiful Swan It Is Not

Over the weekend, The Edge newsletter published a very disturbing chain of emails between the former CEO of 1MDB, Shahrol Halmi and Jho Low and a few others who have links to Jho Low. Like most Malaysians, I can only hope that these emails are fraudulent. However, knowing the integrity and working of the editorial team at The Edge, there is a high chance that these emails are substantially true.

The picture that was painted by these emails is one of gross incompetence of the management team at 1MDB. There is also failure on the part of the Board of Directors to properly supervise this management team.

After you have read through the email exchange (here), you will be struck with one huge question: How can one man, Shahrol Halmi made a decision to invest USD1 billion into a JV with an unknown company, PetroSaudi?

Even after this huge mistake was discovered by the Board, which prompted the resignation of its Chairman, Mohd Bakke Salleh (the current CEO of Sime Darby), and was probably later discovered by the auditors (remember the resignation of two previous auditors), the Government did not do anything to clean up the mess. Shahrol Halmi resigned as CEO after 3 years on the job and is now attached to the Prime Minister's Office.

Since our Prime Minister is the Chairman of the Board of Advisers, he should know about this mismanagement. He is also our Finance Minister where our Government has issued a few Letters of Support to procure loans for 1MDB. These letters are effectively letters of guarantee in the event of default unless our Government is prepared to hold out to the rest of the world that our country does not put value to our words as reflected in the letters of support.

I believe that this mess in 1MDB could cost the country a loss of billions of ringgit. Najib is definitely feeling the heat. He has obtained support from his Cabinet, which doesn't mean anything (here). More importantly, he has rallied UMNO's division leaders behind him (here).

I believe that Najib should have stepped down as Chairman of the Board of Advisers on the first instance when he learned about the mismanagement in 1MDB in 2009-2010. It is not too late for him to do so today. Whether this will save him as our PM is another question. As a taxpayer, I demand a proper and full accounting of the financial transactions in 1MDB.