Sunday, November 20, 2016

Financial scandal regarding 1MDB in Malaysia

Politicians are always subjected to objections. Apart from South Korea as I wrote recently, Najib Razak, the Prime Minister of Malaysia, is in front of ignited rage of citizens.

Najib is suspected to have been involved in a scandal regarding 1MDB, and government-funded investment company. It happened two years ago. 1MDB was developed with a strong opinion of Najib aiming to make Kuala Lumpur a core city of the financial industry. But later, 1MDB met several uncertainties regarding the management of its money. Especially, Najib was suspected to have received up to 700 million USD. Finally, the bond of 1MDB resulted in default. A certain cause of the default is that an official fund in Abu Dhabi withdrew the investment. Abu Dhabi claimed 1MDB failed to make the payment of one billion USD debt. It is no doubt that the suspicious connection between 1MDB and Najib contributed to the distrust to 1MDB.

Najib was so good at controlling the environment around him that the attorney general concluded that there was no evidence that he committed an illegal act about this scandal in January 2016. On the other hand, there are some other lawsuits remained in foreign countries. Especially in the US, the Department of Justice restarted the investigation according to a suspect of illegal movement of money from 1MDB to Najib at least 3.5 billion USD.

In Malaysia, thousands of citizens gathered to protest the resignation of Najib. They believe several more politicians have been involved in this scandal.

Aljazeera: Thousands demonstrate against scandal-hit Malaysia PM

In my opinion, it is no good to punish a politician for a financial crime. Politicians are likely to be involved in financial lawsuits. Many of them are merely naïve to the process of managing money. If a single breach kills a talented politician’s activity and dispels his or her contribution in the past, there will be no capable politicians appeared. They should be let out on bail, without no more allegation, as far as the loss can be compensated by himself. In some case, of course, the amount of payment should be doubled or tripled, as a deterrent of further tricks.

However, in the case of Najib, the amount of money subjected to the investigation is extraordinary big. He will not able to compensate the loss if he is guilty.

It remains not sure he is innocent. Unless he is proven to be responsible, at least based on the current legislation, Najib needs not to drop his seat. And indeed he would not. However, it is a different issue Malaysian government will be working with such disbelief. Rational and feasible management is required to fix the situation.

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