PUTRAJAYA, Malaysia (June 14): Prime Minister Tun Dr Mahathir Mohamad has discovered that Malaysia is in far worse financial shape than he and his allies had feared, The New York Times (NYT) reported today.
The national debt, tallied at US$170 billion by former Prime Minister Najib Razak’s administration, has been reassessed, along with other government liabilities, at US$250 billion. That is 80 percent of Malaysia’s gross domestic product, NYT reported.
“The more we look into the previous administration, the more bad things we find,” Mahathir said in an interview in the grand, Islamic-style Prime Minister’s office in Putrajaya, the administrative capital he helped design in the late 1990s. “Any organization that had money, the previous government found the means to take the money.”
The United States Department of Justice has already accused Najib, Mahathir’s one-time protégé, of siphoning US$731 million from the country’s investment fund into his personal bank accounts, NYT reported. At least US$4.5 billion is believed to have been diverted from that fund, known as 1Malaysia Development Berhad, or 1MDB.
But the claims of theft from national coffers extend beyond 1MDB to encompass an astonishing array of government-funded initiatives, from a rural development program and a plan for religious pilgrims to a provident fund and a coal mine in Mongolia, according to NYT.
“All have been raped by the previous government,” said Mahathir. “They have taken money. Now they have lost the money.”
New Finance Minister Lim Guan Eng, an accountant and former banking executive, was equally direct. “They were just robbing the country blind,” he said. “I’m having nightmares practically every day, wondering what land mines will I tread on the following day.”
If Mahathir’s Alliance of Hope had not scored its surprise victory in the elections last month, Lim said, “the nation would have become a basket case.”
He added, “We would be at a terminal stage.”
According to NYT, when Mahathir and his aides first entered the Malaysian government offices last month, they found oversize garbage bags filled with shredded documents, a snowstorm of loose papers on the floor, even half-consumed food left by former occupants in a hurry to get out.
At the Finance Ministry down the street, Lim found computers which even the highest-ranking bureaucrats were locked out of certain accounts. In some cases, vital files were accessible only to a single person: Najib, who had also served as Finance Minister.
Coaxing the nation back to health depends on Mahathir, whose first tenure as prime minister was marked as much by his authoritarian impulses as his success in shepherding Malaysia’s transformation into a upper-middle-income country.
But Malaysia’s political malaise cannot be traced only to the nine years that Najib was in power, NYT wrote.
“The state in which the country is today is not just the result of Najib Razak’s misgovernance but also decades of populist politics and semi-authoritarian practices,” said Sophie Lemière, a Malaysia specialist at the Ash Center for Democratic Governance and Innovation at Harvard University.
Mahathir acknowledged that cleansing a political machine riddled with corruption, not to mention aiding at least six national governments that are investigating missing 1MDB funds, has proved taxing. “We have asked so many people to resign we are left with a skeleton,” Mahathir said.
But he refused to acknowledge any systemic faults with the Malaysian political system, instead blaming Najib’s astonishing greed for the nation’s predicament. Police raids last month on properties associated with Najib and his family turned up US$28.6 million in cash and more than 430 designer handbags, NYT reported.
“It is obvious that he has stolen money,” Mahathir said, indicating that his government had already accumulated “enough evidence” to have Najib and his wife, Rosmah Mansor, put on trial. The two have been barred from leaving the country.
“It’s not a question of seeking revenge,” Mr. Mahathir said. “It is just the application of the rule of law.”