Malaysia Uncut

A Repository of Malaysian Stuff and More

The Truth About Khairy Jamaluddin – 11

The Truth About Khairy Jamaluddin continues here:

Part 11: Billion Dollar Khairy

It’s not that difficult to be a millionaire in Malaysia. In fact, it’s not difficult even to be a multi-millionaire – if you have the right connections. Almost always, having the right connections means having a patron in UMNO, whether you are Malay, Indian or Chinese. A godfather in UMNO will give you access to various money-making opportunities for which you may not even need to lift a finger. Take, for example, Haniff Aziz, Khairy Jamaluddin’s first cousin and one of the three ‘Heavenly Kings’ of APs.

As a former civil servant, Haniff would have made no more than RM100,000 per year. Minus all his debts and living expenses, that would give him a saving of around RM30,000 per year, if he is frugal. Definitely, the amount is not enough to build a showroom for imported cars. And yet, today, merely by having APs for two years, Haniff Aziz is worth more than RM300 million. This obscene amount he obtained is not only a reflection of Rafidah Aziz’s increasing disregard for honesty in government, but also a symbol of how people close to Khairy are now becoming the New Untouchables of Malaysian business.

Khairy, like other UMNO warlords of the past, protects his friends even when they are involved in blatant corruption. In Haniff’s case, he has so far escaped any action because Khairy does not want a person who shared the same grandfather as him to be tarnished by scandal, which will of course reflect badly on Khairy himself. So the distributors of Wald automobiles have been first to take the brunt of the government’s reaction to Dr Mahathir’s outburst over the misuse of APs. Wald was deemed responsible for rousing the anger of Dr Mahathir because they were importing the same cars as Dr Mahathir’s son but under-declared them by RM50,000-100,000 below the prices that were sold by Dr Mahathir’s family business. Khairy hopes that by taking action on Wald, at least for the time being, Haniff will escape being the target of public anger.

Perhaps, to politicians, loyalty is the most prized of values. Certainly, Khairy is loyal to his circle of friends who now help him to amass great wealth. One of his Oxford contemporaries managed to use Khairy’s name to escape paying a RM5 million overdue loan to asset restructuring company Danaharta. The man’s father, a failed property developer from Negeri Sembilan, went strutting up to see Danaharta’s officers and merely proclaimed that they could not go after him ‘as his son is a friend of Khairy’s’. The end result was that Danaharta grew scared and the man was allowed more time to repay his loan. The mere use of Khairy’s name is now as useful as getting a passage straight to the inner reaches of the gardens of wealth.

Khairy cannot be accused of being the only person in Abdullah’s administration who is corrupt. Far from it, there are other figures in Abdullah’s circle who are also involved in giving contracts, licenses, permits and commissions to selected supporters. No big fish has ever found himself in trouble with Abdullah unless he is seen by Abdullah and his circle as a Mahathir loyalist. That is the only criteria for being hauled up to face the judges.

The last billionaires in Malaysia created by government corruption were the allies of former Finance Ministers Daim Zainuddin and Anwar Ibrahim. Khairy intends to regain that title for himself. However, unlike them, he shuns the glamour of being a tycoon. Instead, his long-term view is to make money through proxies, while he himself plays the role of budding politician, perceived free from the taint of business. The reality of the situation is that the group making money for Khairy acts almost always under his tutelage and moves only when he says so.

The biggest coup that is being planned is a potential sale of residual assets of Danaharta, currently being brokered by Khairy proxy Norza Zakaria through his allies in Singapore. Norza’s company in Singapore is a joint venture with a certain Mr S who is a Singaporean ex-classmate of Khairy in the United World College (UWC). Mr S, ostensibly, is a corporate finance specialist with interests in real-estate and multimedia. He meets up with Khairy and his Khazanah cronies to discuss various ways in which to strip the assets of Malaysian GLCs and make a percentage commission on them. One of the advisors to Khairy is a shareholder of Ethos Consulting who currently works with Deutsche Bank in Kuala Lumpur.

Why Danaharta? The reason is quite simple. Danaharta was set up as a reaction to the Asian financial crisis. It acquired, with the help of government funds, non-performing loans from various Malaysian banks. In other words, it was a purchaser of debt at a discount. Since its inception, Danaharta has successfully paid of RM11 billion in monies borrowed from the government. However, it still has some RM1.7 billion in assets yet to be sold. Danaharta, however, has a finite life. By the end of the year, it will close down and all the assets must be sold.

Khairy, Norza, Mr S and the Deutsche Bank friend are planning to buy up all the assets from Danaharta at massive discounts. Each will play his role. The Deutsche Bank friend has been preparing a proposal to Danaharta Managing Director Zukri Abdul Samad to purchase all of the assets. In this role, Deutsche Bank would act as a fronting bank, whereas the monies to purchase the assets will come from a fund created by Khairy and Norza. Currently, the proposal is being considered. Deutsche Bank is asking for a discount of around 70% to the market price of the remaining assets, thus making a profit of around RM1.2 billion. Danaharta is reluctant to lose so much to Deutsche Bank, given that many of the assets have the potential of at least 80% recovery value.

But Danaharta is faced with a dilemma. Firstly, the decision to sell is not theirs to make. Instead, it really is up to the Ministry of Finance, a ministry answerable directly to Khairy’s father-in-law, Abdullah Badawi. Even though Abdullah is not personally involved in making such decisions, relying instead on 2nd Finance Minister Nor Mohamed Yakcop, the decision will be heavily influenced by three allies of Khairy in the ministry. In making such decisions, Nor Mohamed will refer to two Special Officers to the Minister of Finance, who are both Oxbridge cronies of Khairy and in fact appointed to their post by Khairy’s own recommendations. The third ‘advisor’ is Norza himself, who is Political Secretary to Nor Mohamed. No prizes for guessing what they would recommend…

As corporate advisory director in ECM Libra, Khairy will lobby for the plan to be accepted. Deutsche Bank will come in as the apparent buyer. In actual fact, the main beneficiary will be the Khairy and Norza fund, which needs only around RM500 million to acquire the billion Ringgit profit. Of course, neither Khairy nor Norza has enough cash at the moment to fulfil this plan. But if they cannot come up with the cash, a bank guarantee will suffice until they successfully sell off the assets at a higher price than what they paid during the purchase. The key point here is that anyone can make quick bucks as a middleman, but only one middleman, Khairy, has the clout to influence such important decisions without having to face the prospect of a rival offer.

No one believes that the assets will be valued properly. Khairy has planted many people in the Ministry of Finance, Bank Negara and other such financial institutions who answer directly to him. Most of them were his contemporaries in Singapore and the United Kingdom. While they do not aspire to get half as rich as Khairy, in performing their services to Khairy, they are rewarded by a fast-track career and side perks of being involved in lucrative insider dealing projects.

Khairy gets a copy of the minutes of Ministry of Finance, Bank Negara, Khazanah and Danaharta’s meetings as soon they are printed. Norza and the other Special Assistants to the Ministers of Finance make sure that Khairy gets to see the choicest deals. The other young Khairy allies in these institutions report to Khairy on any potential rivals. They also use various tactics to thwart other businessmen from securing deals which have been identified by Khairy as his to take. When a purchaser, for example, of a Khazanah asset gives a proposal to that organisation, the information goes through two channels – the official Azman Mokhtar route and the unofficial Khairy route. If Khairy objects to the deal, it will be blocked. Usually no reply is given to the proposal except that it is ‘being considered’. But it never reaches execution because not long afterwards a ‘more acceptable’ proposal from one of Khairy’s contacts appears.

In such a way are the national assets stripped.


The Truth About Khairy Jamaluddin continues…in Part 12: The sound of money


Wednesday, October 11, 2006 - Posted by | Commentary

1 Comment »

  1. […] The Truth About Khairy Jamaluddin continues here: […]

    Pingback by The Truth About Khairy Jamaluddin - 12 « Malaysia Uncut | Wednesday, October 11, 2006 | Reply

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