Thursday, December 16, 2010

Revisiting bank-client confidentiality

Revisiting bank-client confidentiality

Revisiting bank-client confidentiality

Posted: 16 Dec 2010 06:30 AM PST

By Stanley Koh

COMMENT Confidentiality is a cardinal principle in banking law. "The very relationship between the banker and customer is based on this principle of confidentiality," Sarabdeen Jawahitha wrote in his article, "Banking Confidentiality: A Comparative Analysis of Malaysian Banking Statutes", which appeared in the Arab Law Quarterly in 2002.

According to researchers, the notion of bank-client confidentiality goes back to the commercial codes of Germany and Northern Italy and is even traceable to the Middle Ages. Indeed, many professional bankers will go so far as to say that a bank's duty to maintain confidentiality is as old as banking itself.

As commerce expanded, the need for trustworthy bankers increased, and their discretion and promise of confidentiality were the private individual's only protection against feudal authorities.

Today, wherever one goes – whether it is in the East or the West or the North or the South – one will find some form of regulation meant to ensure banking secrecy.

But of particular interest are the articles of association and by-laws of many old western banks that provide for the observance of strict confidentiality in their dealings with clients.

Since banking activities affect practically everyone in modern society, it is hard to ignore the confidentiality issue.

Malaysia, which follows the common law as well as British statute on banking confidentiality, passed the Banking and Financial Institutions Act in 1989.

But Jawahitha complains that the confidentiality issue is not addressed in a manner that is comprehensive enough to ensure effective legal enforcement.

CB Drover and RWB Bosley, co-authors of the classic Sheldon's Practice and Law of Banking, write: "The guiding case on this subject is Tournier v National Provincial Bank (1923), where it was held that the banker's obligation of secrecy regarding his customer's affairs was a legal one arising out of the contract implied in the relation of banker and customer, but that the duty of secrecy is not absolute but qualified."

Breach of confidentiality

What are these qualifications? According to Drover and Bosley, they include the following: (a) where disclosure is under compulsion by law, (b) where there is a duty to the public to disclose, (c) where the interests of the bank require disclosure, and (d) where the disclosure is made by the express or implied consent of the customer.

But what happens when a bank's carelessness leads to a breach of this confidentiality? Does this carelessness diminish the fact that the bank has acted in breach of a fundamental duty it owes to its customer? What if it leads to serious problems like emotional stress or health complications?

Recently, a man whom we shall call Wang successfully sued a leading bank in Malaysia for breach of confidentiality.

In April 1997, Wang opened a current account, a savings account and a fixed deposit account under his and his son's names and gave the bank a specific correspondence address.

"On 17-3-2007, without the consent of the plaintiff (Wang), the defendant (bank) sent the statements of account to another address," the judge recalled when delivering his verdict. "As a result of that, the plaintiff's wife came to know about the said accounts and this created a problem between them."

Wang claimed he had suffered financial loss as well as anxiety, trauma, depression, misery and other, more obvious, health problems.

The bank admitted that the plaintiff had never informed it of any change of address and never authorised it to use any address other than the one he specified.

"In conclusion, I find the defendant has breached the confidentiality of the plaintiff's account," the judge said.

The court allowed Wang's claim for general and special damages with interest of 8% per annum. It is not known how much the plaintiff is claiming.

Clients' dilemma

Wang's case raises the question of whether banks frequently commit such carelessness and what the affected clients should do.

In Wang's case, the court had this to say: "While it is true that there is nothing expressly stated in the agreement between the parties, it is implied in a contract between a banker and his customer that the banker will not divulge to third persons, without the consent of the customer express or implied, either the state of the customer's account, or any of his transactions with his bank, or any information relating to the customer acquired through the keeping of his account, unless the banker is compelled to do so by a court, or the circumstances give rise to a public duty of disclosure, or the protection of the banker's own interests requires it (i.e. Tournier v National Provincial and Union Bank of England (1923)1 KB 461)."

When a court finds a bank guilty of a breach of confidentiality, it is an open question what the next course of action should be.

Perhaps customers are perpetually testing whether there is any truth to the proverb that says, "A banker is a fellow who lends you his umbrella when the sun is shinning but wants it back the minute it begins to rain."

Stanley Koh is a veteran political observer who had served with MCA as its research unity head.

Malaysian history: Delusion, amnesia, inertia, arrogance

Posted: 16 Dec 2010 06:06 AM PST

By Lim Teck Ghee

COMMENT A few days ago, two senior academics involved in the writing of history textbooks emerged from the shadows with the public allegation that the history textbooks in the country are biased and littered with errors.

According to Dr Ranjit Singh Malhi, one of the two authors, "secondary [school] textbooks have been used to promote political interests". Ng How Kuen, the other concerned author, expressed the fear that making history a compulsory pass subject would mean that students would have to subscribe to the official version of events or risk failing the entire examination.

It is said that history is written by the victors but it is also true that we get the history we deserve.

The disclosure that the teaching of history in schools has been skewed and has a political agenda – besides suffering from distortions and errors – is not the first time this issue has been brought to the public's attention.

Earlier attempts to highlight the issue of what constitutes the true history of Malaysia and what is being passed off as officially sanctioned history in the schooling and larger public system such as the BTN courses may have begun with a bang but they have all ended with a whimper.

If we go by previous experience we can expect the following response:

  • Bureaucratic foot-dragging and feigned ignorance on the issue;
  • Justification and cover-up of the existing history textbook and syllabus system and attempts to prevent any public discussion and reform;
  • Use of the mask of impartiality and superior knowledge to deflect criticism;
  • Attacks on the credibility of whistleblowers; and
  • Deafening silence from key stakeholders, including the academic community, political parties and professional organisations.

Complex situation

Why is the great majority of our Malaysian public not concerned about the version of history that is being propagated in the schools?

Why do they close their eyes and their minds to the distorted history that is being taught to their children and grandchildren? Do they not realise the consequences of the victory of a history that is radically different from the history that they themselves learnt when they were in school not so long ago? Was the history that they studied so wrong that it needs to be substantially changed in emphasis, content and scope?

Why are they silent on the development of a propagandistic and truncated history which is increasingly infiltrated by the forces of Islamisation and crass nationalism, and where the four major diseases that afflict Barisan Nasional – delusion, amnesia, inertia and arrogance – are prominently evident and force-fed to the young minds of the country?

The answers are complex but they essentially boil down to the apathy and lack of concern, especially among the educated and elite groups of our society on these important issues that are crucial to our future as a rational and thinking society. Underscoring this "tidak apa" attitude is the dominant factor of self-interest and self-preservation.

Those involved with writing history textbooks and who are in the know about the deplorable and compromised standards of their peer group want to protect their lucrative side-employment.

Others such as academics or teachers of the subject in the schools do not dare to speak out for fear of being labelled as "anti-national" or as in the case of those in the public universities, for fear of running foul of the Universities and University Colleges Act which will be selectively enforced on them should they write or speak publicly on issues where they are out of line with the official position.

Fighting for reliable representation

It is no coincidence that the academics and opinion writers that are regularly trotted out in the mainstream media are those that seek to justify or reinforce the current status quo.

These sycophants have not only academic or intellectual immunity but they also enjoy perks akin to those enjoyed by business cronies of the Barisan Nasional.

If there is any reaction from the academic community to the two whistleblowers, we can expect their comments to come from those who will toe and reinforce the official position and circumvent from the main issue of the Islamisation and politicisation of the Malaysian history school syllabus.

Dissenters, on the other hand, have to face the possibility of lost or delayed promotions and other forms of punishment not easily discernible to the public eye.

"Shut up, mind your own business" and "cari makan" (even though it may be through rent-seeking, queue-jumping, plagiarism and other unethical practices) have been the credo of the great majority of the professional elite in Malaysia.

It is a culture that has served them well personally but at what cost to the nation?

Malaysian history must be based on facts and the scrupulous depiction of historical reality.

The writing of textbooks should not be left to those who regard it as a business or political agenda and are prepared to bend the truth so that it meets with the vision of an Islamic and Umno-dominant Malaysia.

Unless we are prepared to fight for a scholarly, reliable and representative history, we will end up with a future – as well as a past – that reflects the dominant ethnic and religious culture and community, and marginalises or erases the contributions of other cultures and communities.

Lim Teck Ghee is the director of Centre for Policy Intiatives. This article first appeared at the CPI website

ADUN Tenang (Datuk Sulaiman) Meninggal Dunia

Posted: 16 Dec 2010 10:03 AM PST

Chua Tee Yong: It is confirm tht datuk sulaiman taha has passed away at 1.10am. My condolences to d family.

Khairy: Baru terima khabar, dt sulaiman taha baru meninggal dunia.. (yg ni verified source) alfatihah..

Para ahli politik telah mengesahkan maklumat ini dalam twitter mereka, antaranya ialah:

Khairy: Baru terima khabar, dt sulaiman taha baru meninggal dunia.. (yg ni verified source) alfatihah..

Chua Tee Yong: It is confirm tht datuk sulaiman taha has passed away at 1.10am. My condolences to d family.

Akmal Nasir: Alfatihah buat Adun Tenang. Ramai Sedara di Segamat, mungkin boleh melawat mrk nanti

Chegu Bard: 1202 tghmalam... Adun tenang kembali ke rahmatullah apabila mesin bantuan penafasan dibuka... Doa moga rohnya dicucuri rahmat..

Shahriza Amir: Baru terima khabar, dt sulaiman taha baru meninggal dunia.. (yg ni verified source) alfatihah..

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DUN N5 Tenang, Johor

Ruckus in and outside Parliament over suspension

Posted: 16 Dec 2010 04:00 AM PST

Pandemonium erupted in Parliament this morning ahead of the motion to suspend four opposition MPs, including Opposition Leader Anwar Ibrahim. Video by Wong Teck Chi Anwar and House speaker Pandikar Amin Mulia got into an argument with the opposition leader demanding the right to respond to charges that he had misled Parliament on the issue of Apco, a Washington-based public relations agency hired by the government. Full story here:
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Posted: 16 Dec 2010 03:49 AM PST

Story to follow.
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Nazri on PR MP actions: Tirany of the minority

Posted: 16 Dec 2010 02:41 AM PST

Minister in Prime Minister's Department Mohd Nazri Abdul Aziz has described Pakatan Rakyat MPs as "stupid" and "crazy" for threatening to sue Dewan Rakyat speaker Pandikar Amin Mulia. Commenting on legal threats by Bukit Gelugor MP Karpal Singh, Nazri, who is both de facto law minister and minister in charge of parliamentary affairs, said that the courts cannot interfere with Dewan Rakyat proceedings.
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Haris clears the air on 'support' for Zaid

Posted: 16 Dec 2010 01:57 AM PST

Haris Ibrahim clears the air on the perception that he supported Zaid Ibrahim during the latter's fight for the deputy presidency of PKR at the party's direction elections for party posts.
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Khalid fails to get debate going on Shah Alam hospital

Posted: 16 Dec 2010 01:56 AM PST

Khalid Samad (PAS-Shah Alam) fails again in his bid to get a response in Parliament from the Works Minister on the controversial Shah Alam hospital.
Views: 92
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KJ: It was a dark day for Parliament

Posted: 16 Dec 2010 01:24 AM PST

Khairy Jamaluddin (BN-Rembau) claims that the ruckus in Parliament represents a dark day in the august House and blames Anwar Ibrahim as the Opposition leader for causing it.
Views: 366
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Malaysian Opposition MPs Disgraceful Parliamentary Circus!

Posted: 16 Dec 2010 09:14 AM PST

Kuala Lumpur. Thursday 16th December 2010.

I had dreaded today's desecration of the Malaysian Parliament from taking place for quite some time now and my fears were realized without fail by the MP's from the Malaysian Opposition at the hallowed Dewan Rakyat!

This unprecedented disgraceful protest in the Malaysian Parliament has been a pre-planned publicity seeking stunt by all those who took part in this uncultured show of blatant vulgar display of crude mentality by those Pakatan Pembangkang MP's who truly do not merit and deserve being there in Parliament based on their apparent political immaturity!

Watch the clowns in action here and here.

I say pre-planned because the opposition MP's carried with them into the Dewan Rakyat preprinted placards and unfurled them in the Dewan Rakyat itself, an act that clearly goes against the rules and etiquettes of any Parliament in the world!

Here is the proof!

These bunch of protest oriented opposition so called MP's have tarnished the name and reputation of being 'Members of Parliament' in the history of this nation.

Ever since they won 5 states in the Malaysian Peninsular in the 12th GE and lost Perak on a crossover technicality, the Malaysian Opposition parties who have come together in an unholy pact have nurtured the culture of street protests and uncouth mannerisms in the State Assemblies and now desecrated the very halls of our nation's Parliament!

I have had this immense sense of disgust watching the antics of those who really do not merit the honor and respect that any Parliamentarian deserves over the last couple of years.

Today, they have turned our Parliament into a political circus! 

They have displayed their true colors of being an uncouth mob of attention seekers who have made a mockery of our nation's highest institution of power!

I have just written in my preceding article here about the need for the next GE's electoral candidates to possess a certain criteria of not only academic qualifications, sound judgement, high moral standings but also a well grounded sense of maturity and capable of tabling, discussing and debating of all relevant issues with the best of oratory skills and decent standards of expressing and sharing of one's thoughts and ideals in a manner worthy of being the respective parliamentary constituents representative in the highest institution of law and order of this nation. 

In short a sense of decorum worthy of holding one's position as a Member of Parliament.

I wonder how the Malaysians who voted for these uncouth fellows now feel having these political clowns misrepresenting them at our Parliament?

My words contained in the article here have today been proven to be correct by today's parliamentary fiasco perpetrated by those who all these while aspire to rule over this country and replace the current government.

Have I not proved my case?

These are the kind of people we have wanting to rule over us?

If things do not go their way, they will resort to all kinds of unparliamentary behavior, disregard the positions that they have sworn their oaths to observe all necessary decorum and conduct themselves in a manner that will not tarnish and bring disrepute to the very institution of our Malaysian Parliament!

Today, they have proven that they are unfit to be our future federal or even the state governments.

Today, they have destroyed whatever vestiges of honor and respect that was still remaining of their positions as members of the opposition in parliament.

Today, they have rendered meaningless the honorifics as 'Yang Berhormat' @ 'The Honorable' before their now soiled names.

How do we continue to accord respect and honor to those who have now dishonored our Malaysian Parliament?

How do we trust these political desperadoes who continue to soil and tarnish the once respected positions of being a Member of the Malaysian Parliament?

Hello??? Never before in the history of this nation, has members of the Opposition resorted to such unbecoming behaviors!!!

Look at the photos here and witness for yourselves the crude barbaric manner by which the Opposition MP's resort to vent their frustrations when 4 of their fellow MP's were suspended by the Speaker for violating certain guidelines and rules of the Malaysian Parliament!

This is the ringmaster of the most disgraceful day of our nation's Parliament. 

Ever since he was removed from power as Mahathir's Deputy, he has orchestrated an endless series of political unrests and turned the once hallowed halls of our Malaysian Parliament into the now desecrated halls of shame and infamy. 

Here is one of his up and coming star rabble-rouser in action outside of Parliament!

By now, this travesty of crude mis-behaviorism of the nation's opposition so called MP's must have reached the far corners of the whole watching world! 

You still want these political clowns to be the future rulers of this country?

God Forbid!

Instead of throwing tantrums and pulling circus like stunts like these, the Malaysian Opposition MP's ought to stand their grounds and debate their points and perspectives in the best forms of political arguments and not resort to unparliamentary language, crude mannerisms and posturing which do not reflect the high position as honorable members of parliament!

Any parliament for the matter!

It's ironic that the placard with the words 'Kangaroo' implying that the Malaysian Parliament is akin to the term ' Kangaroo Court' reflects their very own behaviors which betray their own uncouth misbehaviors!!!

Look at the 'Yang Berhormats' sitting like country bumpkins in suits brandishing placards and crude posters in quite unparliamentary actions!

Do they still merit such honorifics? 

I for one don't think so! No sirree!

For those who wish to hear what Nazri Aziz, the Minister in Charge of Parliament has to say in response to the ruckus created by the Opposition clowns, you can watch him speak his mind here and here.

* All of the above photo credits belong to Agenda Daily.

Wikileaks: Promoting Truth

Posted: 16 Dec 2010 08:01 AM PST

… by George Waters

George Waters is my guest-blogger for this post. He is an Associate Professor of Economics at one of the universities in Michigan, Ann Arbor. His research focuses on the global effects of the outsourced job market in the United States. When he is not teaching and writing, George also advocates for distance education through "Being a Professor, I have sought out ways to better connect with my students. This has led me to blogging. I focus a lot of my writing on world politics and economics."

"Wikileaks: Promoting Truth" by George Waters

The fire storm that Wikileaks has ignited on the airwaves of the mainstream media has been astonishing. Many countries, including Malaysia, have been involved in the embassy cables released by the whistle blower website. Many within the establishment, including various members of the mainstream media have slammed Wikileaks and its actions. Some television hosts have even gone so far as to say that Julian Assange should be executed for treason. It is obvious the talking heads on these shows are in the pocket of the establishment, as they call for the blood of truth-speakers, and demand even more cyber-security.

Wikileaks founder, Julian Assange

There are still those that understand that truth and honesty is the only true policy for a government that is not corrupt or deceitful. It is true that when the people of a country relinquish one small part of their human rights to a government, even in the name of security there is nothing but tyranny. This is because governments are run by men who cannot resist taking power over other people's lives. In the modern era, these power brokers are given what is essentially a right to secrecy. The media generally avoids the pertinent issues, while corrupt officials conspire against the people they supposedly serve. Wikileaks is a useful watchdog against such government corruption.

Malaysia has been mentioned in roughly 994 of the secret embassy cables released on the whistle blower web site. Over a quarter of a million cables are slated to be released in batches, one batch at a time. So far, two different cables have been released that originated from the Malaysian embassy, while a few other cables mention the country in passing. In one of the cables, Malaysia's officials express desire to temporarily suspend Fiji from the Commonwealth. This was in response to the 2006 coup in Fiji. New Zealand, another country within the Commonwealth, expressed desire to completely remove the Fiji from the Commonwealth.

In one quite controversial cable regarding Malaysia, two companies based in Malaysia were said to be front companies for Iranian-based interests. The two companies were said to be buying up nuclear and missile technology from all around the world. The Malaysian government vehemently denied any such accusations in the newspapers, however.

The accusations came from the State Department, and is the second time the country has been accused of harboring Iranian sympathizers. In the cable, the United States asked Beijing to assist them in investigating the Malaysian based companies. The names of the two companies accused of providing technology to Iran are Electronics Components Ltd and Skylife Worldwide Sdn Bhd., which is the company that the State Department claimed was a front company. Skylife Worldwide was accused by the State Department of purchasing gyroscope technology that is to be used in guidance systems of cruise missiles, ballistic missiles, and UAVs.

It seems our leaders seem to have missed some lessons in their education when it comes to governing. If they did not have the time to take lessons they could certainly enroll in one of the many online leadership-schools available on the web. Government officials are reacting to Wikileaks as if it were the scourge of the world, and perhaps it is the scourge of theirs, but to the rest of us Wikileaks is a promising weapon in the truth keeper's arsenal. Government corruption will certainly not cease because of the web site, but perhaps the general public will be given a better chance to expose and confront corruption. The result of Julian Assange's trial will be a telling example of the future to come for those who wish to speak the truth, as it appears that much of the globe may risk sinking into a police state, if it has not already.

Tagged: julian assange, promoting truth, wikileaks

Parlimen Hari Ini

Posted: 16 Dec 2010 07:42 AM PST

The Chicken Farm (I)

Posted: 16 Dec 2010 06:29 AM PST

Disclaimer: The following story is about a fictional chicken farm. Any similarities to the Sabah State Health Department (JKNS) are purely coincidental and unintentional and sincerely regrettable.

Once upon a time, there was a chicken farm that housed many chickens.

These chickens were housed in chicken coops made of wood with unfashionable zinc roofs.

Under these hot and clammy conditions they toiled and worked their days away, serving each other especially the ill and the sick.

One particular chicken coop was exceptionally outstanding, and mostly for very peculiar reasons.

Now this was a chicken coop that was separated from the others by a body of water.

As mentioned earlier, this chicken coop make headlines for the wrong reasons.

In fact, calling it a chicken coop would be a misnomer because there is no single chicken coop but multiple makeshift independent settlements of chickens running wild and on their own.

Over the years, the number of chickens in this 'coop' has risen to a staggering figure, to the extent that there was hardly any space left for new chickens to learn and practice the art of worm-hunting.

You see, while food was provided at a regular basis for the chickens, it was barely enough.

The younger, more energetic chickens required more food to sustain their growing bodies and families.

These young chickens were also more ambitious, unlike the older more nonchalant ones who have mostly settled in a comfort zone made up by a mundane daily routine.

Some of the younger chickens had greater foresight, knowing that in the long run the chicken coop and farm were not sustainable.

Armed with the right resources and empowered by nothing but inherent motivation, the younger chickens accumulated skills and knowledge, continuously improving themselves to face a possible future in the wilderness away from the false fa├žade of security within the confines of the chicken coop and farm.

More importantly they were willing to teach other younger chickens the skills that they have learnt so that they can create a community of skilled and capable chickens.

The end point for most of these young chickens is ultimately to leave the chicken coop before it collapses under its own weight.

However, their efforts and drive became the envy of some older chickens, particularly the old fags who have never left the chicken coops their whole damn lives.

These old fags would do all that they can to inhibit the younger chickens from leaving the chicken coop, scheming in malicious and mostly unimaginable ways to suppress the young ones while preserving their own vested interests.

You see, the young chickens are the ones keeping the chicken coop functional, tending to the sick and hungry while the old fags know nuts about catching worms or have mostly tried and failed at that.

One young chicken however, managed to escape the draconian rule of the old fags by consistently being two steps ahead of the old log woods.

The young chicken lives to tell its tale without fear or favor.

Haris Ibrahim on the MCLM

Posted: 16 Dec 2010 06:21 AM PST

Check the MCLM Website HERE

This posting includes an audio/video/photo media file: Download Now

Competent Malaysian Politicians

Posted: 16 Dec 2010 05:23 AM PST

The BN government recently discovered via WikiLeaks that they weren't held in high esteem by their southern neighbours as originally thought.

But Najib insists that Malaysian politicians are competent.

Methinks thou doth protest overmuch.

Now, I personally think Tony Pua, Nick Aziz, Hannah Yeoh, Fong Po Kuan and a few others aren't too bad.

But the phrase "Competent BN Politicians" would be an oxymoron.

Perhaps you might like a further glimpse of these politicians in all their glory:

Mohd Said & Bung Mokhtar - these two fleas had their day in parliament.

Shahidan Kassim - this genius thinks Facebook should be banned in the name of national security.

And then we could come to a conclusion.

MCLM First KL Public Forum

Posted: 16 Dec 2010 04:53 AM PST

If you still haven't a clue what MCLM stands for, it's Malaysian Civil Liberties Movement.

It has been registered in the UK since our national registry for societies has been pussy-footing (surprise, surprise) for way too long.

Date: 21st December, 2010
Time: 7.30pm
Venue: First Floor, KL Selangor Chinese Assembly Hall.

Speakers :
1. Haris Ibrahim
2. Malik Imtiaz Sarwar
3. Andrew Yong (Malaysian Overseas Votes)
4. The second independent candidate

Since they generally convene in London, you really do not want to miss this opportunity to get in touch.


Posted: 16 Dec 2010 03:43 AM PST

COMMENT In 2008, opposition figures pushed for an investigation into the procurement of 12 Eurocopter helicopters costing RM2.3 billion that they contend was conducted improperly. It is claimed that the Defence Ministry massively overpaid by more than RM1.4 billion when buying aircraft from Eurocopter for the Royal Malaysian Air Force.

helicopter military eurocopter cougor ec 725 troop transporterThe complaint claimed that Malaysia signed a letter of intent to acquire 12 Eurocopter EC725 Cougar helicopters for the sum of RM2.3 billion when Brazil paid only US$1.2 billion for 50 units of the same model.

The questions Malaysians want answered are: Is the Malaysia government buying the best aircraft in terms of value for money? Was there a feasibility study conducted to compare prices and functionality of these copters? In the first place, why was there an issue with the proposed purchase that necessitated the Public Accounts Committee to conduct an investigation?

The year before that in late 2007, the auditor-general had tabled a report in Parliament alleging that a contract to build naval vessels given to PSC-Naval Dockyard, a subsidiary of Penang Shipbuilding & Construction Sdn Bhd, owned by Amin Shah Omar Shah was in serious trouble.

The Malaysian company was contracted to deliver six patrol boats for the Malaysian Navy in 2004 and complete delivery by April 2008. Those were supposed to be the first of 27 offshore vessels ultimately to cost RM24 billion. The contract included the right to maintain and repair all of the country's naval craft. However, only two barely operational patrol boats had been delivered by mid-2006.

malaysia military navy teluk sepanggar naval base sabah 030908 02There were 298 recorded complaints about the two boats, which were also found to have hundreds of uncompleted items. The original RM5.35 billion contract ballooned to RM6.75 billion by January 2007.

The auditor-general attributed the failure to serious financial mismanagement and technical incompetence stemming from the fact that PSC had never built anything but trawlers or police boats before being given the contract by then defence minister Najib Razak. The report had found the value of the contract should only have been RM4.9 billion and that two vessels delivered to date were both found to be defective.

Sub-standard equipment issued

Another scandal concerned not only the amount of money wasted on defective equipment but the fact that the Army actually allowed these products to be issued to soldiers.

military malaysia army tentera 131106 troop patrolSome 5,000 defective ballistic helmets were issued to soldiers even though the Army was aware of the helmets' weaknesses - its testing team had conducted tests on them and concluded that these helmets did not meet the armed forces requirements.

Instead of holding the contractor, Seri Mukali Sdn Bhd responsible and demanding redress, the Army issued them to its combat units. This amounted to criminal negligence and a dereliction of duty on the part of those responsible for making the decision.

A case in 2004 had an international dimension. US authorities arrested and charged Pakistani national Jilani Humayun for his alleged role in shipping contraband military goods to Malaysia, from where they were re-exported to Iran.

He was also charged with conspiracy to commit money-laundering and mail fraud. The sensitive dual-use hardware, which was funneled through an as yet unnamed Malaysian company, included parts for F-5 and F-14 fighter jets and Chinook helicopters.

There were also question marks surrounding the 2004 proliferation case involving Scomi, a company owned by then prime minister Abdullah Ahmad Badawi's son Kamaluddin, which was allegedly involved in supplying dual-use technology to Libya's clandestine nuclear-weapons programme. Buhary Syed Abu Tahir, a Sri Lankan national with Malaysian permanent residency, sat with Kamaluddin on the board of Scomi-linked company, Kaspadu.

Documents obtained by the Associated Press reveal that Buhary was the chief financial officer of Pakistani nuclear scientist Abdul Qadeer Khan's underground nuclear-proliferation network. How he was able to forge such high-powered alliances with Malaysia's political elite is a question that remains unanswered.

Jets left to rot in the Californian desert

hawk 208 230605The choice of aircraft and other military equipment by the Malaysian Armed Forces has often baffled observers. The operational problems faced by the newly acquired Hawk fighters in 1996 – avionic components prone to breakdowns and spare parts slow in arriving – turned out to be because the Hawks used were new models!

The RMAF experienced a critical moment earlier in 1996 when almost all the Hawk advanced jet trainer squadrons were grounded because of components shortage. As a result of this problem, the RMAF was unable to meet its target of training sufficient numbers of pilots to fly the more sophisticated jet fighters like the MiG-29 Fulcrum and the F/A-18 Hornets.

The pilots need at least 1,000 flying hours on the Hawk or other fighter aircraft like the F-5E air defence jets before they can fly the Fulcrums or Hornets. By then, the maintenance cost of the aircrafts had gone up and the government had to foot the bill for the spare parts.

The case of the missing Skyhawks is even more remarkable. The Malaysian government had bought 88 Vietnam War-era A4 Skyhawks from the US for less than US$1 million (US$1=RM2.58) each in 1985. However, the cost of refurbishing the aircraft with new avionics, engines, and armaments ended up to be RM320 million.

Fifty-three of the aircrafts were taken out of the desert. Out of these, 40 were refurbished to be flown by the RMAF; 12 others were cannibalised for spare parts and one brought back for maintenance training. The balance (35 jets) was left in the California desert. They were never brought back but were placed under the management of a company in the US which paid the parking charges for years.

In November 1993, "the Defence Ministry invited local and international companies to bid for the airframes of 35 RMAF A4 Skyhawk fighter bombers mothballed in the United States." From 2000 to 2003, RMAF decided to take back the aircrafts in order to sell them off, but discovered that we no longer legally owned the aircraft.

Choppers falling out of the sky

Besides having to pay for the exorbitant military budget through the years, the human casualties and the loss of these very expensive aircraft is not acceptable.

Apart from the tragic loss of lives of our servicemen and women, one wonders if we have been short changed by the arms suppliers or if there has been compromises on the price, quality of the equipment or even if we have adequately trained personnel to fly these ultra-modern, high-tech jet fighters.

And of course, the quality of management and system of accountability have been called into question often enough in the armed forces.

From 1968 to 1997, the crashes of Sikorsky Nuri helicopters had claimed 73 lives in all.

nuri transport military helicopterDefence Minister Syed Hamid Albar, who was in the United States at the time, said there was no plan to retire the Nuris; instead, the remaining Sikorsky 61A-4 Nuris would be upgraded to extend their life span. They had been in service for 22 to 30 years up until 1997.

From 1970 to 1995, there were four De Havilland Caribou aircraft crashes killing at least 17 servicemen. Then there was the crash of the Super Puma helicopter in January 1994 in which four crew members lost their lives.

The Super Puma was on its way to fetch then deputy prime minister Anwar Ibrahim and his delegation in Kangar when it crashed. It was the 15th crash involving aircraft of the Royal Malaysian Air Force since 1990 – five involved the Pilatus PC-7 basic training aircraft; four were A-4PTM Skyhawk fighter bombers.

The other incidents included the Alouette III helicopter, the Cessna 402 aircraft, a Nuri helicopter and Hercules C-130 transport aircraft. It was remarked that we have lost more aircraft and pilots through accidents than through war combat.

Fifteen years later, the loss of two jet engines does not say much about the culture of maintenance or accountability at the RMAF. Nor does it say much about the role of the mainstream press in Malaysia in reporting and pursuing these vital questions involving the purchase and maintenance of Malaysia's military equipment.

The RMAF still had its Italian-made Agusta A-109C and Sikorsky AS61-N1 helicopters for VIP transport. But instead of tightening up and solving these shortcomings after each aircraft crash, it has only given the Defence Ministry an excuse to buy more and more expensive aircraft as replacements.

After the spate of crashes involving the rather expensive Hawks in 1996, a comment by the Air Force Chief Lt Jen Abdul Ghani Aziz was a giveaway – he grumbled aloud that simulator training was necessary to prevent accidents; it would help prepare pilots to cope with emergencies.

However, this suggestion was quickly shot down by then defence minister Syed Hamid, who said the government would not be buying simulators before acquiring new aircraft for the Air Force because the cost of this equipment was too high.

We thus have a Catch-22 situation of our armed forces wanting the latest expensive military toys but not being able to afford the necessary accessories which can help to prevent wastage and tragedies.

Spending not subject for discussion

There is no doubt that ever since the Malaysian peoples' 'political tsunami' of March 8, 2008, the BN government has been forced to be more circumspect about authorising any big defence procurements for fear of losing electoral support.

malaysia army 160806 battalionFor instance, the government was forced to stall the planned purchase of the Eurocopter EC 725 helicopters. Nevertheless, this has not stopped the same BN government from allocating a record RM23 billion, or 10 percent, of the total development allocation under the Tenth Malaysia Plan for defence and security.

It is clear that the government could get away with such huge defence budgets during the last few decades because of the erosion of these safeguards in our democratic system, viz. dominance of the executive over parliament; loss of public accountability; absence of Freedom of Information legislation; inadequate separation of powers between the executive and the judiciary; poor safeguards for civil rights.

The defence minister has recently reiterated that "security and defence matters are not subjects for discussion."

Nevertheless, it is important that while Pakatan Rakyat highlights the corruption involved in arms procurements by the BN, they also present their alternative defence policy to the rakyat at the next general elections.



The above is an excerpt from 'Questioning Arms Spending in Malaysia: From Altantuya to Zikorsky', a new book by KUA KIA SOONG. The author is a former MP, college principal and a human rights activist. 'Questioning Arms Spending in Malaysia' is available at all major bookstores.

Interesting Govt's Spending Part 2

Posted: 16 Dec 2010 03:35 AM PST

From Malaysiakini

Defence spending accelerated across the board after Prime Minister Najib Razak, called "the driving force" behind Malaysia's military modernisation programme by Foreign Policy in Focus, became defence chief in 2000 - his second tenure in the ministry.

azlanHis shopping list included battle tanks from Poland, Russian and British surface-to-air missiles and mobile military bridges, and Pakistani anti-tank missiles, F/A 18 jet fighters, submarines from France and Russian Sukhoi Su-30 fighter aircrafts.
The BN government has been far from transparent in its arms purchases. Instead of calling for competitive bidding on defence contracts, the government has insisted that its military procurement be conducted through private negotiations because of security considerations.

Very often, contracts are given to companies which have links to political leaders. Approving officers, for obvious reasons, then approve projects forwarded by relatives or friends of political leaders.

azlanOnce in a while, compromises in the Malaysian armed forces are revealed by retiring civil and armed service personnel. For example, on Aug 8, 1996, on the eve of his optional retirement from the Air Force, RMAF Chief Lt Jen Abdul Ghani Aziz took to task ex-RMAF officers-turned-defence-equipment-suppliers for selling unsuitable and obsolete equipment, and thus compromising the safety of their former colleagues.

The account of how DCNS International of France and the Spanish shipmaker won the contract to build two Scorpene-class submarines for the Malaysian Navy is an example of the non-transparent manner in which defence contracts are awarded and the importance of political connections in gaining these contracts.

The following are some of the sleaze involved in Malaysia's military procurement:

The 'arms for aid' scandal

The 'Arms for Trade' scandal involving the funding of the Pergau hydroelectric dam in Malaysia, revolved around the linking of arms sales (worth RM5 billion) to British overseas aid in the form of Aid-and-Trade Provision (ATP) funding.

The linkage came to light when a senior civil servant in the British Overseas Development Administration (ODA), Tim Lankester, objected to the funding of the un-economical and environmentally damaging dam in 1991 but his objections were over-ruled by the then foreign secretary, Douglas Hurd.

The investigations by the British press into the reasons for the UK government's proceeding with the funding of the dam project in Kelantan centred on the linkage of the two deals, which was against stated government policy.

The scandal highlighted the links between arms transfers and aid provision in the Conservative government's record. It was stated British government policy that there could be no such linkage. This government policy was based on the 1966 Overseas Aid Act.

NONEAllegations of corruption were levelled at the Malaysian government, specifically in theSunday Times.

It provoked a backlash by Mahathir Mohamad's government which announced a 'Buy British Last' policy in 1994.

Soon after, the editor of theSunday Times at the time, Andrew Neil lost his job as editor because of the political impact of the investigations of Pergau.

While the mainstream press in Malaysia published hardly anything on the 'Arms for Aid' scandal which had erupted in Britain in 1994, the British press had a field day which subsequently led to Mahathir's second trade boycott against Britain.

Grisly murder of Altantuya

It took the brutal murder of a Mongolian national, Altantuya Shaaribuu in 2006 to shock the nation and for questions surrounding the purchase of two Scorpene submarines to be asked in this country and in France. Altantuya, a Mongolian translator, was shot in the head on Oct 19, 2006, and then blown up with C4 explosives which are available only from Malaysia's military.

altantuya razak baginda mongolian murder case 030907According to testimony in the trial, Altantuya accompanied her then-lover Abdul Razak Baginda to Paris at a time when Malaysia's Defence Ministry was negotiating through a Kuala Lumpur-based company, Perimekar Sdn Bhd, to buy two Scorpene submarines and a used Agosta submarine produced by the French government under a French-Spanish joint venture, Armaris.

Perimekar at the time was owned by a company called Ombak Laut, which was wholly owned by Abdul Razak, who is a close associate of then defence minister Najib. The contract was not competitive.

The Malaysian Defence Ministry paid 1 billion euros (RM4.5 billion) to Amaris for the three submarines, for which Perimekar received a payment of 114 million euros (RM510 million). The total cost of the submarines purchase after including infrastructure, maintenance, weapons, etc, has since risen beyond RM7 billion.

Deputy Defence Minister Zainal Abdidin Zin told the Parliament that the money was paid to Perimekar for "coordination and support services" although the fee amounted to a whopping 11 percent of the sales price for the submarines.

Altantuya, by her own admission in the last letter she wrote before her murder, said she had been blackmailing Abdul Razak, pressuring him for US$500,000. She did not say how she was blackmailing him, leaving open lots of questions.

While two former bodyguards of the then deputy prime minister and defence minister were subsequently found guilty of her grisly murder, it raised suspicion of an official cover-up since their motives were never divulged to the public nor probed in court.

military malaysia navy french built submarine scorpene classAltantuya had had a relationship with Abdul Razak Baginda, a defence analyst from the Malaysian Strategic Research Centre think-tank, which has close ties to Najib. She had worked as Abdul Razak's translator on a deal to purchase Scorpene submarines from France.

In October 2006, the French newspaper Liberation claimed that Altantuya was informed that the commission paid by Armaris, the French-Spanish consortium involved in Malaysia's acquisition of the submarines of one billion euros (RM4.7 billion), had been deposited in a bank account in Malaysia.

The commission of 114 million euros was allegedly paid into the account of Perimekar, a company that Razak Baginda controlled and Altantuya had flown to Kuala Lumpur with her cousin to demand her share of the commission, which was to have been US$500,000.

Altantuya was reported missing on Oct 19, 2006 by her cousin who lodged a police report and sought help from the Mongolian embassy in Bangkok. She was later discovered murdered and her remains were found in a forested area in Shah Alam.

Two jet engines stolen

Experts say that Malaysia's Air Force suffers from too many aircraft types and aircrafts that fail to keep up with recent purchases by its neighbours. The recent case of the missing jet engines was by no means exceptional when seen in the light of these scandals.

Two F-5E fighter aircraft engines costing RM50 million from the Royal Malaysian Air Force went missing in May 2008 and a police report was lodged in August that year. It was only towards the end of 2009 that the theft of two jet engines was reported in the media.

The possible reason the government did not disclose the loss in 2007 was because the general elections was nearing. Had they done so, the opposition would have had a gala time ridiculing the government.

According to Najib, there was no cover-up on the theft of the jet engines. The jet engines went missing when he was the defence minister in Abdullah Ahmad Badawi's cabinet. It was reported that a brigadier-general and 40 other armed forces personnel had been sacked over the incident.

They were not charged. There was no court martial. It appears the general and several others lost their pension but upon appeal they got it back.

NONEThe thefts and subsequent sale of the parts would have affected national security and also have international implications. The United States, which sold the hardware to the RMAF, would surely want to know who the buyers were. Indeed, there is a good possibility that investigations will go international.

N Tharmendran (photo), one of the accused, has since emerged to accuse the RMAF of torture and persecution.

questioning arms spending malaysiaThe above is an excerpt from 'Questioning Arms Spending in Malaysia: From Altantuya to Zikorsky', a new book by KUA KIA SOONG. The author is a former MP, college principal and a human rights activist. 'Questioning Arms Spending in Malaysia' is available at all major bookstores.

NEM Fails To Excite Global Investors - By Yow Hong Chieh.

Posted: 16 Dec 2010 03:27 AM PST

The Najib administration's New Economic Model (NEM) has failed to excite investors, with Bank of America Merrill Lynch maintaining this week its call to shed investments in Malaysia.

Despite the government's high hopes on the NEM, the investment bank this month continued to rate Malaysia as a "big underweight" in emerging markets.

An underweight call is a recommendation to investors to reduce their investments in a particular security, asset class or, in this case, a country.

Malaysia managed to trim its underweight rating from over 50 per cent in November to 46 per cent this month but still only managed to come in second-last among the 15 countries studied by the investment bank.

This is despite the fact that emerging markets continue to be the equity region of choice for investors worldwide, with investments persisting at historically high levels.

Investors have so far greeted Prime Minister Datuk Seri Najib Razak's highly anticipated NEM with disinterest, owing to lack of detailed policies, timelines and the apparent rollback of ambitious Bumiputera quota reforms detailed in the first half of the year.

The bold recommendations set out in the first part of the NEM to boost competitiveness by reducing quotas appear to have been sidelined in the second part launched recently.

Observers attribute this to stiff resistance from Malay rights groups concerned that such moves will erode the community's interests.

Economists and political analysts have also criticised the NEM for its lack of innovative thinking and timidness, which they said does little to dispel lingering investor skepticism.

Malaysia also remains unattractive to Asia Pacific investors, with Merrill Lynch increasing its underweight rating four-fold for the country from November.

Topping the Asia Pacific list were strongly overweight Taiwan, Hong Kong, South Korea and China, with Singapore coming in fifth despite its downgrade to neutral.

Making up the rest of the underweight club were Southeast Asian nations Thailand, the Philippines and Indonesia, along with New Zealand, Australia and India.

Nonetheless, Malaysia looks set to end the year as the fourth fastest growing emerging market after China, India and Turkey, and is expected to remain number four in 2011.

Developed markets, which bore the brunt of the financial crisis, will continue to contract, with the possible exception of sluggish growth in Europe. Emerging markets, on the other hand, face the risk of overheating next year and increased likelihood of "policy mistakes" in the form of insufficient or excessive money tightening.

Merrill Lynch expects the ringgit's outperformance this year to fade due to a likely 50 basis point interest rate hike over the next 12 months by Bank Negara Malaysia, in response to increasing private investment in the economy.

Slow implementation of the Economic Transformation Programme (ETP) due to political resistance and the low priority of fiscal consolidation were cited as possible risk factors to the national currency.

Also of concern were "some small risk" that Umno may lose more seats in the next general election — expected to take place next year — as well as higher inflation due to rising food and fuel prices.

The government embarked on a second wave of subsidy cuts earlier this month, which saw RON95, diesel and LPG prices go up by five sen per unit and sugar price increase by 20 sen per kg.

The price hikes are expected to put upward pressure on inflation, which Merrill Lynch predicts will rise from 1.8 per cent this year to 2.8 per cent next year, before dropping slightly to 2.5 per cent in 2012.

Malaysia's real GDP growth is also expected to drop to 5.2 per cent in 2011 and 5.4 per cent in 2012 from the expected 7.2 per cent expansion this year, putting at risk the 6 per cent annual growth needed to propel the nation to high-income status by 2020.

Courtesy of The Malaysian Insider

MCLM/3rd Force Should Join Pakatan Rakyat

Posted: 16 Dec 2010 03:26 AM PST

I was on the phone with a friend of mine today. One of the topics we discussed is the issue of RPK/Haris Ibrahim/Third Force/MCLM. My friend (Mr. IS) mentions MCLM should join Pakatan Rakyat or aligned with Pakatan Rakyat. They need to prove that they are not a BN stooge first and foremost before anyone can give them any trust and crredibiltiy.

Apparently, Mr.IS contact in the Selangor governnment says the Selangor and Malaysian NGO's are not too keen in expressing their support to MLCM that is being sponsored by Raja Petra and Haris Ibrahim.

Apparently, Pakatan Rakyat's move to appoint NGO reps in local councils paid off big time this time around. Majority of the NGO has first hand view on the difficulties in implementing reform to an enviroment of public servant that has operated under UMNO's culture for the last 50 years. What is ideal and what is real can sometimes be contradictory. So, we have to compromise somewhere.

People like HAris and Raja Petra are people on the outside. To them, the temporary compromise being made by PKR is viewed by them as a sign of tolerance to corruption. Raja Petra and Harris, for one, has never tried to implement reform in the real world. They just sit on the sideline and comment. Therefore, perspectives can be different between "players" and "punters".

Pakatan choose to implement reforms in stages. And thus far the Pakatan administration is heads and shoulders above the previous UMNO administration. So, the people is still benefiting from the Pakatan Rakyat government as compared to before.

The best course of action for MLCM is for them to work with Pakatan Rakyat and not become a rival to Pakatan Rakyat.

Tulang Besi

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