Trengganu MB crisis: Follow the money trail


I spent a couple of years in Trengganu when I was a kid. I have fond memories of a tranquil and rustic state, wonderful childhood neighbours – whom I have recently been reacquainted with after all these years – and family picnics at Pantai Chendering.

So the high stakes battle in Trengganu over the choice of Mentri Besar is of special interest to me.

While much has been said about the constitutional position, there is more to it than just the letter and spirit of the law.

There is more to it than that – and it is essential that we consider this dimension in any discussion of the political situation in Trengganu.

Follow the money trail.

One of the key issues, I believe, is how the Petronas oil royalties due to the state amounting to some RM1 billion annually should be spent – for the benefit of the people or for vested interests. Despite its oil wealth, Trengganu is one of the poorest states in the federation.

The royalty payments are no small change. In the past, the money was paid directly to the state government and dispensed under its supervision.

But when Trengganu fell to opposition hands (Pas) in 1999, then prime minister Mahathir changed the rules. He couldn’t bear to see all that money going to an opposition-controlled state government.

Instead of the Petronas royalties (amounting to 5 per cent of oil extraction and sales) going directly to the Trengganu state government, they were now channelled to a federally administered Special Fund Financing Programme (the Fund), which was established in December 2000. The money in this new Fund was euphemistically renamed “goodwill money” (wang ihsan) and it was supposed to directly finance development programmes for the people of Terengganu, largely bypassing the state government.

Since then, there has been little accountability over how this money has been spent and whether the projects really benefit the ordinary people.

The missing Accounts Committee

Basically, the Treasury is supposed to make allocations out of the Fund to various ministries (and via these ministries to federal agencies), financial institutions, and federal and state-level offices.

According to the Auditor General’s Report 2005, in line with a directive, the Treasury was supposed to create an Accounts Committee, chaired by the Treasury’s Chief Secretary, to administer the Fund. The Committee was supposed to comprise representatives from the Prime Minister’s Department (including the Economic Planning Unit), the Treasury, and the Finance Ministry.

But the Auditor General (AG) said then that such a Committee had not been set up – surely this must be of serious concern.

Instead, a “Central-level Committee”, which appears less high-powered, was formed. This Committee, which includes representatives from ministries and implementation agencies, meets twice a year to discuss and approve allocations. It is not clear who exactly is in this Committee. PM Abdullah must reveal the composition of this committee.

This Central-level Committee is supposed to evaluate projects and recommend to the Cabinet financial allocations for the various states. But the AG said he found that allocations for the various states were not decided during the Committee’s meetings. Instead, the “allocations were based on the approval of the Finance Minister and they were forwarded straight to the relevant state Menteris Besar”. The Finance Minister is of course the Prime Minister.

Would that explain why Abdullah Badawi is so keen on retaining Idris as MB?

In an article for Aliran Monthly, ‘Buying goodwill – RM4 billion worth of it’, I wrote back then that although the AG had said that the people had benefited from the Fund, his finding was not backed up by empirical evidence. He conceded that, at the state level, “expenditure that should not have been financed from the Special Fund allocation had occurred and this had more or less jeopardised the objective of the programme”.

He also found that not all ministries, departments and agencies had submitted their quarterly expenditure statements as required (though he said their monitoring work was adequate). This meant the Treasury’s records related to the Fund were incomplete. More seriously, there was no evidence to show that the Treasury had taken follow-up action. He also stressed that all allocations should be approved by the Central-level Committee.

Reading between the lines, it seemed to me, that there was a lot of arbitrary discretion being exercised as to how the fund was being administered – most likely to serve the interests of the ruling party while benefiting certain vested interests.

The best solution is to return the royalties to the state governments. High-powered independent audit committees with opposition representation, reporting to the respective state assemblies, should be set up to ensure that such funds are used on projects that really empower the rural poor. This will dispel the perception that this ‘goodwill money’ is being used as a patronage tool to boost political ‘goodwill’ for the Barisan Nasional while also benefiting vested interests.

I would hazard a guess that the Agong, who is the Sultan of Trengganu, knows what is going on and is deeply concerned.

Here’s one intriguing question: If a new MB who is not the PM’s choice is sworn in, would the files of yet another state government disappear?

Right now, it’s a battle of wills.

Even though Abdullah’s choice of MB (supposedly) has the backing of all the BN assembly members, would the weakened PM ram him through and risk having to face another state election in Trengganu? This time, Pas and PKR, fresh from their successes on the west coast, could well pose a stronger challenge.

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24 Mar 2008 7.22pm

Spot on! Nothing escapes a good auditor’s nose. Your audit training in London is paying handsome dividends.

Patricia John
24 Mar 2008 8.03pm

Hi Anil! I have been a regular visitor to your page for the past year. Thank you for your insightful pieces. I have stopped reading the msm – so I look forward to your take on the latest news. Thanks again. Pat

raj raman
raj raman
24 Mar 2008 9.04pm

you are such good accountant deserve to be in the opposition accounts commitee with highly paid salaries to save the billions our bn/umno (have wasted in) our nation.{personally i dont mind to pay you 10% of the billions to save the balance pocketed)i know to make some money but i dont know how to multiply the money.its so easy mr.anil.where else the billions goes.???.into (the) pocket (of well-connected parties)… thanks.raj raman.race.dreaming to be malaysia putra.religion;my own problem to anwser to god when the times come by.

24 Mar 2008 9.50pm

All boils down to money. Not only in malaysia, but in all countries, from time immemorial greed has always been the driving force in all dealings especially in politics. And to make it worse they dare to use God(religion) as a main reason to justify whatever their dealings to steal not millions but billions of dollars from their people, the common man. How much does a man need? Have you not enough with your millions? Pity the common man, the down trodden suffering, the hurt of the wretched, the desperation of the poor, my friend, lest you incur the WRATH… Read more »

24 Mar 2008 10.01pm

Money talks Devising front committee Just a show for ulterior motive No proper accounting tabled It is just between the Central Government and its agent Dispensing funds to cronies what else? Imagine the value of $1billion a year Charging into the state of Terengganu Along the way it should help the needy Yet it is hijacked for some other purposes The Auditor General Report When he makes his assessment Nothing is done to rectify the flaws Officers talk turning one eye again He can’t beat the system AG got fed up He can’t prosecute He has no such authority So… Read more »

24 Mar 2008 10.09pm

very good info here, anil. i didn’t know about this petronas fund and so on as you wrote here. this is too good not to be share, thus i will CnP this post of yours on my blog. thanks!

24 Mar 2008 11.52pm

My brothers and sisters, The time has come for us to show the UMNOputras another lesson. The first lesson that we taught them during the PRU12 did not seem to penetrate through their thick skulls. Therefore, let us hurt them where they are most vulnerable: money. Since the UMNO a** l***ers love to boycott and “show solidarity”, let us give them a taste of their medicine by boycotting all UMNO and crony owned businesses. Let us drive a stake through …. and hopefully come PRU13 they will cease to be relevant. I am now compiling a list of companies owned… Read more »

artic turban
artic turban
25 Mar 2008 4.57am

With the increase in global oil prices can you imagine how much has been pocketed, and these people talk as though they are our messiah to lead us in the proper direction, well folks these people will lead us into hell if this goes on, let the new MB come clean and open up all these wang ehsan files and let the rakyat know, don’t forget the sultan holds the trump card, he can cause the downfall of THE PM by just requesting on open inquiry with independant auditors, another thing the mb might face legal problems, the agung just… Read more »

Cucu Terengganu
Cucu Terengganu
25 Mar 2008 7.26pm

The secret deal has been there all the time. It was practiced during Tun M’s time. The deal escalated during ABB’s time. His cronies….and others have allegedly been plundering the Petronas money… It was also (alleged) that part of the money was siphoned out via organization of Monsoon cup – millions of it each year, since ABB became PM. The wang ihsan was just a “goodwill” cover-up. Our Agong, who is also Sultan of Terengganu, knew about this sometimes back….It is also no secret that the oil is going to run out – estimated 4 – 5 years time. Unless… Read more »

9 Apr 2008 11.28am

We know why our Agong is so piss off with the under-developed state of Trengganu despite with the abundant royalty money which gone missing and the people reamain as the secong poorest state in Malaysia after Sabah. Why there is a need to show off the magnificient crystal and glass mosques along the Trengganu River and spending RM300 million to host and Monsoon Cup which clearly do not benefit the proor in the state except some’cronies’ benefited from such project. Wake up Badawi, you are still lucky to bave Trengganu under your rule now but you may not be lucky… Read more »

25 Mar 2008 7.50pm

Daulat Tuanku,

Trengganu memerlukan Pilihanraya baru. Ketegasan Tuanku kami junjung tinggi.

Mr Smith
Mr Smith
25 Mar 2008 9.24am

I remember the then PAS government filed a civil suit on its right to the 5% royalty. I am not sure what has come out of it. If the suit was withdrawn by the UMNO government, then we need to know why it was done. This whole mess was created by Mahathir who wanted to punish PAS for winning the 1999 elections. This old man messed up all the systems of governance. One billion ringgit (each year) belong to the rakyat has gone into the pockets of a selected few. (These leaders) are not defending the constitution now. They are… Read more »

25 Mar 2008 9.16am

Marcos fell because it was all for me and none for you. In Malaysia, it’s some for you and alot for me. Let’s show them that’s not good enough either.

raj raman
raj raman
25 Mar 2008 8.30am

thanks for amending my so so english anil.alot of thing i wants to comment but my english writing skill is very poor.local school of malay medium and a kampung boy.thanks,raj raman

25 Mar 2008 8.01am

an excellent down to earth investigative reporting , quite unlike many bombastic rants and raves do nothing thereafter egoistic SOPO blogs mushrooming all over now

25 Mar 2008 3.35pm

Anil, you should be on TV.

25 Mar 2008 10.32am

Could someone please reword the nusery rhyme This old man and give us a laugh? Thanks in advance.

eric karasu
eric karasu
25 Mar 2008 9.47pm

first of all keep up the great work, i wish many more people get an oppoturnity to know this sort of info to be aware of what is happening.May the truth be exposed.

25 Mar 2008 9.09pm

Anil – this is very scary man. Pity the peasants in Terengganu – being sold out alive. Hopefully Ahmad Said will have the heart, courage and guts to stop all these cheatings.

chan h a
chan h a
25 Mar 2008 10.36pm

anil, you’re good.

Abang Pun Macamni
Abang Pun Macamni
25 Mar 2008 10.21pm

If you were the chairman of Tgganu Rakyat Corp, and you happened to have employed a Manager who flushed out RM1 million from the Corp into some overseas accounts every year, what would you do to the Manager ?

Someone says he would protect the Manager and allow this to carry on, and get kickbacks from the Manager. Was this what happened under the books?

We should ask all the shareholders of this Corp for their opinions.

26 Mar 2008 1.06pm

Hi Anil, a job well done. Over the last few weeks since this 2008 election I have been reading a lot of new interesting articles about our poluted Ministeries and their croonies. I feel it is time we started penning these polutions into a booklet form and getting it published and distributed to the rakyat of Malaysia. I am sure there are many out there who actually does not really know the true colours of these rascals. If you need support for any collection on expenses, let me know, we can start the ball rolling. You deserve to be the… Read more »

26 Mar 2008 4.26pm

It is purely money politics and the Sultan of Trengganu has diligently exercised his discretionary powers to stop BN from further eroding the rakyat’s heritage and to ensure the ideal candidate will take precedence in upholding the rakyat’s confidence. After all, we (suspect) that the election results were rigged in favor of BN.

Hopefully the new MB would expose the proxy former MB’s misdeeds. We had enough of the abuse of the BN who are too arrogant to recognize their failures.

26 Mar 2008 7.11pm

Don’t such men fear retribution at all?!!

Stealing right under our noses, can the newly-elected DAP-PKR-PAS MPs doing something to stop this blatant, daylight robbery!

The sultan’s firm stance, in this case, should be applauded! All Malaysians should throw their support behind the sultan. The thieves must be stopped!

Kenny Tan
Kenny Tan
26 Mar 2008 8.32pm

This news is a real shocker to me since i known of the (wang ihsan) is to be replacing the royalty payment during the old man era. About the unaccountability if this monies until todate is indeed an eye-opener for the rakyat. I think this article on this issues should be publicly publish for the knowledge of the people of Terengganu and whole Malaysia.

Lets gather the rakyat to form a peace demonstration demanding the accounts to such account to be made public and see who are the real culprits.

I will support such action.

Go Anil Go.