Will the 1MDB controversy drive a wedge into Umno?

Quite apart from the Pakatan and other non-BN voices sniping at the 1MDB issue, we had Mahathir firing an early salvo in his blog.

Then out of the blue, the Batu Kawan Umno deputy chief, Khairuddin Abu Hassan, reported to be a Mahathir supporter, surfaced to lodge a police report on this issue. Khairuddin insists he is acting alone.

Further pressure was heaped on 1MDB, and by extension, Najib, when Kadir Jasin revealed in his blog:

The police report (by Khairuddin) is the culmination of weeks of controversies surrounding the so-called sovereign fund.

On Dec 4, the company’s top-level delegation led by its Chairman, (Tan Sri) Lodin Wok Kamaruddin was said to have been grilled by (Tun) Dr Mahathir Mohamad. Others in the delegation were board member (Tan Sri) Ismee Ismail and Chief Operating Officer, Mohd Hazem Abdul Rahman. Ismee is also Executive Director and CEO of Tabung Haji.

Just over a week later, on Dec 10, the cabinet in its weekly meeting chaired by Deputy Prime Minister, (Tan Sri) Muhyiddin Mohd Yassin, also discuss the 1MDB issue. Mohd Najib was away on official visit to South Korea.

Sources said Dr Mahathir grilled the 1MDB team on the company’s modus operandi. He is said to be curious about the way the company funds its businesses, bearing in mind that it has a paid-up capital of only US$1 million (about RM3.4 million).

The first question is, who is Mahathir to grill the 1MDB top brass? What locus standi does he have? Shouldn’t that job be done by the auditor general or MACC, since it involves public funds?

Kadir Jasin also claims that sources told him that the 1MDB team also held a separate meeting was held with Bank Negara governor Zeti Aktar Aziz – though the central bank’s strategic communications department denies any knowledge of it.

Kadir adds:

The sources said 1MBD had requested Bank Negara to extend it non-performing loan (NPL) period from three to six months and was agreed to.

It is understandable. No matter how unhappy Zeti might have been with 1MDB borrowing, an extension is needed. If it was not given, there would have been a massive default and Tier 1 banks that extended the loans would have to make huge provisions. This could lead to the downgrading of the local banking system.

1MDB’s ability to keep to the extended period, according to one source, depends largely on whether it will or can bring home the RM7 billion it parked in the Cayman Islands before the last GE.

The New Straits Times today reported that 1MDB has postponed the sale of up to RM8.4 billion sukuk (Islamic) bonds to next year. It said the delay came as the company is seeking an extension of two months on the construction of the US$3.2 billion (RM11.2 billion) power plant it won with partner, Mitsui & Co. earlier in the year.

Sources said some very harsh words and frightening warnings like “somebody is going to jail” were uttered at the meetings. One source said at the meeting with Bank Negara, Lodin had offered to resign immediately. But that is not the concern of Bank Negara. Lodin was appointed by the PM. If it is true that he offered to resign, he should tell that to Mohd Najib.

By now, we can surmise that leading figures in the establishment are getting edgy and nervous about what’s going on in 1MDB, raising questions of Najib’s handling of the whole affair.

It is also clear that if Mahathir is lurking in the shadows, Najib should start getting a bit concerned. Perhaps he should seek the counsel of a certain Badawi to find out how it will all pan out.

This whol affair should be seen in the context of a weakening ringgit, a falling Bursa, public concern about the rise in the cost of living, the vocal voices on the right wing fringe and the sedition crackdown.

Umno, Mahathir and Najib have enough reason to be concerned for their own vested interests.

Thanks to blog reader ratna for the video link.