(We are rerunning this article from Oct. 13, 2010 as a companion piece to Murray Hunter’s adjoining article to give specifics of exactly how rent-seeking and institutional corruption eventually enveloped the economy.)
In the 1980s and 1990s, Halim Saad and Tajudin Ramli were two of Malaysia’s brightest stars, picked by former Prime Minister Mahathir Mohamad to lead the country’s ethnic Malays onto the national stage as exemplars of a new Bumiputera business culture that would catch up with the ethnic Chinese who had dominated commerce as long as Malaysia had been in existence.
When Mahathir took office, insiders say, his plan was to create a cadre of 100 super-rich bumis who in turn would help rural Malays into prosperity under a konsep payung, or umbrella concept routed through the United Malays National Organization, much the way he envisioned driving the country into industrialization through massive projects.
But greed intervened. Once the privileged got rich, there was little incentive to share it with the kampungs, the Malay rural villages. Many of the companies eventually collapsed and are being supported by government institutions such as Kazanah Nasional, the country’s sovereign investment fund, or the Employee Provident Fund.
Rise of the Umnoputeras
Although the Umno connection was widely assumed during Mahathir’s 22 year reign as prime minister, today a flock of explosive court documents filed in different Kuala Lumpur courts appear to be breaking open conclusively the open secret that Tajudin and Halim and others were essentially front men for Umno, the country’s biggest ethnic political party and part of a class of rentier businessmen who became known as Umnoputeras, a play on the word Bumiputera, or native Malaysians, predominantly ethnic Malays.
Nor were they alone. Others included Syed Mokhtar Al Bukhary, one of Malaysia’s richest men, as well as Yahaya Ahmad, who headed Mahathir’s national car project and who tragically was killed with his wife in a helicopter crash, and Samsuddin Abu Hassan, introduced by Mahathir to the government of Nelson Mandela but who had to flee South Africa after being accused of misappropriating millions and evading South African debts totaling about R50 million (US$7.233 million at current exchange rates). Samsuddin left behind his glamorous wife, Melleney Venessa Samsudin, along with a failed Durban bank, and returned to Malaysia.
Samsudin ultimately ended up on the board of directors of Mitrajaya Holdings Bhd., another Umno-linked company that has played a significant role in major national projects including the Kuala Lumpur International Airport, KL’s Light Rail Transit System, the CyberJaya Flagship Zone and numerous other projects.
23 companies vehicles for Umno
At least 23 of Malaysia’s biggest companies (see list below) appear to have been vehicles for Umno to siphon off vast amounts of money in government contracts as Mahathir’s plans went awry. The companies and the people who run them are so hard-wired into Umno, the government and its investment arms that de-linking them would probably destroy the party. That in effect makes a mockery of Prime Minister Najib Tun Razak’s widely publicized speech in July in which he promised to root corruption out of his party.
Much of the ownership appears to have been channeled through a mysterious company, Realmild, that emerged in 1993 to stage an RM800 million management buyout of a major chunk of Malaysia’s media including the New Straits Times Press (M) Bhd and TV3. Realmild already owned a controlling interest in Malaysian Resources Corporation Bhd, which got the contract to develop the massive Kuala Lumpur Sentral transport hub. It also acquired ownership of the Labuan and Sabah Shipyards, which supply the Malaysian Navy, as well as Redicare and Medivest, which were awarded lucrative contracts to supply medical supplies to government hospitals.
Thieves fall out, details emerge in court
In September, Syed Anwar Jamalullail, the brother to the Sultan of Perlis, and others testified in a tangled court battle in a Kuala Lumpur High Court that Daim Zainuddin, the prime minister’s close associate, often told Malay businessmen to act as nominees in the management of Malaysia’s top companies. The long-running suit was launched five years ago in2005 by Khalid Ahmad, a former Realmild director, who alleged he had been cheated out of a RM10 million payment for five percent of Realmild’s shares by Abdul Rahman, thought to be the beneficial owner.
According to the testimony, Abdul Rahman paid out the RM10 million but later reneged after he learned from Mahathir that the shares actually belonged to Umno. The trustees for Realmild in fact were Mahathir himself as well as former Berita Harian Group Editor Ahmad Nazri Abdullah, New Straits Times Group Editor Abdul Kadir Jasin and Mohd Noor Mutalib. Another witness, Ahmad Nazri, said in a deposition that he held the majority share of 80 percent in Realmild, although 70 percent of the shares were actually in trust for Mahathir.
The companies others ran included Faber Group Bhd, a member of the UEM Group, now involved in integrated facilities management and property solutions sectors; KUB Malaysia Bhd. A holding company dealing in information, communications & technology, property, engineering & construction and food related industries.