Trapping Suaram (Suara Rakyat Malaysia)
for whatever reasons is alike plodding on a dangerous path for UMNO and
this will further dip Barisan’s hopes in the next general election.
Suaram is a body that is apolitical and operates on the basis of social
justice for all Malaysians. Founded in 1989 the aims and objectives are
for the protection and promotion of human rights and the development of
public awareness in Malaysia.
As reported, UMNO leaders have insinuated that the American
non-governmental organisation (Open Society Institute presently called
Open Society Foundation) that funded Suara Rakyat Malaysia (Suaram) is
linked to currency speculator George Soros.
To promote democratic government
It was alleged that Open Society Institute (OSI) channelled funds in excess of US$ 180,000 (RM558, 556.92) to Suaram the period 2007 to 2010.
By virtue of this – the Soros factor – UMNO is beating the political
drum to dupe the rakyat that it is “immoral” for Suaram to accept money
from the organisation.
Suaram cannot be blamed even if it has received the funding. The network
of Open Society Foundations or OSF (named Open Society Institute or OSI
until 2011), is a grant making operation started by George Soros, aimed
to shape public policy to promote democratic governance, human rights,
and economic, legal, and social reform.
OSF works to build alliances across borders and continents on issues
such as combating corruption and rights abuses. This is far from any
anti-money laundering or pro-terrorism activity that can be classified
under the Anti-Terrorism Financing Act 2001.
Suaram has no record whatsoever of being a body that promotes terrorism.
Neither is Suaram in cahoots with Soros to damage the country. Yet, to
some UMNO leaders Soros was alleged to have “damaged” the country’s
economy in the past.
Soros was never the “devil”
For political reasons, the chorus calling for the demonising of Suaram
has included many other pro-UMNO NGOs and also the former prime
minister, Mahathir Muhammad. They feel that it’s wrong to accept aid
from any organisations that are connected to Soros.
Little do these armchair politicians or proponents of virtues realise
that Soros was never the “devil” that caused the 1997/98 Asian Financial Crisis that involved Malaysia. As for Malaysia the real “devil” could have been leaders from among UMNO’s rank and cronies.
Soros was politically perceived by Mahathir as the perpetrator of the 1997/98 Asian financial crisis. Soros was the individual who sabotaged the country’s economy, so was the allegation by UMNO leaders echoing what Mahathir had said about Soros during the financial crisis.
Both Soros and Mahathir were actually into currency speculation but the
former was too nifty for the latter. In fact, currency speculation was
nothing new during Mahathir’s tenure as prime minister.
The Malaysian economy was actually incapacitated a few times by local
currency speculators more than what Soros had done in Asia.
It was bad governance; an economic bubble and the involvement of local
currency speculators who made Malaysian economy vulnerable and the
country lose billions when Bank Negara started the FOREX business well before 1997.
Soros is a businessman
Soros is a businessman who knows about the economy and of course the prime interest of any businessman is to make money. Mahathir was a politician who knew little about the economy but tried hard to become one.
But being economically handicapped at the time he had to depend on some
of his trusted “expertise”. When politicians and their inept cronies get
into business, more often than not they damage the economy.
It was alleged that more than US$6 billion was lost in the FOREX market
during Mahathir’s tenure as premier. Malaysia's foreign reserve was
gambled away in 1992-1993. In fact it was alleged that Bank Negara,
during Mahathir’s time, was involved in global speculative activities
tacitly as early as in the 1980s.
Mahathir’s penchant for mega projects
Mahathir’s penchant for mega economics projects did not work either. It
only exacerbated the situation when investors had low confidence of the
nation’s economy. Investors trickled in only for quick gains.
More than RM6 billion was unnecessarily spent to build Telecoms tower in
Kuala Lumpur and the high rise PETRONAS buildings that did not benefit
the country much. The multi-billion ringgit national car project went awry and the buying of the RM300 million Lotus racing car plant did not bring much benefit to the national car industry.
The billions spent on the MSC (multimedia super corridor) venture was
more hype than accomplishment. The abandoned Bakun project in Sarawak
brought colossal loss to the economy.
The bailing out of failed companies and Bank Bumiputera perpetually
dented the nation’s coffer at the time. Billions of Employee's Provident
Fund and PETRONAS dollars were
used to bail out projects given out to cronies at inflated prices
without tenders and all this incurred a big financial loss to the
country.
Non-performing loans
More than a billion was lost for the “purchase” of the Skyhawks from the
US that was not delivered to the country. RM6 billion was lost in
Perwaja Steel Mill. More than RM3 billion was burnt in the BMF scandals.
Cronies were allowed to borrow millions from local banks without collaterals that ended up becoming non-performing loans.
More than RM3 billion was lost from the London Tin scandal
when the US released their Tin Stockpile. From 1992-93 the country
experienced more than US$6 billion FOREX lost by Bank Negara. The list
goes on.
As usual, the economic buffer was the hard-earned PETRONAS dollars – without which the country would have gone bankrupt.
Both shared a common desire
Just before the financial crisis economists warned Mahathir that if
Malaysia did not manage its economy and finance right, it would suffer
the same fate as countries that had observed their currencies tumbling.
In 1992 the battleground between Mahathir and Soros was the London foreign exchange market. Britain’s FOREX market was the focus of many speculators who wanted to profit from the market instability at the time.
Both expected that they were going to make money from the British.
Mahathir expecting the pounds to appreciate gave the green light using billions of US currency from Bank Negara’s foreign reserves to speculate on the British pound sterling.
Soros – the global FOREX player – expecting the fall of the pound
borrowed 10 billion pounds from British banks and changed the money to
German Mark.
Malaysian speculator, Mahathir lost
On Sept 16, 1992, unable to stand the economic and market pressure on
its overvalued pound, Britain, instead of floating the pound, officially
devalued its currency causing the pound to fall.
Soros, who took the loan from the British banks, repaid it in pounds
which was then cheaper and pocketed the difference of more than US$1
billion.
While the Malaysian speculator Mahathir lost about US$4 billion.
As reported, later in 1993, Bank Negara again lost another US$2.2
billion in speculative activities. Malaysia’s total loss by this time
stood at US$6.2 billion. The actual figures for Bank Negara losses were
never revealed, though.
Both the “gamblers” had the same desire – to make money. But in the end
when Mahathir failed, Soros made the money. The stark difference here
was that when Mahathir used the nation’s money to bet, Soros used his
own fund. The latter of course was more righteous in this game of FOREX gambling.
Why then demonise Soros and his charity
work? The only reason must be because he was perceived by none other
than Mahathir that he was a currency speculator. For political reasons,
leaders within UMNO have forgotten and forgiven Mahathir for his past “gambling” habit.
Lack of investor confidence
Soros earned a billion dollar profit from speculating against the British currency in 1992. Malaysia got her fingers burnt.
Preceding the 1997/98 Asian financial crisis the annual economic
“growth” rate of Malaysia was reported to be 8.5 percent for 6 years –
from 1990 to 1996.
But a lack of investor confidence soon attributed to a wave of currency
depreciation in the inflated economies of Asian countries at the time.
Soros being a shrewd currency speculator could foresee the economic
collapse of a few Asian countries.
In mid-1997, when the Thai
Baht depreciated his fund managers sold US$10 million of Thai baht to
make a fortune. He did not sell Malaysian ringgit or any other
currencies. The depreciation of the Thai Baht was enough to lead to a
domino effect on some other Asian economies, including Malaysia.
It only showed that the economies of these countries were not resilient enough.
Short-term investors pulled out their funds in droves resulting in the
economic crisis in Malaysia. The value of the Malaysian currency fell by
more than 50 percent from RM2.50 to RM3.80 to US$. The stock market
index dropped and at one point hovered around 300 points.
The “Mahathir factor” too affected the stock market then. The country’s
stock market fell each time after Mahathir spoke against the economic
market system.
To Soros, currency speculation is a business. He confessed that he had
no time taking part in currency speculation for political purposes.
A serious business
Before June 1997, there were already signs on the wall that Malaysia
would face with economic problems but this was ignored by Mahathir
citing “sheer jealousy” of western countries as the reason.
During the crisis it was the low confidence level of investors in the
country that led to huge capital flights sensing that the economic
bubble was going to burst. Even prior to this crisis the economy of the
country did not justify to the confidence of markets – a reality that
Mahathir did not want to admit.
After being badly mangled, the aftermath of the financial crisis made
Mahathir say that currency trading is unnecessary, unproductive and
immoral during the IMF and World Bank meeting in Hong Kong which took
place in mid-September 1997.
But the same was not mentioned after Bank Negara lost US$6 billion or
more in FOREX trading. UMNO leaders cannot be too naïve not to
comprehend this setback to the nation’s economy.
To Soros, currency trading is business and weak governments have to be
cautious not to create a bubble burst upon being tested by currency
traders. Managing a nation is a serious business.
Singapore, Brunei and Japan, for instance, were the least affected
during the 1997/98 financial crisis because of their economic
resilience.
Finding scapegoats
Other UMNO leaders did not dare question or speak up against Mahathir,
instead danced to the master’s tune in blaming Soros for the latter’s
self-made debacle.
UMNO is always good at finding scapegoats. Instead of opening up the
case relating to the Scorpene Scandal the leaders are trying to strike
Suaram with the “Soros factor” – exploiting on the fund Suaram received
from OSI.
However, the rakyat are not that irrational to buy UMNO’s political
ploy. They are just fervently waiting for the French court to reveal the
truth about the Scorpene Scandal that involves UMNO, the country’s top
leadership and his cronies.
Malaysia Chronicle
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