Kua Kia Soong, Suaram Advisor
Kua Kia Soong, Suaram Advisor

By Kua Kia Soong

George Orwell once said: “The most effective way to destroy people is to deny and obliterate their own understanding of their history.”

Those who are in power today can try to rewrite the past but they won’t succeed, not when almost all of history has been digitised already.

We are made to believe by the new history changers that the 1MDB scandal has been the only financial scandal in Malaysian history and the previous prime minister is the first kleptocrat our country has ever had.

The former leader of the opposition, perhaps thankful that his son’s corruption charges were dropped and that he was further rewarded with the finance minister’s post, is now quick to say he had never ever said Prime Minister Dr Mahathir Mohamad was corrupt.

Let me remind him of the financial scandals in the Mahathir era and what he said about them:

Financial scandals since 1981

Soon after Mahathir became the prime minister in 1981, the Maminco-Makuwasa scandal erupted, incurring a loss estimated to be RM1.6 billion or more. In this scheme, a RM2 company, Maminco Sdn Bhd, was set up and used to buy tin future contracts in order to push up prices on the London Metal Exchange.

Maminco obtained financing up to RM1.5 billion from Bank Bumiputra. The tin price could not be maintained at the artificially high level for long and eventually the tin market collapsed. In the process, Maminco lost RM600 million of national funds. In 1986, Mahathir publicly admitted that Makuwasa was created to recoup the government’s losses from the Maminco debacle and to repay its loans to Bank Bumiputra.

The scandal involving Bumiputra Malaysia Finance (BMF) was one of the earliest scandals, surfacing in 1984. BMF gave out loans in amounts that exceeded its capital, losing RM2.5 billion in the process, and a bank official sent to investigate the scandal was murdered in Hong Kong. In the 15 years following that, Bank Bumiputra had to be bailed out at least four times until it was merged with Commerce Asset-Holding Bhd to form Bumiputra Commerce Bank.

Lim had called this the “scandal of scandals”.

In the early nineties, the botched attempts by Bank Negara to wager vast amounts of its assets on the forex market left the country between RM16 billion and RM31 billion poorer after George Soros “broke the Bank of England” on Sept 16, 1992. Clearly a reckless gamble using Malaysian taxpayers’ money,

Mahathir then called Soros a “moron”. Then finance minister Anwar Ibrahim assured Parliament that it was only a “paper loss”. Former finance minister Tengku Razaleigh Hamzah reckoned that the amount of money Malaysia lost was closer to RM31 billion over the two years from 1992 to end 1993. It is easily Malaysia’s biggest scandal of all time.

But it was Perwaja Steel which, according to Mahathir in his memoirs, “gave me the most trouble”. Showcased as his visionary drive towards heavy industry in the eighties, Perwaja made accumulated losses of RM9.9 billion by 1996 and had to be privatised.

There were other financial scandals that nonetheless exposed the excesses of the Bumiputera policy. Mahathir was criticised for handing multi-billion ringgit projects such as the North-South Highway and the RM6 billion sewerage project to Umno-controlled companies without any competitive tender.

Lim called it “piratisation”. (Pirates are never corrupt – they just loot.)

The projected toll collection was estimated at RM54 billion over the 30-year concession period, with the burden of toll to be borne by the public.


With the overnight affluence of Umno leaders, money politics became the norm in the party elections and the stock market was blatantly manipulated to raise funds for the political campaigns. The periodic power struggles within Umno have often produced unexpected revelations of great interest to the people.

Thus, in November 1994 it was revealed that relatives of prominent Umno politicians had been profiting from the preferential share-allocation scheme originally designed to help ordinary Malays under the New Economic Policy.

Among these were Mirzan Mahathir, son of the prime minister; Marzuki Ibrahim, brother of then deputy prime minister Anwar Ibrahim, and Fazrin Azwar, son-in-law of international trade and industry minister Rafidah Aziz, who happened to chair the allocation committee. This information was only leaked to the public by Rafidah because she wanted to show that it was not just her son-in-law who had gained from the allocations. Is this corruption?

Mahathir’s favoured “Bumiputera entrepreneurs” included Tajudin Ramli, Yahaya Ahmad, Halim Saad, Samsudin Abu Hassan and Wan Azmi Wan Hamzah. They were presumably Umno’s nominees, holding all these business interests on behalf of Umno. Mahathir’s own children didn’t do too badly either – in 2011, Forbes named Mokhzani Mahathir as the 15th richest Malaysian, worth US$560 million.

During the financial crisis of 1997, the state provided support for favored firms linked to the “Bumiputera capitalists” after the imposition of capital controls, such as reflationary measures which included cutting interest rates and making credit more readily available to these fledgling firms. Banks were also encouraged to lend more, and to bail out troubled firms and a new expansionary budget was introduced in October 1998.

Mahathir’s son Mirzan had shipping interests that had to be bailed out in 1998 with RM1.7 billion of Malaysian taxpayers’ money. In December 2000, the government bought back the 29% stake held by Tajudin Ramli in Malaysian Airline System (MAS), the operator of Malaysian Airlines. The price was reported to be about twice the market price, thus effectively bailing out Tajudin.

Tengku Razaleigh said the exorbitant amount of the bailout and the construction of projects forced on Petronas had deprived the company of the much-needed cash build-up for reinvestment, which would ensure its business sustainability.

According to him, since 1997 the subsidies to the national power supplier, the independent power producers and some other non-power outfits amounted to RM136.5 billion. And while these power producers continued to enjoy subsidised fuel prices, petroleum subsidy to the consumers – which purportedly cost the government RM14 billion in 2011 – was partly discontinued.

The academic Barry Wain had claimed that during Mahathir’s term in office from 1981 to 2003, RM100 billion had been squandered through mismanagement, corruption and financial scandals. After the publication of Wain’s book, Lim had called for a Royal Commission of Inquiry into Wain’s allegations and challenged Mahathir to sue him with immediate effect.

Mahathir created system that led to 1MDB

Thus, Mahathir’s term in office was marked by sensational financial scandals which were not unexpected of an authoritarian populist who did not pay much heed to accountability and good governance. They should help Malaysians understand why Umno politics and Malaysia’s political economy have developed in the way that they have.

Najib’s 1MDB scandal was possible only because of the political system that Mahathir had created. The use of public funds by Umno for the general election and to reward corporate allies was part of the BN modus operandi.

But thanks to digitised history, we have a record of what Lim reminded us on May 30, 2015:

“Just before the 13th general election on Feb 23, 2013, I had declared that if Pakatan Rakyat was to capture Putrajaya in the general election, we should re-open investigation not only on Mahathir’s RM30 billion Bank Negara forex scandal of 1992, there should be a Royal Commission of Inquiry into the RM100 billion losses suffered by the country in the financial scandals of the 22-year Mahathir era … a dark era in Malaysian history which saw key national institutions in the country like the Judiciary, the civil service, Attorney-General’s Chambers, the police, the Anti-Corruption Agency, and the Election Commission compromised and subverted to serve the behests of one man, the prime minister and from which disaster Malaysia has not yet fully recovered.”

Alas, to try and rewrite Malaysian history or to feign amnesia is not an option. I would recommend that our forgetful politicians continue taking fish oil.

Kua Kia Soong is Suaram adviser

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