Monday, 24 January 2011

Explain RM888b illegal funds leak

by Lim Guan Eng
23.1.2011

DAP wishes to extend our congratulations to the Royal Malaysian Navy for its success in capturing 18 Somali pirates and preventing their attempted hijack of a Malaysian chemical tanker near the Gulf of Aden. This successful operation in saving the tanker and their crew without any loss of life inspires confidence in a professional navy that justifies the people’s faith.

Whilst our navy boys are heroes for their successful capture of Somali pirates in international waters, DAP regrets that land “pirates” are allowed to roam freely in Malaysia. The US-based financial watchdog Global Financial integrity (GFI) reported that illicit money outflows from Malaysia tripled to US$68.2 billion (RM208.1 billion) in 2008, from US$22.2 billion in 2000.

For the period 2000-2008, China tops the chart among the world’s exporters of illicit capital with a whopping US$2.8 trillion of outflows, followed by Russia (US$427 billion), Mexico (US$416 billion), Saudi Arabia (US$302 billion) and Malaysia (US$291 billion or RM888 billion). Other Asian countries with high illegal capital flight are Philippines ($109 billion), Indonesia ($104 billion) and India ($104 billion).

Clearly illegal capital flight from Malaysia of RM888 billion over 9 years from 2000-8 has dwarfed legitimate capital inflows into the country. GFI defines illicit financial flows as generally involving the transfer of money earned through illegal activities such as corruption, transactions involving contraband goods, criminal activities, and efforts to shelter wealth from a country’s tax authorities.

GFI said that poor governance, pervasive corruption and rising income inequality as contributory factors, making serious allegations that even GLCs such as Petronas could probably be driving illicit flows. This is a devastating indictment of the lack of enforcement, rule of law and a culture of corruption that has eroded confidence in our capital market.

GFI also pointed out the significant discrimination in labour markets was another factor which moved not only people but also illicit and unrecorded capital out of the country. Sadly, Malaysia’s loss of human talent has not only dimmed our future but also made all of us poorer.

Clearly, not only Petronas but BN must come clean on the scandal of huge illicit money outflows RM888 billion from Malaysia in 9 years from 2000-2008, the 5th highest in the world amongst developing countries.

GFI proposes increasing transparency as critical to reducing the outflow of illicit money from developing countries.This is in line with Penang state government’s CAT governance of Competency, Accountability and Transparency, which has resulted in Penang being commended by the Auditor-General’s Report as the best financially managed state and won praise from Transparency International.

The refusal of BN to come clean will not only cause greater losses in the future, there is a possibility that the country may even go bankrupt by 2019 as Minister in the Prime Minister’s Department Datuk Seri Idris Jala had warned. RM888 billion in only 9 years is a huge sum by any measure, and more than four times our 2011 National Budget. If RM888 billion was given to 27 million Malaysians, each man woman and child would receive nearly 33,000/- each over 9 years.

Any clean and responsible government with integrity would have immediately established a Royal Commission of Inquiry into this RM888 billion illicit capital outflow scandal. However BN’s reluctance to establish a Royal Commission of Inquiry into other scandals such as RM52 billion bumi shares scandal, where Malays/bumis lost RM 52 billion of bumi shares which just “disappeared”, leaves Malaysians with no choice but to change the government if we want to unearth the truth and punish the culprits responsible.