Analysis: Malaysia’s business, political elite on edge with Anwar’s graft crackdown on ex-financial tsar Daim
https://www.channelnewsasia.com/asia/malaysia-corruption-daim-zainuddin-umno-macc-4014111
Analysis: Malaysia’s business, political elite on edge with Anwar’s graft crackdown on ex-financial tsar Daim
A bold move by the Malaysia government to seize a prime property owned by former finance minister Daim Zainuddin, widely considered one of the country's most influential businessmen, has triggered both shock and panic among the political and business elite.
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KUALA LUMPUR: Prime Minister Anwar Ibrahim has sent the chill down the spines of Malaysia’s political and business elite with the recent corruption crackdown on former finance minister Daim Zainuddin, triggering speculation that targeting big business corruption will be a central theme of his administration in the coming months.
Mr Daim, easily one of the country’s wealthiest and most politically influential personalities, has been caught in the pincers of the Malaysian Anti-Corruption Commission (MACC), which last week sequestered his family-owned Ilham Tower, a prime commercial building in the capital Kuala Lumpur designed by the famed British modernist architect Norman Foster.
The seizure on Dec 21 of the Ilham Tower, which was built at the cost of US$580 million and located in a cluster of exclusive high-rise residential and commercial complexes around the iconic Petronas Twin Towers, came after Mr Daim snubbed repeated petitions from the MACC to officially declare his assets in an investigation that began in late May.
In a country where every high-profile development is viewed through a political prism, the assault on Mr Daim’s financial affairs was quickly decoded as a very public message from Prime Minister Anwar Ibrahim that his promised crackdown on corruption in government and big business had begun.
"He (Anwar) has thrown down the gauntlet. The move on Daim shows that now anyone can be a target," noted a former chairman of a state-controlled financial institution.
Mr Daim was the leading architect of Malaysia’s economic model, which has long featured the close intermingling of politics and commerce that over the last four decades has created a crony business network that represents the bedrock of the country’s system of patronage politics.
The ongoing MACC investigations are not limited to Mr Daim’s affairs.
Other businessmen close to Mr Daim, including Mr Halim Saad, a one-time business nominee of the long-established United Malays National Organsation (UMNO), and Mr Mirzan Mahathir, the eldest son of former premier Dr Mahathir Mohamad, are also being investigated.
Now, there is growing speculation among Malaysia’s elite that other personalities, who have built their corporate empires on the back of political ties, are expected to come under scrutiny.
"Anwar is a strategist, and he is sending the message that he wants accountability by putting his rivals on notice," noted Mr Manu Bhaskaran of Centennial Asia Advisor and long-time observer of regional political and economic affairs.
SLEEPLESS NIGHTS
PM Anwar, whose relations with both Dr Mahathir and Mr Daim have long been strained, has dismissed suggestions that his administration that came to power after the Nov 2022 general election had initiated a witch-hunt against his political and business foes
“Stop making interpretations that there must be a conspiracy whenever we ‘touch' an influential person,” Mr Anwar told reporters after the seizure of Mr Daim’s flagship Ilham Tower became public, adding that "this is an open secret, where a person has amassed extraordinary wealth".
Close associates of Mr Daim and businessmen who regularly meet Dr Mahathir noted that the two men insist that Mr Anwar is out for revenge and point to the veiled threats the politician made before he became premier.
For example, at a national congress of his Justice Party, or Parti Keadilan Rakyat, in mid-2022, Mr Anwar, who was opposition leader at the time, told delegates that Mr Daim "would be the last person to want to see me as prime minister. He would have sleepless nights".
WHO IS DAIM?
Intensely private and taciturn, Mr Daim, whose business career stretches back to the late 1960s, has amassed a fortune through canny networking, patronage and exploitation of Malaysia’s often-opaque commercial world where business and politics intertwine.
At 85 years of age, the elfin lawyer-turned-businessmen is frail.
He regularly uses the wheelchair, wears a mask at all times, uses a voice amplifier and speaks through a wireless microphone headset.
Mr Daim also keeps a tight schedule of meetings three days a week, according to associates, meeting politicians and businessmen apart from his managers who operate his extensive business holdings, with equity stakes in property development, hotels, and banking.
His enduring influence has been one of the few constants in Malaysia’s turbulent politics.
During the first two decades of the Mahathir era that began in 1981, Mr Daim played the role of finance minister, informal advisor and purse-keeper of UMNO and was also the most enthusiastic architect of the Malaysian economic model.
It featured a brand of command capitalism where the government awarded economic opportunities in the form of infrastructure contracts, licences and lucrative concessions to operate toll networks and power-generation projects to politically well-connected businessmen who today control large swathes of the economy.
The big beneficiaries of economic privileges closely associated with Dr Mahathir are Mr Syed Mokhtar Al-Bukhary of the DRB-Hicom Group, Mr Vincent Tan Chee Yioun of the Berjaya conglomerate and Mr Ananda Krishna, who controls a sprawling empire with a leading presence in multi-media and telecommunications.
While building his own wealth through business proxies, such as businessman Nasir Ali, and businesswomen Lutfiah Ismail and Josephine Premala Sivaratnam, who are close associates of his third wife Na’ imah Abdul Khalid, Mr Daim concentrated on the creation of a new generation of ethnic Malay businessmen.
Through the Mahathir government’s privatisation of state enterprises and major infrastructure projects, Mr Daim, who served as UMNO treasurer between 1984 and 2001, wielded his role as finance minister with the expansion of UMNO business interests.
His business proxies included Mr Halim, who was executive chairman of the once UMNO-owned publicly listed conglomerate Renong Bhd, as well as Mr Tajudin Ramli, who was awarded the country’s first private telecommunications licence and later acquired a controlling stake in the national carrier Malaysian Airlines Bhd, or MAS.
BEHIND DAIM’S TROUBLES
So, what is behind Mr Daim’s current woes?
Weeks after the anti-graft probe began in late May, the MACC released a statement that the agency was gathering information into the “alleged embezzlement of state funds amounting to an estimated RM2.3 billion”.
The agency added that it had frozen bank accounts with funds amounting to RM39 million (US$8.45m) belonging to an unidentified former senior minister and two businessmen, who were also not identified. It gave no other details apart from the investigations relating to anti-money laundering violations.
Government officials and anti-graft investigators directly involved in the probe told CNA that the alleged embezzlement of state funds was a direct reference to the RM2.3-billion-ringgit transaction that took place in November 1997 involving Renong and United Engineers Malaysia Bhd (UEM) that were already locked in a complex set of cross holdings.
The three unnamed personalities are believed to refer to Mr Daim, who served as finance minister between 1984 and 1991; Mr Halim, his long-time business protégé who at the time was a controlling shareholder of both Renong and UEM; and Mr Abdul Rashid Manaf, a prominent Kuala Lumpur-based lawyer who handled all of UMNO’s corporate affairs.
At a time when regional markets were already in a swoon because of the currency crisis that first hit Thailand, the move by cash-rich UEM to acquire a 32.6 per cent interest in a debt-laden Renong from undisclosed buyers triggered a blood-bath in the Malaysian stock market and quickly set-off huge concerns over corporate governance in Malaysia.
Mr Anwar was highly critical of the UEM-Renong deal, which in turn strained his relations with both Mr Daim and Dr Mahathir.
The disagreements over the stewardship of the Malaysian economy worsened and Mr Anwar was subsequently sacked and jailed in September 1998, events that pushed Malaysian politics into a tailspin.
THE UEM-RENONG DEAL
The decision by the MACC to revisit the UEM-Renong deal some 26 years later has renewed fresh interest over the corporate transaction that remains a mystery to this day.
Senior financial executives in Mr Anwar’s inner circle of advisors noted that MACC investigators are working on a number of theories.
These include the possibility that the transaction was a result of a desperate scramble by the business nominees of UMNO to protect the political party’s equity interest in Renong that may have been used as collateral for some other corporate transaction that had turned sour in the crisis rocking financial markets at the time.
Investigators believe that to avoid what would have surely become a major political crisis in UMNO in the event that the party's corporate holdings in Renong were seized in a financial default, the political party’s financial managers used cash-rich UEM as a bailout vehicle.
But financial executives tracking the unfolding anti-graft probe noted that the prospects of uncovering the exact circumstances surrounding the UEM-Renong deal after such a long time are very slim.
“Tracing how these deals took place after so many years is going to be tough, especially when UMNO’s corporate holdings at the time were only known to both Mahathir and Daim,” noted former banker Abdul Azim Mohd Zabidi, who served as UMNO treasurer between 2004 and 2009.
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