Malaysia Chronicle
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.
