Month: March 2024

FEAR OF FRYING 

Historians have noted that the world moved from being flat to round to simply, being crooked. 

But consider its scale. If the Malaysian duo of Fearless and Felonious (Malaysian ex-premier Najib Razak and  Jho Low) rewrote global fraud records with their US$5 billion heist in  2011, a new fraudster has emerged to rain upon their charade.  

On Thursday, Judge Lewis Kaplan sentenced former crypto tycoon Sam Bankman-Fried  to 25 years for stealing US$8 billion from customers of his now-bankrupt FTX cryptocurrency exchange.

Crypto, as everyone knows, is the new Greek as in “it’s all crypto to me.” Even its root, “cryptic” is from the  Greek “hidden” and comes across as “mysterious” or “obscure.” 

Which sums up cryptocurrency. Essentially, it’s a digital currency that’s created from encryption technologies. These technologies mean they function both as a currency and as a virtual accounting system. You might say it’s gold for nerds. 

Cryptocurrencies have become increasingly accepted as a medium of exchange worldwide. All one needs to trade in it is a cryptocurrency wallet with your own PIN number. And even God can’t help if you forget your PIN.  

None of the developed countries have recognised digital currencies as legal tender but that could change. Presently, El Salvador is the only  country that  recognises bitcoin as legal tender.   

For students of history, it was actually Felonious who hit upon the idea of a cryptocurrency way back when. He thought he would call it Decibel. It was a word that resonated with him and it had all the hallmarks of a sound investment. But 1MDB was, shall we say, simpler and, like Everest, was there for the taking.

But I digress. 

If there are cryptocurrencies, there must be exchanges where it can be traded. Bankman’s FTX was the third largest exchange in the US with over a million users. 

It went bankrupt in 2022 after a spike in depositor withdrawals revealed a massive US$8 billion hole in its accounts. Criminal charges weren’t far behind for Bankman, a math prodigy once estimated by Forbes to be worth US$26 billion. 

Bankman, 32, was found  guilty in November 2023 on fraud and conspiracy charges in what prosecutors called one of the biggest financial frauds in US history.

Kaplan said the sentence reflected “that there is a risk that this man will be in a position to do something very bad in the future. And it’s not a trivial risk at all.”

To his credit,  Bankman-Fried stood and apologised. “A lot of people feel really let down. And they were very let down. And I’m sorry about that. I’m sorry about what happened at every stage,” he said. “My useful life is probably over. It’s been over for a while now, from before my arrest.”

It could have been a lot worse for him. Bankman-Fried could have received up to 110 years behind bars for his crimes. The 25-year sentence was also less than the 40-50 years that the prosecution sought.

The leniency may have come from his effective altruism. The former magnate had believed in donating all or part of one’s wealth to charity rather than, say, volunteering at a soup kitchen. And he had donated liberally in the past.  

Even so, he had embezzled customer funds systematically and over a long period. 

“The defendant victimised tens of thousands of people and companies, across several continents, over a period of multiple years. He stole money from customers across several continents who entrusted it to him,” prosecutors said.

If it all sounds familiar, it is. The only difference is that our duo screwed an entire country. 

Bankman just screwed his clients. They couldn’t bank on him and they got fried. 

ankmanENDS

DON’T WORRY, BE HAPPY 

For 52 years after independence, Malaysia wasn’t that well known internationally. 

Then Najib Razak aka Fearless Leader happened. 

You might say Fearless put Malaysia on the world map. For a moment in time, we were the globe’s experts in international money laundering. Even Bernie Madoff bowed his head in tribute when no less an authority than the US’ Department of Justice declared Fearless’ 1Malaysia Development Bhd (1MDB) wealth fund the largest “theft” in world history.

Fearless et al helped invent a new word – kleptocracy – while whole forests had to be felled to supply the newsprint required to explain the fraud’s magnitude to the world. Books have been written. And a 1MDB movie has been made by Netflix. 

Hollywood might take a trifle longer as it was, apparently, smitten by the conspicuous extravagance lavished it by Fearless’ portly partner, the champagne-swilling Felonious aka Jho Low. Incidentally, the latter is the protagonist in Netflix’s Man on the Run.

You’d be amazed by how many friends a country’s money can buy. 

It is by way of this circuitous route that I’ve arrived at the reason behind my blog this week. 

I read, with some incredulity, that Malaysia’s overall happiness had apparently plunged since Fearless’ status changed from Former PeeEm to First Felon. 

This is the contention of one Lim Sian See, a social media influencer. Mr Lim said that Malaysia’s ranking in the World Happiness Report saw a continuous drop after Fearless was defeated in the 2018 general election.

Mr Lim said Malaysia’s happiness ranking had been rising throughout Fearless’ tenure. The index was introduced by the United Nations in 2013 while Fearless was leader from 2009 till 2018, at which point  the ”happy” people of Malaysia kicked him out.

It was therefore the same cheery lot that allowed  justice to take its course and, subsequently, consigned him to prison.

Ever the pedant, Mr Lim pointed out that Malaysia was ranked 56th in 2013 in the index and climbed to 35th in 2018, making it the second “happiest” country in Asean after Singapore.

Along those lines, Bhutan is the “happiest” country in the world. It may, of course, be entirely due to its yak butter but there does not seem to be many people queuing up to become its citizens.

Even so, Mr Lim is  convinced by his arguments.

“After Najib fell, Malaysia’s ranking in this index kept falling and was slowly overtaken by other Asean countries,” he said in a doleful Facebook post.

Based on the report, Malaysia dropped from the 55th happiest country in the world in 2023 to the 59th position this year.

In the 2024 World Happiness Report, Singapore ranked 30, the Philippines (53), Vietnam (54), Thailand (58), Indonesia (80), Laos (94), and Cambodia (119).

Even so, I’m amazed that Malaysia, at its 59th spot, continues to be as happy as it is.

After Fearless’ ouster, Malaysians learnt the following facts: 

We are among the most indebted countries in Asean with over RM1.5 trillion in debt. 

The 1MDB fiasco didn’t just cost us US$4.5 billion but US$12.3 billion due to accumulated debt taken on to service 1MDB’s obligations. 

The scale and scope of corruption in Fearless’ administration was frightening.  And trust agencies once deemed sacred – the Pension’s Fund, Felda, the Pilgrims Fund, the Armed Forces Pension Fund – were looted to cover up the fraud.  

Moreover, even after his conviction by three progressively higher Courts, Fearless never apologised to the Malaysian people. Nor has he shown any remorse.  

You’d be depressed, too, if you’d just learnt these facts. Indeed, I’d say most Malaysians are as happy as Felonious being informed the champagne had run out. 

But Felonious had never run out of champagne. He knew that all happiness depended on a leisurely breakfast.

ENDS

EATING YOUR WAY TO THE PRESIDENCY 

The English contribution to world cuisine – the chip. – British actor and comedian John Cleese

If you want to politically succeed in France, it’s not by way of the Lloyd George rule. The former British premier had suggested keeping one’s conscience “well under control.” 

Being pragmatists, the French were more than likely to agree on this but would have added diet to the mix. 

Egg-zactly, zey would have eggs-claimed. More precisely, they would have suggested an omelette.

Not just any frittata. No, it’s the one from Mont Saint Michel, an island off Normandy – a region in the north of France.  Specifically, it’s the one from the Restaurant de la Mère Poulard which has been serving the public since 1888.

Some background first. The French take their cooking very seriously. It’s like, to make a croissant from scratch, you have to first create the universe. It’s like that sort of grand. 

I mean, I can melt butter with the best of them, but so can a hot day.  Most people mix flour and water and make glue but a Frenchman with artistry in his soul and passion in his heart can make a little miracle: with those ingredients plus a little salt and yeast, he can make a baguette.

Toasted and lightly buttered, they go down a treat especially during breakfast. It’s highly prized by those sections of the French military with a sense of history. Throughout the 20th century, those humble bread rolls have sustained countless French armies marching their way towards surrender. 

But we were talking about omelettes and their impact on politics, weren’t we? 

That particular omelette was invented by one Annette Poulard, a master chef whom Michelin himself had his eye on.  She had been running an inn on the island and she created the omelette to cater to pilgrims visiting the abbey on Mont Saint Michel.

Apparently, guests could only reach the island by land during low tide and, as such, would arrive at all hours. Poulard would quickly prepare her omelette of eggs, salt, pepper and local butter so that her guests could have something to eat while waiting for a more substantial meal.

But the egg dish was as light as a souffle and just as delicious. Couple that to the French love for superstition – they’d been the ones who invented triskaidekaphobia to begin with – and Bob’s your Uncle! 

Actually, Uncle Robert had nothing to do with it but, over the years, a legend developed that those politicians who eat the Omelette de la mère Poulard would go on to be  President of France.

The legend dates back to the contest for the Presidency between Georges Clemenceau and Paul Deschanel in 1920. While in the running, Clemenceau visited Poulard but did not eat her omelette as she was unwell at the time. Deschanel, however, did and won the race.  

Since then, it has been noted that those who won all ate the omelette – such as Charles de Gaulle, who made a family visit to Mont Saint Michel in October 1957 before going on to win another term as President in 1958.

Nicolas Sarkozy actually launched his 2007 presidential campaign in Mont Saint Michel. Indeed, he thoughtfully chomped his way through several omelettes – you couldn’t be too careful – before going on to win his campaign.

But that was then and even urban legends, like old generals, have to fade away. Emmanuel Macron thought the whole superstition fowl and he refused the omelette, preferring another egg dish for breakfast. 

He thought boiled eggs were hard to beat. 

ENDS

EASIER SAID THAN DONE

I couldn’t believe my eyes. 

I rarely read the papers as it’s depressing.  But on occasion – this column, for instance – I must trawl for ideas, and you know what they say about beggars. 

And there it was. An item in Star Online, about the government contemplating an Act of Parliament to curb rent seeking. 

Imagine that! 

Do Malaysian business people know what rent seeking is? That’s like asking if the Ayatollah’s Muslim? They may not know its meaning, neither did they invent it, but they know the practice. In fact, they’ve taken it to Everest-like heights. Rent seeking is the practice of manipulating public policy or economic conditions as a strategy for increasing profits. 

Unfortunately, a pivotal public policy in Malaysia facilitates, nay, encourages such behaviour. 

Since 1971, the New Economic Policy has sought to uplift the country’s poorer Bumiputeras (indigenes and largely Malays) into economic parity with their richer countrymen. 

Where the Malay corporate and industrial community’s concerned, it’s taken various forms including quotas, licenses, permits, contracts, concessions, even outright grants. There isn’t any estimate, but many billions of taxpayer dollars would have been spent by now.   

They’ve been used to reshape industry. Take autos. In the 70s, it was dominated by the Chinese. The government decreed that approved permits (APs) would have to be obtained to import and sell cars in the country.

It created an effective monopoly. Cars became more expensive and the favoured few became very rich. 

One, so much so that he went into helicopters in a big way. At least, it demonstrated his entrepreneurial flair. 

The rest remain dependent on patronage and get outraged when their entitlement is threatened. 

Standout example: they weren’t happy campers when Tesla was recently allowed to import and sell its own cars without jumping through hoops – like having to go through an AP dealer, or Tesla having to sell some of its local equity to a Malay partner. 

The hoops, in the context of state protection from competition, are everything. 

Meanwhile, there are other items – from sugar and onions to flour and steel products – that require import licenses. It creates more “rents” – only selected businessmen need apply – and inflates prices.  

Under Dr Mahathir’s premiership, new rents were created and not necessarily for Bumiputeras.  At one point, the latest scheme for instant wealth creation were the licensing of independent power producers. 

IPPs bought subsidised gas from Petronas and, if its former chairman is to be believed, the national utility was “forced” to buy its output. 

Its obvious drawback –  whopping costs to the state-owned utility – was all but ignored in the flush of new wealth creation and an excited stock market.

As a former reporter, I used to think that some people were there just to dream up new RS schemes that would be NEP-compliant. The trick was to have a powerful, and sympathetic, ear in government.  

It was thus that I got a tip-off in 2003 that cigarette and beer firms would be forced to affix security labels on their products to “deter smuggling”.  

It wasn’t surprising. Cigarettes and beer are heavily taxed ergo smuggling is rampant. It still is. 

The firms are easy targets as they are foreign-owned and their products, generally frowned upon. Full disclosure: I like beer.

The tipoff was accurate.  I called the company, and they came back with the old “it’s the Swiss technology” chestnut.

A search revealed that the firm’s chairman was a brother of a (then) senior Umno minister. Smoking gun. We ran with the story in the Asian WSJ the next day and I waited expectantly. 

It went over with all the thrill of a wet sponge. Talk of vanishing into a vacuum! No outrage, no heated denials. Boredom, it seemed, was the order of the day.  

It was just another day in Paradise.  

ENDS