Pandora’s Box: Daim Zainuddin and the Law
Pandora’s Box: Daim Zainuddin and the Law
Former Malaysian finance minister and tycoon possibly to be indicted
In the 1980s and 1990s, Daim Zainuddin, a diminutive lawyer, politician, and businessman with close ties to Mahathir Mohamad, was the highest-flying of all the cronies allied with the then-prime minister. Born in 1938, he shared Mahathir’s home province of Kedah.
He was twice named finance minister as well as the steward of the once-powerful United Malays National Organization’s finances, using his proximity to power to snap up banks, construction firms, real estate, ports, palm oil plantations and other businesses, using the 1971 New Economic Policy that required Chinese interests, which dominated the high ground of the Malaysian economy, to cede a significant portion of their holdings to Bumiputeras, indigenous peoples who are granted special rights under the constitution, mainly ethnic Malays.
Today, at age 85, seriously ill and undergoing kidney dialysis three times a week, Daim has largely disappeared from public view. He is likely to be charged in court, possibly as early as tomorrow, January 21, on charges of having concealed millions of dollars in assets hidden overseas, some details of which turned up in October of 2021 in the so-called Pandora Papers, the 11.9 million documents leaked mostly from the Panamanian law firm of Alemán, Cordero, Galindo & Lee, that were published by the International Consortium of Investigative Journalists.
What the ICIJ found is believed to be a tiny portion of Daim’s fortune. Many believe him to be the country’s richest individual although he appears nowhere on Fortune Magazine’s list of the country’s 50 top tycoons. His assets in Kuala Lumpur, including a 60-storey office building, have been seized and his accounts have been frozen. The Malaysian Anti-Corruption Commission has also raised suspicions over the alleged misappropriation of $480 million in state funds dating back to the 1990s, which he has denied.
The question coursing through Malaysia’s political community is why Prime Minister Anwar Ibrahim has chosen to go after the ailing Daim, who is spending a considerable amount of time in the hospital and whose alleged transgressions took place at least 22 years ago in a country rife in present-day corruption, sliding down the Transparency International corruptions perception index in every year since 2015.
A previous prime minister, Najib Razak, is serving 12 years in prison over the 1Malaysia Development Bhd scandal amid rumors a pardon might spring him to help out Anwar’s political fortunes with the Malay electorate. Two other trials for Najib have seemingly faded into the far distance. Anwar’s own deputy prime minister, Ahmad Zahid Hamidi, has mysteriously escaped from an ongoing trial in which he was charged with 45 counts of criminal breach of trust, abuse of power, and money laundering involving a total of RM114 million (about US$27.4 million) in funds from the Yayasan Akalbudi charity.
“It’s score-settling,” said a highly-placed lawyer based in Kuala Lumpur, a consensus held in both the legal fraternity and the business world, although Anwar himself insists that the government and attorney general are only going where the law takes them. Daim’s second stint as finance minister began on January 7, 1999, three months after Anwar was sacked by Mahathir and later imprisoned for six years on corruption and sexual perversion charges that have been dismissed by international human rights organizations as trumped up to ruin Anwar’s political career.
Daim, so closely tied to Mahathir, is regarded as part of the ruling cabal that repeatedly wrecked Anwar’s career. Anwar, once Mahathir’s acolyte, has feuded with Mahathir, now 98, ever since he was sacked in the 1997-1998 Asia Financial Crisis. Mahathir thwarted him from becoming prime minister following the Reformasi coalition’s 2018 defeat of the ruling Barisan Nasional and its biggest component party the United Malays National Organization, reneging on a promise to step down as premier. Daim was chief of the five-member Council of Eminent Persons advising the new government. Daim himself has publicly accused Anwar of a “political witch hunt.”
Last week, Mahathir’s son Mirzan was also summoned to the headquarters of Malaysia’s Anti-Corruption Commission, which is said to be investigating Mirzan’s business activities in what the Bloomberg news service called “a sign of Prime Minister Anwar Ibrahim’s widening anti-graft campaign against his rivals.” The MACC said Mirzan has been given 30 days to declare all assets in his possession within 30 days as part of the MACC’s probe into information from the Pandora Papers as well as his business activities.
In a January 9 application for judicial review of the MACC’S allegations against Daim and members of his family, his lawyers argue that while 12 individuals are named – including Ahmad Zahid Hamidi – in the Pandora Papers, Daim and his family are the only individuals under investigation by the anti-corruption agency. If any charges are to be instituted, “such charges would be unconstitutional and void because they will not receive a fair trial, having regard to the delay of some 22 years in their institution, thereby infringing the fundamental right of ‘personal liberty’ under the Federal Constitution.”
That said, of all the ethnic Malays that Mahathir sought to leverage into positions of power in Malaysia’s business world during his first 22 years in power, which ended in 2003, Daim Zainuddin was the one who not only attained enormous leverage, but was instrumental in propping up UMNO, serving as its finance chairman. Many of the other Bumis picked by Mahathir ran their concerns into the ground, to be bailed out by the government or wound up.
Daim used the New Economic Policy’s stipulation of divestment of Chinese firms to ethnic Malays, for instance, to take control of such institutions as the Chinese-owned United Malayan Banking Corporation, then the country’s second largest bank. Much of Daim’s financial doings are hardly a secret. They were reported in detail by the now-defunct Asian Wall Street Journal, the New York-based publication’s Asian edition, by reporter Raphael Pura, with little or no effect. They can still be found in the publication’s archives.
The effectiveness of the 54-year-old New Economic Policy and its look-alike successors has to be questioned. Ethnic Malays today make up 69.9 percent of the country’s population against the 23 percent Chinese, and 8 percent who are other nationalities, mostly ethnic Indian. Although the 54-year-old New Economic Policy was designed to engineer 30 percent of the country’s economic wealth for Bumiputeras, 42 of Fortune’s 50 richest individuals or families are still Chinese.
According to the ICIJ findings, as reported in local media including the independent news portal Malaysiakini, Daim and his family including his sons Amin and Amir and his wife Na’ima Khalid are the beneficiaries of ZA Star Trust, which held assets worth US$52.5 million as recently as 2020, with investments in three British Virgin Islands companies. Two of those companies own two properties in London, including an eight-floor office building near St. Paul’s Cathedral acquired in 2014 for $50.8 million, according to U.K.’s property register. The third BVI company indirectly owns shares in nine entities registered in Delaware and Massachusetts that were used to invest in hotels, parking lots, and other commercial and residential property. The trust’s financial statements show that the trust received a US$47 million loan from another entity called Adam Zeta Trust. The files don’t state the owner of Adam Zeta Trust or when the loan was made. He is listed as a signatory to other trusts as well.
Daim has consistently denied wrongdoing, saying he had always paid taxes on his investments and properties. “I’ve retired from business for some time already, and trusts are part of estate planning,” he told local media. He insists he has paid taxes in all jurisdictions where he conducts business. He also said that not all firms he has links to are owned by him, explaining that they are partially controlled by his kin.
A fair summary of the sorts of shenanigans everybody in Malaysia, and outside of that openly corrupt and racist country, knows about even before the so-called media in Malaysia gets wind of anything of the sort. Some in Malaysia's legal fraternity have inside knowledge of these affairs but most, I have found over many years, make stuff out if it gets their name in the press that may help advertise their legal business. One thing one quickly realizes about Malaysia is one takes everything one is told by those who think they are in the know, so to speak, with a ship-load of salt.
All that said, it would not be so far fetched to suggest Anwar Ibrahim, who is clinging to power with the backing of Umno -- a party of Malay crooks and liars (not dissimilar to the self-aggrandizing Malaysian Chinese Association and the Malaysian Indian Congress) -- may well be taking revenge on anything that relates to the vile racist fascist Mahathir Mohamad and his long-time cronies, including Daim Zainuddin, for "thwarting" Anwar's early attempts to rise to the top of Malaysian politics and supplant the likes of Mahathir in the most humiliating way possible to the latter. Don't forget the deep humiliation Anwar Ibrahim has suffered at the hands of Mahathir and his scummy backers, all of them washed by greed that stems from the ongoing racist New Economic Policy of 1970 -- a policy, to be frank, that has failed rural Malays by exploiting them ideologically and by false religious facades, a policy that has failed in its economic redistributive justice aims whilst enriching those urban Malays indubitably tied to UMNO and Malay state capital. Domestic Chinese capital works on its own political and business peculiarities but at least it is more dynamic and "progressive" than Malay capital which remains predominantly ersatz and breeds manic corruption between Malay parties, the Malay state and Malay state capital (the so-called government-linked companies).
Yet it is strange -- even weird -- not to ask the extent to which Anwar Ibrahim and his Parti Keadilan Rakyat have also forged the specter of cronyism if one understands, at a critical analytical level, the nature of Malaysia's political economy. It would be illusory, in my view, that so much change has taken place in Malaysian political economy and the riddles of "Malaysian capitalism", if that is what it is called, that Anwar is without his cabal of cronies when, clearly, he seems to have shied well away from undertaking real political and economic reforms and, more, the continued power-play of patronage politics in urban Malaysia and patron-client relations in rural Malaysia. Just as Mahathir conducted "protection racket", it would be interesting to see the extent to which Anwar is running the same (I strongly suspect that he is, inevitably).
At one level, the Daim Zainuddin saga is also the Mahathir Mohamd sage and more than just "corruption" in Malaysia which, as the bulk of the world's major investors already know, is a given, historically and contemporaneously. Just as 1997-98 showed, and again between 2018-2020, this "war" between Anwar and Mahathir and Daim, is personal. It's vendetta politics, to put it crudely. At another level, it is a battle to ease the throttle back on "reformasi" reforms and, I would suggest, to cancel them, for obvious reasons. And if you think about it, Anwar Ibrahim is doing the Xi Jinping thing: attack corruption of his "big fish" enemies in the name of cleaning up the system, only, ironically, the system is not being cleansed because Anwar, like Xi, has little to no clue how to fix not just the economy but the whole political economy. And it will never -- never -- begin with redistributive policies.
By the way, Malaysiakini is hardly -- barely -- an "independent" media company given its horrendous and obvious longstanding bias favoring the Democratic Action Party.
It would be interesting to know under what ordnance or statute they would charge Diam and Mizran. Malaysia's legislative drafting is something to behold. There are no laws against accumulating money in Malaysia and the word corruption has no legal definition in Malaysian law. But then again we are referring to Malaysia, a country where the rule of law is hardly understood by its legal fraternity and its legislatures.
As for the ICIJ, I would question its integrity and independence when considering it is funded in part by the NED and by George Soros's open societies foundation.