Dudley House, MARA and that Red Herring
CORRUPT MALAYSIAN MONEY?- A RED HERRING- A RED THREAT
It appears that fortune does indeed favour the brave. At least in the case of Malaysian politicians and public servants in charge of cashed up trusts, charitable foundations, government and semi government agencies, this appears to be true.
An article titled “Corrupt Malaysian Money” published in the highly regarded Australian Financial Review (AFR) appears to have caused a stir in Malaysia. The article (also carried in the Melbourne Age on 22 June 2015) has been plagiarized to the hilt in a Malaysian daily parading as an original piece and a scoop.
In Australia by contrast the story has caused but a ripple. The totally contrasting responses (Malaysia and Australia) to this story is largely due to the differing impacts of the allegations in the story in both countries.
In Malaysia where the government has been under immense pressure lately to provide disclosures over a multi billion dollar sovereign fund the 1MDB, the story provides a possible window of opportunity for the Malaysian opposition and its “investigative journalist” cohorts to satisfy their lust for information about how some of Malaysia’s seemingly unregulated state owned and state funded enterprises operate.
The story in the AFR understates the true extent of money laundering via real estate transactions in Australia. Money laundering by mainland and south east Asian Chinese is a widely acknowledged scourge on the Australian economy.
The Dudley House transaction the subject of the AFR story is a Red Herring the media has created (on behalf of undisclosed interests) to deflect the growing criticism of government over the issue of the Chinese black money menace.
The incompetence of the Foreign Investment Review Board (FIRB) and other regulatory bodies, and the very real possibility that bribes by Chinese have been paid to Australian politicians in exchange for looking the other way looms large over the controversy of Chinese black money in Australia.
The overall detrimental impact to the lives of ordinary Australians by Chinese black money in the economy also fits into the matrix of growing public anger at government. Money laundering through real estate transactions and casinos in Australia is not only a hot topic. It has now become a political hot potato for reasons that will become apparent later.
Australian’s want more discussion, transparency and disclosure of facts about this menace of Chinese black money and they demand greater government action on the subject. This is because the laundering of hundreds of billions of dollars in mainly real estate transactions impacts more severely and adversely on the daily lives of ordinary Australians than it could ever impact on Malaysians in a comparable way.
JOURNALISTS TRIPE AND MONEY- AVOIDING THE REAL BLACK MONEY PROBLEM
Amidst the rising tide of public anger over sky rocketing house prices in Australia, the Australian government has been desperately searching for a diversion from the subject. This week it appears to have found one such distraction in a property called Dudley House and a Malaysian government agency better known by its acronym MARA.(Majilis Amanah Rakyat formerly the Rural Industrial Development Authority)
The problem and correlation between Chinese black money and escalating housing prices in Australia strikes at two things quintessentially Australian.
The first of these is related to the ever present Anglo Australian phobia of Asians (the Asian invasion theory). The second and equally significant of these is based on that perceived right of every Australian to be able to afford a home.
The AFR story appears to be a purely political exercise and a terribly partisan one at that aimed at a foreign audience in Malaysia.
If there is a prize for mediocrity in journalism, the Dudley House ‘expose’ by the 3 AFR journalists (and a Malaysian who claims to have worked with them) deserves that prize hands down.
The Dudley House affair against a backdrop of MARA, a couple of Malay public servants and their Chinese middle men appears to at the very least reek of dishonest political theatre.
Unable to make a fundamental distinction between a Malay and a Chines the AFR journalists expect their readers to accept their story at face value as being ‘investigative journalism’. And some readers will swallow it.
WHATS CORRUPT ABOUT THE DUDLEY HOUSE DEAL?
At the outset the AFR fails to identify with any degree of clarity what offences it is that have been committed by any of the players in the Dudley House transaction.
There is reference to bald allegations drawn from witness statements in the public examination by Pitcher Partners in the wind up of the developer of Dudley House. The article offers up nothing more than the very broad brush allegations ferreted out of court records to support their allegations of corruption.
That proceeding from which the allegations against MARA published in the AFR and a half baked Malaysian tabloid was initiated by liquidator Andrew Yeoh in the Supreme Court of Victoria. Andrew Yeoh is a partner with the firm of Pitcher Partners. His motives are nothing out of the ordinary. He is after all a liquidator.
What is also not identified in the AFR article apart from a series of unproven allegations of ‘corruption’, is the proof that is required to support it .
There is no proof to suggest that money alleged to have changed hands in the amount of over $4,000,000 in lieu of invoices issued for ‘consultancy fees, and advise’ is ‘Corrupt Malaysian Money’ or money tainted with illegality.
In any event who is to say how much a ‘consultant’ (a very ambiguous term pregnant with all sorts of interpretations) may charge for services here or in Malaysia in the absence of clear legislation prohibiting or limiting such fees and payments?
Further and less convincing is the allegation that because one valuation of the property arrives at a price of $17,000,000, that valuation is conclusive proof of an over payment for purchase of Dudley House and therefor the subject of corrupt activity.
SELF RIGHTEOUS INDIGNATION- SELF INDUCED IGNORANCE AND UNINFORMED REPORTING
In the Malaysian version of these events a point raised by the Malaysian ‘reporter’ writing about the Dudley House transaction requires consideration and analysis.
The ‘reporter’ makes reference to the use of offshore companies in the transaction as if to suggest it was improper or unlawful of MARA to have used an offshore company and secondly that a failure or refusal by a MARA executive to respond to his questions by telephone over the transaction is somehow sinister. Ignorance, inexperience?
There is no law in either Malaysia or Australia prohibiting the use of offshore corporations for commercial transactions. It happens all the time.
Malaysia after all by legislation has created an offshore territory of its own for exactly the same purposes as the British Virgin Islands and the Caymans were created by Britain. That Malaysian offshore territory is Labuan island in Borneo.
The second point also raised by the same ‘reporter’ concerns a telephone call he placed to an executive of MARA and failed to elicit a response from the executive he spoke to. The inference he appears to draw from this is that something was either wrong or that MARA had something to hide (from him).
MARA and its officers like most corporations are under no legal obligation to respond to anyone including this ‘reporter’ in search of his smoking gun. MARA and any other corporate officer in their position have obligations to their board, their stakeholders and the relevant minister in the Malaysian government in MARA’s case.
The concept of corporate confidentiality, the need to be discreet in any commercial dealings appears lost on that ‘reporter’. The absence of impartiality on the part of journalists appears to be a casualty in the witch hunt over Dudley House by all accounts.
Taking his version of event further and beyond the realms of common sense and reality a third and further suggestion is raised by that ‘reporter’. He appears to suggest that anyone in the position of a would be purchaser as MARA contemplating a purchase of the magnitude of the Dudley House investment would have sourced their purchase in newspaper ads.The farce does not stop there.
WHERE IS THE VICE?
The AFR’s conduct in publishing such a headline as this is totally unethical and irresponsible and a tad racist. One of the AFR’s headline in this matter screams out “Corrupt Malaysians sidestep FIRB”. Nothing is said about the massive sidestepping of FIRB by mainland Chinese which is where the real problem and controversy lies.
Further more and in an effort to justify their claims of corruption the article suggests that a valuer valued the property at $17,000,000 and that MARA paid $22,000,000 for that property. And in doing so it appears to suggest by that difference in price that there is evidence of corruption.
Valuation is said to be an imperfect science. In fact it is not a science at all but a very subjective art form. From the content in the articles both in Australia and in Malaysia it appears that ‘journalism ‘ too is also ‘an art form’. A highly subjective ‘art form’ at that.
AUSTRALIA HELD CAPTIVE BY CHINESE BLACK MONEY- AFR OFFERS A SMOKE SCREEN FOR THE DEVIL?
The problem with the AFR article and its lack of objectivity is evident by both its omission of any reference to the main source of the problem facing Australia’s housing affordability crisis and the corruption on an industrial scale that drives it. These are the Illegal flows of Chinese black money.
Much of this money finds its way through settled Chinese in Australia. Many of them are from Malaysia and Singapore who act as agents and nominees of mainland Chinese who pay a substantial premium for any available real estate in Australia driving prices through the roof.
Australia’s economy is in crisis and has been so for sometime now. Australia is a one trick pony as far as foreign investment is concerned today. Iron ore and coal prices are in the doldrums and mine workers are being laid off in the tens of thousands.
Europe is near bankrupt and it does not take a genius to figure that Europe’s contribution to foreign investment in Australia is stagnant if not redundant.
The Chinese are Australia’s largest source of foreign investment and its largest trading partner and has been so for over a decade and half. Put another way Australia is held captive to and economically dependent on a very rich, very powerful and a very aggressive China. A significant portion of Chinese investments in Australia apart from that it invests in mining, is known but not readily acknowledged to be tapped from that illegal pipeline of the US$3.8 trillion in black money.
Black money has been flowing steadily out of China since at least 2002. Major recipients of these funds include Australia for its slack regulatory oversight.
To provide an example of the extent of the problem, a recent CCTV report on the subject of black money in China, clandestinely records a conversation between a Bank employee at an immigration stand (complete with an Australian flag placed on its counter) soliciting deposits as investments for migration purposes:
“We don’t care where your money is from or how you’ve earn it, we can help you get it out of the country,” a Bank of China employee is quoted as saying at the fair. “We don’t care how black your money is or how dirty it is, we will find ways to launder it and shift it overseas for you”.
THE TREASURER IS MIFFED-BUT THE LAUNDROMAT KEEPS SPINNING
Federal Treasurer Joe Hockey has promised to investigate and to prosecute those foreigners purchasing property in Australia without first having obtained FIRB approvals. The Chinese government has applauded that initiative.
There is a Malay saying for the sincerity of the Australian government’s initiative in this regard: “Ajak ajak ayam”.
Now here’s the difficulty for Australia in trying to shut down the Chinese black money pipeline.
For Australia (through its FIRB) to officially approve many of these offending real estate purchases using illicit Chinese money would be tantamount to an acknowledgement by Australia to being an accessory to the Chinese black money industry. It would be admission by Australia to aiding and abetting the breaches of China’s foreign exchange remittance laws and to also being a party to money laundering. Australia’s acquiescence with Chinese black money launderers is less than impressive. It is embarrassing and two faced.
The anger amongst Australians at the impact of Chinese black money in its economy can be gauged by the widely reported claim that treasurer Joe Hockey was the informant in a case involving his Chinese neighbor who purchased a multi million dollar house next to his in Sydney apparently without FIRB approval. Such is the level of anti Chinese sentiment now in Australia in the wake of the housing affordability crisis caused by Chinese black money.
AUSTRALIA: THE CAYMAN ISLANDS OF ASIA THE PACIFIC REGION
Australia’s media is being disingenuous in its pursuit of corruption in foreign governments anywhere.
Australia has on more than one occasion been referred to by anti-corruption advocates in the Asia Pacific region as the ‘Cayman Islands of the Asia Pacific’. Not very flattering tag one might say.
For decades Australian lawyers, ex politicians, accountants and banks have been engaged in the very profitable business of money laundering stretching from China, Hong Kong, the Philippines (Marcos) Indonesia (Suharto), Thailand, Cambodia and Papua New Guinea.
The truth of the matter in the context of FIRB avoidance is that Australia cannot afford to upset the mainland Chinese regardless of how dire the situation is. The sheer quantum of Chinese money that flows into Australian banks is not something Australia’s economy can afford to ignore or stop now.
Australia’s real problem is its government’s need to explain to its people why they are unable to contain the massive surge in house prices whilst effectively underwriting the prosperity of Chinese criminals at the expense of ordinary Australians.
Successive Australian governments through their lack of long term strategy have created a monster in China’s money in much the same way they pandered to the 5 Tigers before that in the 1980’s.
Unfettered access to Australia’s economy is false economy.
This is now a “Qu’ils mangent de la brioche“(let them eat cake) moment for the Australian government. It does not bode well for them or the Australian people that the tsunami of Chines black money is allowed to infest the economy unabated.