Jho Low: The sovereign fund nightmare

President Bongbong Marcos and associates are not ready to let go of the bone they call Maharlika Fund and have even certified the proposed bill for it as “urgent.” Another term for “urgent” is “to rush” and that is a bad idea because rushing things always creates problems, if not disasters.

Before our honorable members of Congress and the Senate decide to surrender their will and duty as a form of compliance and allegiance to the Executive Department or the cordon sanitaire around PBBM, may I humbly suggest to all, including our beloved readers, to go to their computers, tablets or phones and look up a Malaysian fugitive by the name of Jho Low.

When the PBBM administration pitched the idea of putting up a sovereign wealth fund after the elections, everyone in the public space jumped into the debates but very little information ever came out in the Philippines about how “Jho Low” siphoned off $4.5 billion from the Malaysian sovereign fund called 1MDB by using the political cover provided by an alliance with then prime minister Najib Razak.

There are many posts and videos about “Jho Low” but for purposes of credibility and reliability, search for the Al Jazeera documentaries on the subject. After that you can view other videos that showed how the guy spent money creating “impressions” of wealth, influence and popularity and how he burned billions of US dollars that otherwise was supposed help Malaysia and Malaysians.

The 1MDB nightmare began in 2009 when Najib Razak used his political power and influence to establish the Malaysian Sovereign Fund. It is reported that $1 billion was invested by the government to get things started and from there, Jho Low worked out a deal with a Saudi prince and a newly established oil company where 1MDB was to invest $1 billion but the money did not reach the intended investment.

Instead $700 million was diverted to a Swiss bank account.

This was apparently the method of operation of Jho Low and associates who worked out other so-called investments but little or none of the vital funds for investment were ever placed. Instead, hundreds of millions of dollars were spent paying off, bribing or sharing cuts with politicians and their families, etc.

Former Malaysian prime minister Najib Razak and his wife were accused of receiving a substantial part of the stolen funds. During police raids, several hundred millions worth of cash, jewelry and high value accessories were confiscated from the private residence of Razak. He has been sentenced to 12 years in prison while his wife is still fighting off criminal charges.

“On the side,” Jho Low spent money creating an image of being an international player, paying hundreds of thousands to millions of US dollars to different individuals from US movie stars, celebrities to influencers, etc. to show off that “they” were his friends. As part of the image he also bought his private jet, a super yacht and mansions all over the world.

During a media briefing, a US State Department official described the nightmare as “the largest single case ever brought by the (US) State Department’s kleptocracy asset recovery initiative. 1MDB was created to improve the lives of the Malaysian people but unfortunately, a number of corrupt 1MDB officials treated this fund as a personal bank account.”

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If anything, the insistence of government officials in pushing for the Maharlika Investment Fund is proof that they are not listening to their intended clients or investors or even considering the warning signs. They have already decided what the “investment” engine should look like, who operates it and what needs to be done to get it going.

The only problem is that, it is not what the customers were asking for!

Foreign and local investors along with just about every legitimate corporation have time and again said what they need is “a business friendly” environment where laws and practices are predictable, consistent and competitive. Investors have had to push long and hard for “liberalization,” property ownership and simplification in establishing or setting up corporations, companies and projects.

Having too many laws and agencies with so many processes and requirements have also placed the Philippines in the bottom rank in terms of ideal choices for investment. The fact that the Philippines had to put up the Anti-Red Tape Agency or ARTA is evidence of the bureaucratic mess and corruption. Only when ARTA closes shop for being obsolete is the day we can say the Philippines is a great place to invest.

The national government keeps harping on their need for development funds, money to spend on infrastructure programs, etc. They want to make an oversized piggybank and hope that investors will help raise it and the government can skim capital from the profits or dividends. Why go through the trouble? A reality check shows that so many companies are awash or overflowing with funds that need to be reinvested somewhere.

Ironically, the Philippine government has the PPP or Public-Private Partnership program that has had some measure of success through several administrations. Just looking at the investments poured in by San Miguel Corporation and the MVP Group into our expressways is already proof that, given the right incentive, the private sector will put their money where it is safe and predictable and void of political interference or contrary vested interests.

At the moment, what has been coming out from the internet are videos about failed sovereign funds and guys like Jho Low. I don’t think Malacañang should push its luck and insist on a poorly crafted and badly presented idea that can turn into a nightmare that resurrects film clips and documentaries from the past about bank runs, parallel central banks or confiscated crates of cash and jewelries. Learn from the past.

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