Anwar: Bad move to gag bank notes bribery case

Opposition leader Anwar Ibrahim  has slammed Australia for making a bad move in its bid to hide the names of high-ranking Asian government officials in a bribery case before courts in that country.

The PKR leader said such a ruling by the Australian court against the reporting of this case was bad governance, akin to hiding the truth and raised suspicion if it was aimed at protecting the interests of a powerful few.

No less than three generations of Malaysian prime ministers were named in the case, which alleges that  several Securency and Note Printing Australia (NPA) agents had given millions of dollars in inducements to secure contracts to supply polymer banknotes to Malaysia, Vietnam, Indonesia and other countries.

'It will serve to protect vested interests'

The Supreme Court of Victoria's “unprecedented” suppression order, dated June 19, was leaked on the anti-secrecy group Wikileaks’ website on July 29. However, the order can only apply to Australia.

“We fail to see how such a prohibition would advance the cause of good governance, aside from serving to protect certain vested interests.

“In this regard, the continued pursuance by the Department of Foreign Affairs and Trade of the gag order must be seen as condoning corruption in high places,” Anwar said in a press statement.

Apart from violating a fundamental principle of press freedom, the suppression order also runs counter to the practice of good governance, Anwar said.

This, he added, would involve transparency in dealings among public officials and accountability for their actions.

Both Australians and Malaysians have a legitimate right to all relevant facts and details on this case, Anwar said.

Malaysiakini has published the full list of 14 top Asian government and banking officials mentioned in the case in this article.

- See more at: http://www.malaysiakini.com/news/270569#sthash.zZ3ltIWy.dpuf

WikiLeaks gag order: open justice is threatened by super-injunctions

Australian courts have increasingly been issuing suppression orders preventing the publication of legal proceedings – and an implicit dislike of the media is partly to blame

In a statement published with the leak, Julian Assange, Wikileaks founder, said the gagging order relates to a case that “concerns the subsidiaries of the Australian central bank”. Photograph: Karen Bleier/AFP/Getty Images

Last month, an Australian judge issued a super-duper injunction preventing the reporting of bribery allegations which involved south east Asian political figures, and in some cases their family members.

The allegations have arisen in a criminal case before the supreme court of Victoria. The super-injunction, which not only prevents publication of the allegations, but the detailed terms of the injunction itself, only came to light because WikiLeaks published the intimate details on July 29.
So while WikiLeaks, anonymous blogs and social media are buzzing with the details of these sweeping court orders, which apply Australia-wide, the mainstream media cannot trespass in this territory for fear of facing proceedings for contempt of court. This is the ludicrous nature of overreaching suppression orders, and this one is to last for five years unless earlier revoked.

The internet has made them so porous as to be useless. Only those who publish above the radar with sizeable assets and readily identifiable journalists and executives (at least ones that are not corralled in foreign embassies) are effectively injuncted from publishing.

Among the parties to these proceedings, which can be reported, are lawyers for the Commonwealth of Australia, instructed by the department of foreign affairs. So you can put two and two together and guess that the government was the applicant for this injunction.

Maybe the judge was trying to protect people whose names would come up in the criminal trial without warning or without legal representation. At the same time, it does seem an extraordinarily wide order to grant on the application of someone who is not a party to the criminal proceedings and whose self-interest lies beyond the issues to be tried and determined by the court.

Is it a contempt to tweet from Australia a link to the WikiLeaks story? “Yes”, says media lawyer Peter Bartlett, because it would reveal the names of the parties whose identity in this context is now protected.

At the same time, it would be acceptable to use a #WikiLeaks hashtag without a link. Anyone vaguely interested in this can easily find out in this global news village what we are not allowed to publish from Australia. Such is the disjuncture between proscriptive court orders and the real world of information.

The erosion of the principle of open justice has been steadily ratcheted-up with each passing year. Almost on a daily basis, the courts are issuing suppression orders preventing publication of entire proceedings or aspects of proceedings. In Victoria alone, there were 1,502 suppression orders over a five year period.

Since the passage of legislation in both NSW and Victoria that purports to create a presumption in favour of openness, the opposite has been the case and there seems to be a steady rise in orders restricting reporting of proceedings. Rarely are they accompanied with judicial reasons that carefully balance the argument between open justice and protecting the administration of justice – a flexible term which means more or less whatever a judge wants it to mean.

Judges do bang-on about the importance of open justice and love to quote Jeremy Bentham:

Publicity is the very soul of justice ... it keeps the judge himself, while trying, under trial.

Yet, in their hearts they don’t like things being too open at all. There’s also an implicit dislike of the media trampling on their patch.

The overriding judicial belief is that the administration of justice is a delicate flower that can all too readily wilt if reporters are telling their readers, viewers or listeners what is going on chapter and verse inside their courtrooms.

This is not to say some suppression is not be justified, including where the physical safety of witnesses is at stake; interconnected criminal trials; family law cases; victims of sexual assault; and trials involving children come to mind. National security is also a popular one for governments to trot out, particularly in terrorism cases or hearings involving security assessments of refugees. Judges have a tendency to be far too craven in the face of overblown claims for suppression on grounds of national security.

Human Rights Watch in New York has been drawn to comment on the Victorian orders, with general counsel Dinah PoKempner saying:

The gag order published by WikiLeaks ... is disturbing on its face as it suggests the Australian government is suppressing reporting of a major corruption scandal to prevent diplomatic embarrassment. The embarrassment of diplomatic partners is not the same thing as a threat to national security, or to the integrity of the judicial process.

Britain saw a spate of suppression orders on privacy grounds in relation to the extra-mural sexual activities of sports stars, and in the infamous Trafigura case involving suppression of a report about the company dumping toxic waste on the coast of west Africa. Ultimately, these court orders were rendered worthless by hundreds of thousands of tweets and even questions raised under parliamentary privilege in the House of Commons.

In Australia, the courts have issued internet take down orders in relation to pending criminal trials. The mainstream media tends to comply, while the rest of the internet, including Google, studiously ignores these attempts to quarantine the jury system.

Surprisingly, this pressing issue is missing from the agenda of next week’s big free speech spectacular put on by the Australian Human Rights Commission. The courts have failed to adjust to an environment where suppression orders, injunctions and super-injunctions can be steadfastly ignored by countless self-proclaimed publishers.

Justice Wilmot, an 18th century English judge, said the law of contempt was important to keep the courts surrounded by a “blaze of glory”. Issuing orders whose observance most people now regard as optional does not assist in that mission.

Comments on this article have been closed for legal reasons

WIKILEAKS: 2006 UMNO GENERAL ASSEMBLY: ABDULLAH OVER MAHATHIR

In what one prominent newspaper editor privately called "the beginning of his own cult of personality," Abdullah orchestrated his entrance into the grand assembly hall as a prophet coming to address his people. As Abdullah entered the hall, the audience began singing a well-known Muslim hymn commemorating the Prophet Mohammed's entrance into Medina. Privately, local journalists and some Middle-eastern diplomats were astonished and somewhat offended that Abdullah would equate himself with the Prophet, though newspapers failed to report his entrance procession.
THE CORRIDORS OF POWER
Raja Petra Kamarudin


1.  (C) Summary:  The United Malays National Organization's (UMNO) General Assembly marked Prime Minister's Abdullah consolidation of power within UMNO and the clear political defeat of his predecessor Mahathir Mohamad after months of public attacks by Mahathir.  Mahathir did not attend the assembly due to timely health reasons, but he remained the elephant in the room that everyone knew was there but no one wanted to mention. 
A week prior to the assembly, Mahathir suffered from a "minor heart attack" and later refused to see a visiting Abdullah.  Prior to the assembly, Prime Minister Abdullah Badawi declared he would not be a one-term prime minister and threatened the party leadership not to take him for granted. 
A local editor claimed Abdullah is trying to build a new cult of personality, as Abdullah evoked comparisons to himself and the Prophet Mohammed.  Mukhriz Mahathir assumed his father's role as Abdullah's chief critic at the assembly, but faced a political backlash for his disloyalty to the party leader.  This is the first in a series of reports covering the 57th UMNO General Assembly which was held in Kuala Lumpur, November 13-17.  End Summary.
Mahathir avoids the dance
2.  (C) Less than a week before the convocation of the UMNO General Assembly, former prime minister Mahathir Mohamed admitted himself to the National Heart Institute with complaints of chest pains.  Deemed to have suffered from a "minor heart attack", Mahathir remained hospitalized until November 14, one day prior to Prime Minister Abdullah Badawi's opening of the 2006 UMNO General Assembly.
Conveniently, Mahathir's health provided an excellent excuse not to attend the assembly and face a possibly hostile reception with little or no opportunity to present his own criticism of Abdullah.  Given Abdullah's control over the party and its rules of order, the Prime Minister was certain to use the the assembly to reaffirm his position of leadership. 
Mahathir's loss as a party delegate in his long-time constituency of Kubang Paso in September (ref A), in the face of strong machine politics, was evidence enough that he no longer controlled the party he once led for 22 years.
3.  (SBU) A survivor of heart bypass surgery in 1989, Mahathir's "faulty ticker" created an unassailable and face-saving excuse not to attend the assembly he fought so hard to crash.  However, his hospitalization did not bring any semblance of death-bed forgiveness or reconciliation.
The day after his admission to the hospital, Abdullah paid a visit to the hospital to greet his predecessor, only to be shooed away by doctors and advised that Mahathir could not see Abdullah as he was sleeping and was not able to have visitors.  Mahathir was not going to attend the assembly, but he was not about to reconcile his differences with Abdullah either.
"I am not a one-term prime minister"
4.  (SBU) In the run-up to the assembly, Abdullah gave an exclusive interview to an UMNO-linked newspaper, Utusan Malaysia, which headlined Abdullah's declaration: "I am not a one-term prime minister." 
Dispelling rumors that he would not seek a second term, or conjecture that Mahathir's attacks had weakened his resolve, Abdullah went on to say, "I will not run away.  I am here to stay.  I have long term plans and I will ensure that these plans are implemented."  Abdullah acknowledged that Mahathir's attacks were "no longer about the bridge or his other projects.  He has begun a total fight against me and the government." 
In a closed door meeting with party leaders the following day, Abdullah advised party officials that it was becoming increasingly difficult to be nice, but warned that he could certainly be otherwise if pushed too far. As one attendee remarked, "Abdullah's main message was 'don't take me for granted.' He showed us he was firmly in control."
Najib sets the tone for the assembly
5.  (U) Opening the early sessions of the General Assembly for UMNO Wanita (Women), Puteri (Young Women) and Pemuda (Youth), Deputy Prime Minister and Deputy President of UMNO, Najib Tun Razak, declared the policy that would preside throughout the entire assembly: "The tradition in UMNO has been the complete loyalty to our leaders.  We must be united behind Dato Seri Abdullah Ahmad Badawi, our party President and Prime Minister." 
Najib praised Malaysia's past leaders, but warned "there is great apprehension when the leaders we cherish begin to squabble.  And the worry increases when the opposition tries to take advantage. . .Quarrels will only lead to disunity."  While never mentioning Mahathir by name, Najib made it clear that past leaders would always be honored and revered, but "disunity" would not be tolerated.  Four days later his closing remarks Najib reiterated the party's undivided support for Abdullah in a traditional Malay poem: ". . .This is Pak Lah's era . . .our country he has changed; our religion he has honored, our race he has defended. . .We give him our support. . .in the name of religion, race and country."
Building a cult of personality
6.  (C) In what one prominent newspaper editor privately called "the beginning of his own cult of personality," Abdullah orchestrated his entrance into the grand assembly hall as a prophet coming to address his people.  As Abdullah entered the hall, the audience began singing a well-known Muslim hymn commemorating the Prophet Mohammed's entrance into Medina. 
Privately, local journalists and some Middle-eastern diplomats were astonished and somewhat offended that Abdullah would equate himself with the Prophet, though newspapers failed to report his entrance procession.
7.  (C) Equally telling were the verses Abdullah had recited from the Holy Quran before delivering his key-note address. The readings were from Surah 49. Al-Hujurat, verses 6 - 13, and carried a clear message that  UMNO attendees should reject Mahathir and embrace Abdullah. 
"O you who believe! If an evil person comes to you with any news, verify it, lest you should harm people in ignorance. . . And if two parties among the believers fall to fighting, then make peace between them both.  But if one of the outrages against the other, then fight you all against the one which outrages till it complies with the command of Allah. . .Let not a group scoff an another group, it may be that the latter are better than the former. . .Nor defame one another, nor insult one another by nicknames.  How bad is it to insult one's brother after having faith.  And whosoever does not repent, then such are indeed the wrong-doers." 
The readings from the Holy Quran lasted nearly 20 minutes, and it was commonly heard uttered among visitors and the media that not even PAS (Malaysia's conservative Islamic opposition party) read that many verses at their annual meeting or dared compare their leader with the Prophet.
Abdullah wishes Mahathir a speedy recovery
8. (SBU)  The subtle use of the Quranic verses aside, press reports all applauded Abdullah for "avoiding any mention" of Mahathir.  Many had expected Abdullah to launch a few veiled salvos at Mahathir, but what they heard were the soft words of their Prime Minister urging the attendees to "pray to the Almighty so that Tun Dr. Mahathir has a speedy recovery.  Let us also pray that Tun Dr. Siti Hasmah (Mahathir's wife) and members of her family be given the strength and patience to see through this difficult period."
The son carries on the fight
9. (C)  Just the day before Abdullah's speech, Mahathir had received a long ovation from the UMNO Youth delegates when it was mentioned he had that day returned home from the hospital.  Moreover, Mahathir's absence did not ensure the assembly avoided the fracas he had long ago begun.  Standing in as his father's proxy, Mukhriz Mahathir was quick to criticize Abdullah's performance. 
Echoing what many others mumbled but no others dared utter, Mukhriz called Abdullah's key-note address disappointing.  "I think it's an address he delivered last year.  I was hoping for something new. Perhaps he has other ideas,"  Mukhriz told reporters.
(Abdullah's keynote speech will be reported septel.)
10.  (C) Mukhriz's comments brought quick rebukes from UMNO Youth President Hishamuddin Tun Hussein and threats that Mukhriz risked being expelled from the UMNO Youth Executive Committee.  However, no one took the threats seriously, and many continue to speculate that the 42 year old Mukhriz will run for one of the 25 positions on the UMNO Executive Committee during the next election cycle, guaranteeing his name will remain in the lime-light, and ensuring his father's issues with Abdullah do not merely fade away.
Comment
11.  (C) The UMNO General Assembly demonstrated Abdullah's consolidation of his party power base and signified defeat for Mahathir's attempt to bring Abdullah's leadership to an early end.  Abdullah made it clear that pretenders would not be welcome if they tried to unseat him before he was ready to step down, and DPM Najib responded dutifully as the head cheerleader.  Mahathir's absence from the assembly was convenient, if not well planned, and prevented any rumors or threats of a division within Malaysia's dominant political party.  Mahathir's criticisms of the current administration will not quickly fade away, and will still attract tremendous interest from the public at large, but it is apparent they will have less traction after Abdullah's successful defense and consolidation of his own authority as leader of Malaysia's dominant political party.
LAFLEUR (November 2006)

WIKILEAKS: ANWAR IBRAHIM'S SODOMY TRIAL II - A PRIMER

Most observers conclude that a conviction in Anwar's case, one upheld on appeal, would essentially end Anwar's political career given the legal penalties and Anwar's age (62). According to the Federal Constitution, a member of Parliament will be disqualified from holding his seat if he is convicted of an offense and sentenced to imprisonment for a term of not less than one year or to a fine of not less than US $570 (RM 2,000) and has not received a free pardon.
THE CORRIDORS OF POWER
Raja Petra Kamarudin


C O N F I D E N T I A L SECTION 01 OF 07 KUALA LUMPUR 000529

SIPDIS

FOR EAP/MTS

E.O. 12958: DECL: 07/01/2019
TAGS: PGOV, PHUM, KDEM, KJUS, MY
SUBJECT: ANWAR IBRAHIM'S SODOMY TRIAL II - A PRIMER

Classified By: POLITICAL COUNSELOR MARK D. CLARK, REASON 1.4 (B AND D).

Summary and Comment
1.    (C) Malaysian Opposition leader Anwar Ibrahim will go on trial beginning July 8 on charges of sodomy -- a criminal offense in Malaysia -- with a former aide.  Anwar was previously tried and convicted of sodomy in 2000 in a heavily manipulated trial that the U.S. concluded "was marred by deep flaws in the judicial process."  The verdict was overturned on appeal in 2004. 
Senior Malaysian authorities were very aggressive in handling the present case during the initial period of June-September 2008, but, coinciding with the passing of Anwar's deadline to bring down the government through Parliamentary cross-overs, have since taken a more measured "rule-of-law" approach in public.  Authorities have not taken all the legal and extra-legal measures available to them, for example, to challenge Anwar's bail provisions or resolve an earlier impasse regarding the court venue.
Anwar's conviction in this trial, which may last many months, could end his political career; the judge would decide whether Anwar would remain free pending an appeal.  This cable provides a primer for the Department's reference, including background on the 2000 conviction and the present case, a synopsis of the specific legal charges and penalties, a summary of likely evidence to be presented in court, and three possible scenarios for the trial.
2.  (C) Comment:  The issue of the specific actions between Anwar and his aide will play out in court and, we suspect, in a very sensationalistic fashion.  The facts surrounding the case, however, make a compelling argument that the government's prosecution of the case is foremost a political act against the Opposition leader. 
Whether the incident in question was wholly concocted or has some basis in fact, the case is not part of a morals campaign or a normal criminal matter and has been the subject of extensive political interference and manipulation.  As one consequence, much of the Malaysian public remains deeply sceptical about the government's prosecution of Anwar Ibrahim. 
Anwar's flawed trials in 1998-2000 produced a public uproar and attracted international condemnation; in today's information-intensive environment, such effects may be exacerbated depending on events in court.  Embassy will provide draft press guidance for the Department's consideration prior to the July 8 trial date.  End Summary and Comment.
Sodomy Case I, 1998-2000
3.  (SBU) Under the government of former Prime Minister Mahathir, Anwar Ibrahim was charged and convicted of sodomy (and abuse of power) in a sensationalistic trials in 1998-2000, directed and heavily manipulated by Mahathir against his former deputy.  Anwar was charged with sodomizing his wife's driver. 
During his pre-trial detention, Anwar was beaten by the then Inspector General of Police.  The High Court convicted Anwar of sodomy in August 2000 and sentenced him to nine years imprisonment. 
The U.S. expressed deep concern with the first sodomy trial, noting "that the trial and (Anwar's) resulting conviction and nine-year jail sentence were marred by deep flaws in the judicial process."
After Mahathir stepped down in favor of Abdullah Badawi, the Federal Court overturned the conviction in September 2004 and released Anwar from prison (Anwar's separate conviction for abuse of power remained in place).  The Federal Court found there were "many unusual things that happened regarding the arrest and confession" of certain prosecution witnesses, including the fact that Anwar's driver stated that he was paid to make the allegations against Anwar. 
In an unusual move and possible political compromise, the Federal Court judges included in their judgment the conclusion that there was evidence to confirm "the appellants were involved in homosexual activities," but added that the prosecution failed to prove the alleged offenses beyond reasonable doubt.
Because Anwar's conviction on the separate charge of abuse of power was not overturned, he was barred from political office until April 2008.
Sodomy Case II, 2008
4.  (SBU) Less than four months after Anwar Ibrahim's People's Justice Party (PKR) and its opposition partners made significant advances in the March 2008 national elections, and three months after Anwar became eligible for political office, an aide to Anwar, Mohd Saiful Bukhari Azlan, filed a police report on June 28, 2008, alleging that he had been forcibly sodomized by Anwar on several occasions. 
The following day, Anwar took refuge in the Turkish ambassador's residence, claiming that he feared a repetition of his 1998 arrest and for his personal safety.  He remained with the Turkish ambassador for only one day, departing after public assurances of his safety from the Foreign Minister and Home Minister. 
In the midst of a highly charged political atmosphere, which included Anwar's claims that he could bring down the government through Parliamentary defections by September 16, 2008, and new allegations linking then DPM Najib with the Altantuya murder case, the police investigation proceeded. 
It came to light that Saiful had had contact with the office of then DPM Najib prior to working with Anwar, and more significantly Saiful had met with Najib (and allegedly his wife Rosmah) at Najib's home just prior to filing his police complaint. 
Najib first denied publicly he had any connection with the case, and then acknowledged meeting Saiful, an admission that preempted internet reports about to be released by blogger Raja Petra (who is now a fugitive from sedition charges).
5.  (SBU) As authorities made known their intention to arrest and charge Anwar for sodomy, Anwar's lawyers arranged for his voluntary appearance before police for questioning and charging.  Contrary to the agreement, on July 16, police in commando-style outfits waylaid Anwar's convoy en route to the police station and arrested him on the street.  Police questioned Anwar, took him to a hospital to provide a DNA sample (which Anwar refused, citing lawyers' advice and fear of "manipulation"), and held him overnight.  Anwar was released on police bail by a magistrate on July 17.
The Charges
6.  (SBU) On August 7, 2008, prosecutors charged Anwar Ibrahim before a Sessions Court under Section 377B of the Penal Code, which reads:  "Whoever voluntarily commits carnal intercourse against the order of nature shall be punished with imprisonment for a term which may extend to twenty years and shall be liable to whipping."  Section 377A of the Penal Code defines "carnal intercourse against the order of nature" as including sodomy. 
Prosecutors specifically charged Anwar with the sodomizing of Saiful Bukhari Azlan at a Kuala Lumpur condominium (owned by Anwar's friend) on June 26, 2008.
Although Saiful originally claimed he was forcibly sodomized on several occasions, the prosecutors chose not to pursue charges against Anwar under a separate Penal Code section (377C), which pertains to non-consensual sodomy (with a higher burden of proof), and also to focus on only one alleged incident. 
It is important to note that under Malaysia's legal system, prosecutors may amend the charges during the course of the trial.  Saiful himself does not face charges for the alleged acts.  The Court ordered Anwar to remain free on a personal bond of US $5,700 RM 20,000 and did not impose other restrictions (for example, Anwar has been free to travel abroad and has done so on many occasions since August 2008).  The government did not attempt to dispute or revoke the bail provisions.
Wrangle and Delay over Court Venue
7.  (SBU) Following Anwar's formal charging, and with Anwar's 9/16 deadline looming in the background, prosecutors quickly moved to transfer the case from the Sessions Court to the High Court. 
The prosecution argued on September 10, 2008, that such an important case with possibly complicated legal issues should be dealt with at the High Court and produced a certificate signed by the Attorney General to move the case, which under normal circumstances automatically results in a transfer. 
However, Anwar's lawyers objected to the transfer out of concern that the more politicized High Court level would result in a pro-prosecution judge hearing the case, as happened during the first sodomy trial in 1999-2000. 
In November 2008, independent-minded Sessions Court judge Komathy Suppiah rejected the certificate of transfer, noting that Attorney General Gani Patail faced allegations of evidence tampering in Anwar's 1998 case and the transfer order signed by the AG would "undermine the public perception of the judiciary."
8.  (C) Judge Komathy was overruled in March 2009 by High Court judge Mohamad Zabidin Md Diah who decided the Sessions Court has no authority to refuse the Attorney General's transfer order; Zabidin himself was then assigned to preside over the sodomy trial. 
Anwar's lawyers filed an appeal against the transfer; the Court of Appeals only began to hear the appeal on June 30; based on precedent, Anwar's camp admits the appeal has little chance of success.  Zabidin initially attempted to schedule the trial to begin in May 2009; defense lawyers argued they needed more time and hoped their appeal would be heard prior to the trial. 
(Note:  The High Court often takes one to two years before setting trial dates in normal criminal cases.  End Note.) 
Zabidin subsequently set the trial to begin on July 1.  Anwar's lawyers filed an application to compel the prosecution to provide them with full documentation and evidence that will be introduced at the trial, which the prosecution has thus far failed to do in apparent violation of the Criminal Procedure Code. 
With the hearing on the disclosure of evidence set for July 1 (now pushed back to July 3), Judge Zabidin postponed the trial start to July 8.  The judge originally specified a three-week duration for the trial, but lawyers assume that the trial will take many months to conclude.
The High Court Judge
9.  (C) High Court Judge Mohamad Zabidin Md Diah is a lawyer by training.  After private law practice, he joined the judicial service as a Sessions Court judge and was elevated to judicial commissioner in 2004.  After two years on contract, Zabidin was promoted to become a permanent High Court judge in 2006. 
Zabidin is not a well-known judge and is not associated with high profile or controversial judgments, according to our senior legal contacts.  Anwar's lawyers allege that Zabidin is beholden to the government and will favor the prosecution; the judge's unusual rush to bring the case to trial is viewed by the defense as an early indication of his bias.
Government Switches Gears
10.  (C) Senior government and UMNO party officials adopted a very aggressive public and private approach to the Anwar case during the June-September 2008 period.  This included frequent, prejudicial statements in public, and strong claims in private to other politicians and diplomats regarding Anwar's guilt. 
This intensive phase encompassed the initial news of the allegations and Anwar's formal charging, but also Anwar's own aggressive political posturing and claims that he could bring down the government by September 2008 through Parliamentary crossovers. 
After Anwar's deadline passed in September, and after resolution of the UMNO leadership battle in favor of Najib's succession in October 2008, we observed a definite toning down of the Government's approach, and a shifting to a lower gear.  For example, we did not hear reports of government intervention to quickly resolve the matter of the court venue, which effectively delayed the prosecution by some seven months. 
Anwar's bail provisions remained in place and unchallenged.  Public statements by senior government officials, outside of by-election campaigns, became infrequent.  This toned down approach has continued through the present; it would fit within a hypothetical decision to demonstrate that the trial is a law enforcement matter, rather than a political battle. Regardless, it is clear that the government has not taken all the legal and extra-legal steps against Anwar that it could have since September 2008.
GOM Confidence:  Waning or Recalculating?
11.  (C) Many of our government and UMNO contacts have insisted to us, emphatically so in the early months of the case, that the evidence against Anwar is very conclusive, often hinting at video footage and physical evidence like DNA (see below). 
Recently, some contacts sympathetic to Anwar but not part of his team claimed the government over time had become less certain it had sufficient evidence to convict Anwar. 
According to one unconfirmed account, in June several key aides to PM Najib advised him to drop the case against Anwar because the evidence was not strong enough for an easy conviction and the political cost of forcing through a guilty verdict would be too high.  It is also possible that the toned down rhetoric from the government has been misinterpreted as uncertainty on the authorities' part.
Evidence at the Trial  
12.  (C) Based on available information, we believe the following evidentiary aspects will feature in Anwar's trial:
Saiful's complaint:  The testimony of Saiful is central to the government's case, and he is expected to take the stand. Saiful has continued to assert that he was forcibly sodomized, although the charges under Section 377B do not require proof of a non-consensual act; given his youth (age 23) and physical size, Saiful will need to explain specific circumstances of the incident to support his assertion of rape.
Medical reports:  As publicly revealed by defense lawyers, Saiful underwent two medical examinations on June 28, 2008, just prior to lodging a police report.  The first examination by a Burmese doctor at a local hospital concluded there was "no conclusive clinical findings" suggestive of sodomy, and the doctor recommended he be examined at a government hospital in line with police procedures in such cases.
(Note:  The Burmese doctor briefly left Malaysia after being held for questioning by police.  End Note.) 
The second examination at the police-approved government hospital also failed to uncover medical evidence of sodomy, according to copies of hospital reports released by the defense.
DNA:  The defense team believes prosecutors will introduce DNA evidence, based on DNA samples held by the police since 1998, and are preparing expert witnesses.  The government's hurried passage in Parliament of a DNA bill, approved by the lower house on June 23, is widely seen as tied to the Anwar trial and will permit the government to utilize the 11-year old samples.  The defense could claim the samples were planted, as is widely believed to be the case in Anwar's earlier prosecution.
Anwar's alibi:  Anwar's lawyers claim that five persons will testify that Anwar was with them at the time of the alleged incident.  They also claim that police attempted but failed to intimidate some of these defense witnesses to change their accounts.
CCTV:  The prosecution may use CCTV footage from the condominium where the alleged incident took place to confirm Anwar's presence at a specific date and time.
Character witnesses:  As happened in the 1999 case, it is very possible that prosecutors introduce witnesses to attack Anwar's character and actions aside from the alleged 2008 sodomy incident.  There are unconfirmed reports that the prosecution will call 30 witnesses to the stand.
Defense witnesses (PM Najib and wife Rosmah?):  In an effort to demonstrate the political motivation in the government's case, defense lawyers could call PM Najib, his wife Rosmah, and other senior officials such as Najib's aide Khairil Anas Yusof who appear connected to the case (Najib and Rosmah because they met Saiful and discussed his reporting to the police).  While this will make for momentary drama, we expect the judge to disallow such moves.
Bail and other Conditions during the Trial
13.  (C) Anwar's legal team has expressed concern that the prosecution may apply to revoke the personal bond that allows Anwar to be free pending the trial or seek to impose other conditions, such as impounding his passport or restricting his movement to within Kuala Lumpur. 
The lawyers acknowledge that there is not a strong precedent for overturning the existing bail decision.  In several recent politically-charged court cases, however, Malaysian judges have ignored precedent decisions.
(Note:  We have no information on the prosecution's intentions in this matter. End Note.)
What if Anwar is Convicted?
14.  (C) Most observers conclude that a conviction in Anwar's case, one upheld on appeal, would essentially end Anwar's political career given the legal penalties and Anwar's age (62).  According to the Federal Constitution, a member of Parliament will be disqualified from holding his seat if he is convicted of an offense and sentenced to imprisonment for a term of not less than one year or to a fine of not less than US $570 (RM 2,000) and has not received a free pardon.
This stipulation comes into effect after all appeals are exhausted (at the Court of Appeals and Federal Court).  The constitution also provides that a convicted person can only be active in politics after five years from the date of his release from prison.  At age 62, a second conviction could effectively bar Anwar permanently from political life.  In the event of a conviction, Anwar will certainly appeal. 
The judge will decide whether Anwar remains free pending appeal or immediately goes to jail.  While officially remaining a Member of Parliament pending the final outcome, he would be unable to operate from prison as the Opposition leader.
Political Interference and Manipulation
15.  (C) The issue of the alleged actions between Anwar and Saiful will play out in court, and sodomy, even a consensual act, is a crime under Malaysian law.  The facts surrounding the case, however, make it clear that the government's prosecution of the case is foremost a political act against the Opposition leader. 
The Malaysian government does not aggressively prosecute cases of sodomy; we find record of some 55 cases since 1991, or an average of 3 per year.  The vast majority of such cases involve adults assaulting minors.
Anwar's prosecution is not part of a morals campaign.  The GOM does not aggressively target non-heterosexual behavior; if it did so, a recent cabinet minister, senior staff associated with PM Najib and other prominent citizens linked to the government also would find themselves under investigation.
16.  (C) Aside from the immediate comparison with Anwar's previous prosecution for sodomy, which was grossly manipulated by former Prime Minister Mahathir, the indications of political interference and manipulation in the present case are compelling; much of the information is in the public realm.  Collateral reporting, not addressed here, provides further substantiation.
Najib connection:  Keeping in mind that Najib and Anwar remain bitter enemies, it is striking that Najib met personally with the complainant Saiful prior to the police report, and allegedly arranged for Saiful to have intensive contact with senior police officials in the days before he filed the complaint.
Senior officials' involvement:  From the very early stages, the senior-most officials in the government, including then PM Abdullah, current PM Najib, cabinet ministers, the AGO and national police chief (the latter two having played important roles in Anwar's 1998-1999 flawed trials) and officials of the ruling UMNO party have been intimately involved in decisions regarding the case, according to Embassy contacts and publicly available sources. 
Despite the current toned-down government approach, and emphasis that the Anwar trial is a normal law enforcement matter, senior-most executive and UMNO party officials continue such a directing role.
Leakage of information:  Senior government leaders provided law enforcement information on the case to leaders of Anwar's coalition partner, the Islamic Party of Malaysia (PAS), in an unsuccessful attempt to split PAS from the opposition.  A recent internet report claims that the government has provided some government-directed press editors with a "sneak preview" of evidence against Anwar.
Public statements:  From the initial public reports of the complaint against Anwar in June 2008 to Anwar's election to Parliament in August 2008, PM Abdullah and other senior leaders spoke publicly and frequently about Anwar's alleged crime and the need for justice, and the case featured prominently in the parliamentary campaign against Anwar.
There have been far fewer statements since September 2008, except during by-election campaigns.
Press:  The Government-directed mainstream press, which includes all major dailies and all TV stations, provided extensive coverage of Saiful's allegations while severely limiting reporting on Anwar's response during the heated period of June-August 2008.
Alleged intimidation:  The police detained for questioning the doctor who first examined Saiful, causing him to leave Malaysia temporarily out of concern for his safety.  Police also pressured the hospital in question to hold a press conference to state that the doctor was not qualified to conduct such an examination, according to our sources.
According to defence lawyers, several of their witnesses have been threatened by police in an effort to change their testimony.  The Imam for the Federal Territories (including Kuala Lumpur and the administrative capital Putra Jaya) claimed publicly that he was forced to witness an "improper" Islamic oath taken by Saiful; he was subsequently sacked by the Prime Minister's Department.
Customized Legislation, the DNA bill:  The government hurriedly prepared a bill on DNA evidence, following shortly after Anwar's refusal to provide a DNA sample at the time of his arrest, which compels suspects to provide samples and allows authorities to utilize previously stored samples in new criminal cases.  The government originally introduced the bill in August 2008 and voted it through the lower house only on June 23, 2009; several steps remain before it becomes law.
Public Scepticism
17.  (C) In the run-up to Anwar's August 2008 arraignment, public opinion polling conducted by the Merdeka Center, Malaysia's most respected opinion survey group, revealed that a preponderance of Malaysians believed the charges against Anwar were unjust, indicating a deep public scepticism regarding the government's case. 
We understand that new polling on this question will be released before the July 8 trial date.  Pollsters have informed us that the new data continues to reflect widespread public suspicions.
Reportedly, only 15 percent of ethnic Malays and 10 percent of Malaysians overall believe Anwar's prosecution to be justified.  Outside of government circles, many Embassy contacts, including those who give credence to rumors of Anwar's personal life, take it as a matter of fact that the government is prosecuting Anwar for political reasons. 
In a public statement made on June 24, former Bar Council president (and U.S. Woman of Courage awardee in 2009) Ambiga Sreenvasan urged the government to drop the charges against Anwar in order to restore credibility to PM Najib's ruling coalition.
Scenarios
18.  (C) When viewed as a political matter, a number of potential scenarios for the Anwar prosecution present themselves; below we review three that are most apparent.  In these scenarios we assume that Najib will exercise the deciding voice on how and whether to proceed, though he also will need to weigh the opinions of other UMNO ruling party elites.
-- Conviction at all costs:  Based on an assessment that Anwar is a threat to UMNO's continued rule at least at the time of the next national elections, Najib and UMNO elites decide that the political costs of prosecuting Anwar are acceptable and pursue the matter aggressively inside and outside the courtroom with the overriding goal of convicting Anwar and removing him permanently from politics. 
While asserting that this is purely a law enforcement matter, the government exerts political pressure as necessary, accepting reputational risks in the process, and achieves a conviction after months of high-profile drama in the courtroom.  The courts hear and reject Anwar's appeals in an expedited manner, well ahead of the next national elections in 2012 or 2013. 
This scenario appeared to be in play during the initial months of the case and in the lead up to Anwar's September 2008 deadline to overturn the ruling coalition's majority; it has been less apparent since then.  Recalling the deep personal animosity between Najib and Anwar, and the singular importance of Anwar to the opposition coalition, this scenario remains plausible, even though Anwar's immediate threat to UMNO's rule has passed.
-- Merits of the case, reputational damage:  In a second scenario, the government proceeds with the prosecution but refrains from exerting undue pressure to achieve conviction, believing that the evidence presented and/or the court proceedings themselves will sufficiently damage Anwar's reputation and this will outweigh harm to the Najib administration's credibility. 
Conviction remains the desired outcome, supported by sufficient evidence, but the government accepts some risk of a final verdict of innocence after all appeals are heard.  This scenario rests on the assumption of sufficiently clear evidence against Anwar that will swing public opinion in favor of the government even in the event of an eventual acquittal.  Absent greater information on the government's evidence against Anwar, it is difficult to judge the prospects for this scenario.
-- Withdrawal:  In a third scenario, Najib and UMNO elites decide that the government's case is not strong enough to pursue, entails unacceptable political costs, or is no longer necessary because of the diminished threat from Anwar.  The government withdraws the charges prior to the trial start of July 8, or shortly after the trial begins, possibly under conditions of "discharge not amounting to acquittal."
(Lawyers tell us that such a discharge in theory would allow the government to reactivate the case at a future time, thus maintaining this as a lever over Anwar.) 
Najib, confident that he can beat back an opposition challenge in the next election, attributes the original decision to prosecute to the previous administration of Abdullah Badawi and takes credit for respecting the rule of law in this high profile case involving his determined political nemesis. 
In contrast to 2008, Najib's currently secure position as UMNO leader and Prime Minister, along with Anwar's diminished threat, make this scenario a political possibility, though some UMNO elites and perhaps Najib himself may not want to give up the opportunity to remove Anwar Ibrahim from politics once and for all.
KEITH

WIKILEAKS: Anwar becomes opposition leader in Parliament

Anwar’s Political Secretary Sim Tze Min and PKR electoral chief Saifuddin Nasution told Poloffs that the opposition plan to achieve a majority in Parliament by September 16 remains "on" but others, including PKR Vice President Azmin Ali, were more cautious, noting "we'll see." More detached observers remain highly skeptical of Anwar’s ability to meet his self-proclaimed deadline, but do not deny, given his present momentum, that the opposition leader could eventually prevail. 
THE CORRIDORS OF POWER
Raja Petra Kamarudin

C O N F I D E N T I A L SECTION 01 OF 02 KUALA LUMPUR 000765

SIPDIS

DEPT FOR EAP/MTS

E.O. 12958: DECL: 08/28/2018

TAGS: PGOV, PHUM, PINR, KDEM, MY

SUBJECT: ANWAR SWORN IN AT PARLIAMENT

REF: A. KL 759 ANWAR WINS RESOUNDING VICTORY

     B. KL 753 INDICATORS ALL POINT TO ANWAR VICTORY

     C. KL 743 GOM PLAYING HARDBALL

Classified By: ACTING POLITICAL SECTION CHIEF W. GARY GRAY, REASON 1.4 (B AND D).

1. (C) Summary.  Anwar Ibrahim, still savoring his landslide by-election victory, was sworn into Parliament on August 28 after being officially confirmed as leader of the Pakatan Rakyat (PR) opposition alliance.  His first intervention was to question the merits of the DNA identification bill which the ruling coalition planned to pass later that day. 

Some key Anwar aides seemed to be hedging on their leader’s stated pledge to oust the Government by September 16 and neutral observers were even more skeptical, but most agreed that Anwar is now enjoying a surge of momentum.   A suddenly more assertive mainstream media is portraying the BN as mired in old thinking and old methods, in contrast to the more cutting edge tactics effectively employed by the opposition in Permatang Pauh.  End Summary.

2.  (C) Parliament was the center of attention on August 28 as Anwar Ibrahim, followed by a large media entourage, entered to be sworn in by Speaker Pandikar Amin Mulia at the beginning of the session.  The Speaker also formally announced that the PR parties had unanimously selected Anwar as Opposition Leader in Parliament. 

Star newspaper chief editor Wong Chun Wai, (recalling a conversation with PM Abdullah a few days before) told Poloffs that PM Abdullah himself had overruled underlings who wanted to delay Anwar’s entry into Parliament and ordered that the newly-elected MP be sworn in as soon as possible.  Anwar, again mobbed by reporters upon re-emerging from the chamber, chided the BN for spending "billions" in Permatang Pauh but failing to win over voters with its negative race-based campaign. 

Having harshly criticized the media over the past several weeks, Anwar told the assembled journalists that he knew "your hearts were in the right place even though you have to write what your bosses order."  In that regard, state-owned RTM (Radio-Television Malaysia), which normally broadcasts the first 30 minutes of every Parliament session, began its coverage only after Anwar’s swearing in.

3. (C) The mainstream media, with the notable exception of Malay language publications, has exhibited uncharacteristic boldness in the wake of the by-election, with a number of articles sharply critical of the BN's campaign in Permatang Pauh and expressing grudging admiration for the opposition alliance's operation.  Star editor Wong told us he had resisted pressure to downplay Anwar's triumph and insisted on reporting it in banner headlines. 

Such openings have appeared in the past only to be slammed shut, and the GOM sent a message on August 27 by ordering all 21 Internet Service Providers (ISPs) in the country to block access to Raja Petra’s controversial Malaysia Today website (www.Malaysia-Today.net).  

The site remains accessible, however, through an alternate link.  Raja Petra charged that the GOM had breached its own commitment not to censor the internet during the promotion of Malaysia’s own version of Silicon Valley, the Multimedia Super Corridor.

4.  (C) While Anwar held court outside, in the chamber opposition MPs voiced their objections to the DNA identification bill, which Home Affairs Minister Syed Hamid was pushing to pass by the end of the day.  Anwar himself returned to make his first intervention, questioning the Government’s motives for trying to rush through the bill, widely seen as targeted at Anwar's own ongoing sodomy case (Ref C). 

Opposition MPs acknowledged to us that they had no hope of delaying the legislation and expected it to pass, but as noted (Ref A), the bill must pass through the upper house, not scheduled to meet until December 1, before becoming law.

5.  (C) Anwar’s Political Secretary Sim Tze Min and PKR electoral chief Saifuddin Nasution told Poloffs that the opposition plan to achieve a majority in Parliament by September 16 remains "on" but others, including PKR Vice President Azmin Ali, were more cautious, noting "we'll see." More detached observers remain highly skeptical of Anwar’s ability to meet his self-proclaimed deadline, but do not deny, given his present momentum, that the opposition leader could eventually prevail. 

Saiffudin maintained that Anwar is now clearly winning the electoral game, but what remains is winning over the critical institutions, especially the police and the military.  He claimed, however, that compared to ten years ago, Anwar and the opposition are in far better shape in this regard to having, won over a number supporters within the various key state institutions. 

He acknowledged that the Police Special Branch was especially critical in this regard, expressing the hope that SB personnel, better than anyone else, knew which way the political winds were blowing and would want to emerge on the winning side or at least hedge their bets.

6.  (C) Our PKR interlocutors continued to exhibit some nervousness about PAS's reliability as a coalition partner.

While gratified with what they saw as a sterling PAS performance in supporting Anwar in Permatang Pauh, they worry that elements within PAS, especially its youth wing, will continue to issue extreme pronouncements that alienate other coalition partners.  They also concede that any new balance of power resulting from MPs crossing over to Anwar’s side must include sufficient numbers of Malay/Muslims to avoid alienating PAS.

In addition to the fragility of the PR, of course the next serious obstacle for Anwar is his upcoming sodomy trial.  GOM sources continue to suggest that they have what they see as some sort of convincing evidence up their sleeve.  This presumably would be revealed upon the beginning of the trial, the date of which will be determined when the court reconvenes on September 10.

KEITH

Wikileaks: US envoy says Umno abused security laws, institutions

The leaked cable said that “in good times Umno can maintain control by distributing power and money to get what it wants (but) in bad times, it uses the stick.” — Reuters file pic

 

KUALA LUMPUR, July 22 — The United States ambassador here told Washington in 2008 that Malaysia was facing a “political crisis” caused by Umno’s control and abuse of security institutions and national security laws to remain in power.


US ambassador James R. Keith said in a leaked cable, released by whistleblower site WikiLeaks through the Malaysia Today news portal that “in good times Umno can maintain control by distributing power and money to get what it wants (but) in bad times, it uses the stick, and for now that means intimidation.”

The document, signed by the US ambassador at the time, charged that Umno “controlled” security institutions like the military and the police by appointing “party stalwarts” to head these institutions. The cable said that while the army would remain “loyal” to legitimate leadership, the police, on the other hand, took direct orders from Umno.

“Umno leaders, united behind but also in a sense using Prime Minister (Tun) Abdullah Ahmad Badawi, have made it clear that they are willing to blacken Malaysia’s reputation to ensure the end to opposition leader (Datuk Seri) Anwar Ibrahim’s political challenge,” said the cable in reference to the Pakatan Rakyat (PR) leader’s on-going sodomy trial where he was charged with sodomising an ex-aide on June 26, 2008.

“The ruling elite maintains control over the security apparatus through party stalwarts who run the security institutions, mainly the police but also the military. We believe the military will remain loyal to legitimate leadership and is not a likely tool to overturn an elected, royally-approved and Malay-led government from either the ruling or opposition side. The police, on the other hand, follow orders from the ruling party.

The document also stated that the government had “failed” to convince the majority of Malaysians that Anwar’s sodomy trial was not politically-motivated. — file pic

“The “commando-style” arrest of Anwar last week, the roadblocks and security checks throughout the city of Kuala Lumpur, the recent arrest of blogger Raja Petra (Kamaruddin), intimidation of Sabah politicians, and the authorities’ strident rhetoric are all part of a broad message to the Malaysian people that they had better not stand in Umno’s path. In today’s Malaysia, one can get along by going along (and of course one can go farther as a Malay rather than a Chinese or Indian), but it is also true that one can be run over,” said the US cable.


The cable added that Umno defined national security as a means to protect the party’s “superiority” and to ensure that the opposition cannot take over the reins of federal power.

“Now the criminal law is laid bare as a political tool, just as useful to the ruling party as the national security law.

“Umno leaders may fail to grasp the consequences of upping the ante; they hear what we are saying, but do not understand sufficiently well how difficult it will be for them to overcome the shadows they are casting on the country. They no doubt thought they were choosing the more palatable path in using the criminal law, and thus the sodomy charge, rather than detaining Anwar as a matter of national security under the Internal Security Act. But contrary to their intent, many in the international community will take this as escalation,” said the cable.

The document stated that at that point in time the Barisan Nasional (BN) government had “failed” to convince the majority of Malaysians as well as the international community that Anwar’s sodomy trial was not politically-motivated.

“The authorities themselves betray that fiction on a daily basis in the pages of the domestic press, and barely one in 10 Malaysians are buying into the party line a survey tells us,” said the cable.

The report recommended that the US “exploit” every possible opportunity for “authoritative bilateral exchange” to ensure the BN government understood the costs of “efforts that diminish the rule of law.”

WIKILEAKS: ANWAR IMPLICATES DPM NAJIB IN MURDER CASE

A private investigator's legal deposition, revealed by Opposition leader Anwar Ibrahim on July 3, implicates Deputy Prime Minister Najib in the high-profile Altantuya murder case. The deposition, based primarily on statements reportedly made by Altantuya and murder defendant Razak Baginda, indicates that Najib had an affair with Altantuya, Altantuya assisted Najib in the controversial purchase of French submarines, and Najib attempted to intervene on Razak Baginda's behalf at the time of his arrest. 

THE CORRIDORS OF POWER
Raja Petra Kamarudin

C O N F I D E N T I A L SECTION 01 OF 02 KUALA LUMPUR 000572

SIPDIS

FOR EAP/MTS AND INR

E.O. 12958: DECL: 07/03/2028

TAGS: PGOV, PREL, PINR, MARR, KDEM, KJUS, MY

SUBJECT: ANWAR IMPLICATES DPM NAJIB IN MURDER CASE

REF: A. KUALA LUMPUR 570 - GOM DELIVERS PROTEST TO USG

     B. KUALA LUMPUR 563 - ANWAR ON OFFENSIVE

     C. KUALA LUMPUR 557 - ANWAR TAKES REFUGE

     D. KUALA LUMPUR 73 - PROSECUTOR DOWNBEAT ON MURDER CASE

     E. 07 KUALA LUMPUR 291

Classified By: Political Section Chief Mark D. Clark, reason 1.4 (b and d).

Summary

1.  (C) A private investigator's legal deposition, revealed by Opposition leader Anwar Ibrahim on July 3, implicates Deputy Prime Minister Najib in the high-profile Altantuya murder case. 

The deposition, based primarily on statements reportedly made by Altantuya and murder defendant Razak Baginda, indicates that Najib had an affair with Altantuya, Altantuya assisted Najib in the controversial purchase of French submarines, and Najib attempted to intervene on Razak Baginda's behalf at the time of his arrest. 

The investigator claims that this information was suppressed by police and ignored by prosecutors. 

Anwar's revelation of this information comes as he launches a political offensive following recent sodomy allegations, which he believes were instigated by Najib.  Meanwhile, Anwar and the Opposition coalition are set to begin a series of nationwide rallies, including a major gathering on July 6 near Kuala Lumpur. 

The national police chief announced the military would join the police in tackling illegal assemblies in an emergency situation, a role the military last played during the 1969 politically-inspired race riots. 

Najib and the government of Prime Minister Abdullah will need to respond, both to Anwar's explosive revelations, but also to the Opposition leader's political offensive, including plans to hold nationwide rallies.  End Summary.

Explosive Revelations

2. (SBU) On July 3, as the next step in his energized political offensive, former DPM and de facto opposition coalition leader Anwar Ibrahim released a statutory declaration (similar to a deposition in the U.S. system), made by private investigator P. Balasubramaniam on July 1, linking Deputy Prime Minister Najib to murder victim Altantuya Shaariibuu (ref e) and implicating Najib in efforts to subvert the investigation of the case. 

(Najib's advisor Razak Baginda and two members of Najib's security detail are currently on trial for murder in this case.) 

Anwar produced the explosive affidavit during a press conference on July 3, with Balasubramaniam standing by his side.

3.  (SBU) Balasubramaniam bases his statement on conversations he had with Razak Baginda and with Altantuya; on events he witnessed acting as Razak Baginda's investigator; and his experiences under arrest and in the courtroom at the opening stage of the murder trial.  Among other things, the affidavit includes the following damaging allegations against Najib and others:

-- Najib and Altantuya had an affair and that Najib introduced her to Baginda.  (Note: Najib has repeatedly denied knowing Altantuya.  End note.)

-- Najib, along with Razak Baginda, was with Altantuya in Paris in connection with the negotiations for the purchase of French submarines, and that Altantuya believed she was due $500,000 for her services.

-- Najib asked Razak Baginda to take care of Altantuya, as Najib did not want Altantuya harassing him.

-- Najib, in a text message, told Razak Baginda he would meet with Inspector General of Police Musa Hassan to resolve the issue of Razak Baginda's impending arrest for murder.

-- Police omitted the above information that Balasubramaniam provided during his seven-day interrogation regarding the murder, and that prosecutors never addressed any questions to him during his court appearances.

4.  (SBU) Anwar stated it was evident the police and prosecution team, especially IGP Musa Hassan and Attorney General Abdul Gani manipulated the case to protect the DPM and hide any linkages of the DPM to Altantuya.  He declared that the declaration further confirmed a clear and consistent pattern of manipulation of the criminal justice system since 1998. 

Anwar continued by saying he is worried the IGP and AG will again manipulate evidence and statements during the probe into alleged sodomy charges against Anwar (ref A - C).  

5.  (SBU) Anwar's incendiary revelations follow a statutory declaration by controversial blogger Raja Petra in which he alleged that Najib's wife, Rosmah, was present at scene of Altantuya's murder.  In addition, on July 1 Anwar publicly accused Najib and Rosmah for being behind the current sodomy allegations against Anwar, which is now under police investigation.

Taking the Campaign Against Najib on the road

6.  (SBU) On another front, Anwar starts a nationwide tour with a rally in Penang on July 5 followed by an appearance at a rally in Shah Alam on July 6.  The Opposition hope to use the Shah Alam rally, originally intended as a protest against the fuel price hikes, as a show of support for their cause against the government. 

Anwar and other Peoples Alliance (opposition coalition) leaders are urging their supporters to attend and hope for a massive turnout (a minimum of 50,000 people) in order to send a message to the government and add credibility to Anwar's claims that he can bring down the government through the defection of enough government MPs by his announced target of September 16.

Police-Military Joint Exercise to Maintain Public Order

7.  (C) At a joint press conference between the Inspector General of Police Musa Hassan and Armed Forces Chief Abdul Aziz Zainal on July 2, Musa Hassan stated that the cooperation between the security forces is crucial because political parties, NGOs, and individuals were organizing more illegal assemblies.  They announced the police and armed forces began a joint training exercise to maintain crowd control and public order. 

Musa said the police and military would work together to tackle illegal assemblies only if absolutely necessary and in the event of a declared emergency.  The tabletop command post exercise began July 2 is expected to run until July 7.  Another joint exercise is planned in September (coinciding with the deadline Anwar set to bring down the ruling government). 

The last time joint police and military force was used to maintain public order was during the politically motivated 1969 race riots.  In 1974, a contingent of rangers was deployed to university campuses to control student protests (coincidentally led by then student activist Anwar Ibrahim). 

Police chief Musa Hassan stated use of military forces during a public disturbance would only take place after consultation with the Home Ministry and Defense Ministry.  A senior military staff member told the DATT that the military is not anxious to take on police roles, but is closely watching events.

Comment

8.  (C) Anwar and Najib have entered a very high stakes political game.  The risks to both men are tremendous, and not limited to their political careers.  Najib will be damaged by the latest serious allegations, coming on the heels of other statements implicating him and his wife in the murder, and the existing widespread public belief that the ongoing Altantuya murder trial has been the subject of political manipulation. 

Najib and the government of Prime Minister Abdullah will need to respond, both to Anwar's explosive revelations, but also to the Opposition leader's political offensive, including plans to hold nationwide rallies.

KEITH

WIKILEAKS: BLOGGER ALLEGES DPM'S WIFE AT MURDER SCENE

Controversial internet journalist Raja Petra voluntarily completed a sworn statement ("statutory declaration") at a Malaysian court on June 18, in which he affirmed that he was "reliably informed" Deputy Prime Minister Najib's wife Rosmah Mansor, together with her aide Norhayati and acting Colonel Aziz Buyong (Norhayati's husband), were present at the scene of the murder of Mongolian national Altantuya Shaariibbu in October 2006.
THE CORRIDORS OF POWER
Raja Petra Kamarudin

C O N F I D E N T I A L SECTION 01 OF 02 KUALA LUMPUR 000529

SIPDIS

FOR EAP/MTS AND INR

E.O. 12958: DECL: 06/23/2028

TAGS: PGOV, PINR, KJUS, KDEM, MY

SUBJECT: BLOGGER ALLEGES DPM'S WIFE AT MURDER SCENE

REF: KUALA LUMPUR 335 - SEDITION CHARGES AGAINST BLOGGER

Classified By: Political Section Chief Mark D. Clark, reason 1.4 (b and d).

Summary

1.  (C) Controversial internet journalist Raja Petra executed a sworn statement on June 18 to the effect that Deputy Prime Minister Najib's wife, Rosmah Mansor, was at the scene of the murder of Mongolian national Altantuya Shaariibbu in October 2006, and that PM Abdullah and a Royal received information to that effect. 

While the mainstream press has shied away from printing Rosmah's name, Kuala Lumpur is abuzz with this latest explosive allegation.  PM Abdullah has thus far remained silent, while the national police chief and Attorney General said they would investigate. 

Raja Petra, who faces sedition charges for earlier claims, informed us that the Attorney General's Office filed a police report on the matter, and he expected to be called in for questioning soon.

While the latest allegations of Rosmah's presence at the murder seem implausible, they nevertheless will have resonance with a Malaysian public that does not have confidence in the integrity of the Altantuya murder investigation.  Continued public attention to such reports also could damage Najib's front-runner status as PM Abdullah's successor.  End Summary.

Rosmah at Murder Scene, PM Has Report

2.  (U) Controversial internet journalist Raja Petra voluntarily completed a sworn statement ("statutory declaration") at a Malaysian court on June 18, in which he affirmed that he was "reliably informed" Deputy Prime Minister Najib's wife Rosmah Mansor, together with her aide Norhayati and acting Colonel Aziz Buyong (Norhayati's husband), were present at the scene of the murder of Mongolian national Altantuya Shaariibbu in October 2006.

Raja Petra also stated that military intelligence provided a report with this information to Prime Minister Abdullah, which was subsequently given to Abdullah's son-in-law Khairy Jamaluddin "for safe-keeping," and that one of Malaysia's traditional rulers also was briefed on the matter.  Raja Petra did not reveal the source of this information. 

Raja Petra remains indicted for sedition for his earlier internet reports that implied DPM Najib and wife Rosmah were connected to the on-going Altantuya murder case (ref A).

3.  (SBU) Internet reports of Raja Petra's declaration emerged on June 20, and the full text became available on his Malaysia Today website.  Some of Malaysia's mainstream media briefly reported Raja Petra's new allegations, but carefully avoided identifying Rosmah Mansor as the "prominent VIP" named in his statement. 

An aide to Najib reportedly described the statement as "mind-boggling."  Inspector General of Police Musa Hassan told reporters the police would look into the "highly inflammatory" allegations, and could take action against Raja Petra if they were found to be untrue, while Attorney General Abdul Gani Patil stated his office would look "seriously" into the matter.

Heavy Buzz in Parliament

4.  (C) As members of Parliament gathered June 23 for the opening of the second parliamentary session, Raja Petra's story competed with speculation of a no-confidence vote against PM Abdullah for the attention of lawmakers.

Opposition MPs, parliamentary watchers, and journalists who spoke with us at Parliament all remarked that Raja Petra had put himself at great risk, and therefore they speculated that he must have some evidence in hand.  If this is a bluff, "it will cost him and his family," one MP remarked. 

Prominent opposition MP Lim Kit Siang said he was troubled that the PM had kept quiet about the allegations.  Later on June 23, Kit Siang introduced an emergency parliamentary motion to discuss Raja Petra's statement.  The Parliament Speaker is required to accept or reject on an emergency motion within 24 hours.

Raja Petra Ready for Police

5.  (C) We spoke briefly with Raja Petra and his wife Marina on June 23.  They related that the AGO had filed a police report regarding the affidavit.  A seemingly confident Raja Petra said, "I am ready and eagerly waiting for the police to question me," and took exception to the threatening tone of IGP Musa's remarks.  He also implied he had further evidence to implicate DPM Najib and his wife, and asked rhetorically what action the police would take "if the allegations are true."

Comment

6.  (C) Putting aside the question of Najib's links to the case, the allegation that Najib's wife would be present at the Altantuya murder scene strikes us as very implausible, though fully in keeping with Raja Petra's sometimes wild and highly emotional reporting. 

The Malaysian public and political elite, however, have no confidence in the integrity of the government's investigation into the 2006 murder of Altantuya.  The government's inept and gruelingly slow prosecution of the case against DPM Najib's former advisor Razak Baginda and two soldiers from Najib's security detail, and the authorities' decision early on to limit the scope of the investigation to exclude any further links with DPM Najib, have sent clear signals of political interference.

Against this backdrop, most Malaysians will believe there is at least some truth in Raja Petra's affidavit.  Amidst the leadership struggle within the ruling UMNO party, emerging fractures in the National Front coalition, and maneuvering for a no-confidence vote against PM Abdullah, the latest allegations add to the nation's sense of political turmoil.

Continued public focus on such allegations also could harm Najib's front-runner status as PM Abdullah's successor.

KEITH

WIKILEAKS: UNPRECEDENTED SEDITION CHARGES AGAINST BLOGGER

Raja Petra was charged after posting an article on his website on April 25 entitled ‘Let’s send the Altantuya murderers to hell’ that implied that DPM Najib Tun Razak and his wife Rosmah Mansor were connected to the 2006 murder of a young Mongolian interpreter, Altantuya Shaaribuu. He also accused PM Abdullah of holding on to evidence that implicates his deputy in order to keep Najib in line. 
THE CORRIDORS OF POWER
Raja Petra Kamarudin

C O N F I D E N T I A L SECTION 01 OF 02 KUALA LUMPUR 000355

SIPDIS

FOR EAP/MTS AND DRL - JANE KIM

E.O. 12958: DECL: 05/18/2018

TAGS: PGOV, PHUM, PINR, KDEM, KPAO, MY

SUBJECT: UNPRECEDENTED SEDITION CHARGES AGAINST BLOGGER

REF: A. A) KL 130 - PRESS STIFLED IN ALTANTUYA TRIAL

     B. B) KL 73 - PROSECUTOR DOWNBEAT ON ALTANTUYA CASE

     C. C) 2007 KL 291 )RAZAK BAGINDA CASE

Classified By: Political Section Chief Mark D. Clark for reasons 1.4 (b and d).

 1. (C)  Summary. For the first time, Malaysian authorities have resorted to a colonial-era law to bring sedition charges against a blogger and the author of a comment on an internet web site.  Blogger and veteran anti-government activist Raja Petra Kamarudin touched a sensitive nerve in implying that DPM Najib Tun Razak and his wife were connected to 2006 murder of a young Mongolian interpreter, Altantuya Shaaribuu (reftels).  He also accused PM Abdullah of holding on to evidence that implicates his deputy to keep Najib in line. 

Visiting EAP DAS Marciel raised the issue with Deputy Home Minister Wan Farid on May 6, and Wan Farid indicated the proceedings against Raja Petra should be a warning to other bloggers.  The Raja Petra case will continue to keep public focus on the Altantuya case and allegations of Najib's involvement.  Prosecuting a blogger for sedition also complicates Prime Minister Abdullah's efforts to be seen as a reformer.  End summary.

Colonial-era Sedition Act utilized

2. (SBU) On May 6 Malaysian Police charged blogger Raja Petra Kamarudin and Syed Ali Akhbar, who posted a comment on Raja Petra's website, with sedition.  This is the first time Section 4(1)(c) of the Sedition Act (enacted by British colonial authorities in 1948) has been used in response to material appearing on the internet. 

The Section reads, ‘Any person who prints, publishes, sells, offers for sale, distributes or reproduces any seditious publication’ can be charged with sedition.  If found guilty, Raja Petra and Syed Ali could be jailed for a maximum of three years and/or face a fine of up to USD1,600. 

Syed Ali was released on bail after pleading not guilty and the court fixed June 10 to hear submissions by the defense and prosecution on a preliminary objection raised by the defense, which claimed that the charge was groundless.  Raja Petra initially refused to post bail and was remanded at the Sungai Buloh prison, but on May 8 he changed his stance and he was scheduled to be released on bail May 9.  His trial is fixed for October 6-10.

3. (SBU) Another prominent blogger described Raja Petra’s action to poloffs as a gambit to not only generate publicity for himself but also for his news portal Malaysia Today (www.malaysia-today.net).  The local blogger community as a whole has reacted with outrage to what is seen as a threat to the free exchange of ideas on the internet.

The Malaysian Bar Council called on the authorities to withdraw the charges against Raja Petra and Syed Ali, describing the relevant section of the Sedition Act as a draconian, archaic and repressive legislation that has long outlived any perceived utility it might ever have had. 

A number of prominent civil society groups issued a statement characterizing Raja Petra’s arrest as politically motivated and aimed at silencing principled and uncompromising voice speaking against the abuse of power, including those stemming from the highest level of government and authority.

4.  (C) DPM Najib publicly denied that the arrests were politically motivated or an indication of government intentions to crack down on internet sites.  Visiting EAP DAS Scot Marciel raised the case with Deputy Home Minister Wan Farid on May 6 and questioned why the government was using sedition charges in such a case. 

Wan Farid said bloggers could not be allowed to accuse people of murder and not back up such claims.  "You can't just (post) anything on the internet," and not expect consequences, indicating this was a warning to other bloggers.  The government would proceed with the case in court, Wan Farid said.

Raja Petra a thorn in UMNO’s side

5. (SBU) Raja Petra was charged after posting an article on his website on April 25 entitled ‘Let’s send the Altantuya murderers to hell’ that implied that DPM Najib Tun Razak and his wife Rosmah Mansor were connected to the 2006 murder of a young Mongolian interpreter, Altantuya Shaaribuu.  He also accused PM Abdullah of holding on to evidence that implicates his deputy in order to keep Najib in line. 

Two police officers from the security detail of DPM Najib have been charged for killing Altantuya, while Abdul Razak Baginda, a close associate of DPM Najib, was charged with abetting the murder.  The murder trial that began in June 2007 has been dragging along for nearly a year, giving rise to suggestions of deliberate delays for political reasons (Ref A ).

6.  (SBU) This is not the first time Raja Petra, a cousin of the current Sultan of Selangor, has challenged the ruling establishment. He was one of the key leaders of the reformasi movement launched in September 1998 by former DPM Anwar. 

In 2000 he became the Director of the Free Anwar Campaign (FAC) and founded the FAC website that regularly posted articles criticizing the government. 

In 2001 he was detained under the Internal Security Act (ISA) and held for 52 days before being released unconditionally, reportedly due to pressure from his uncle the then King, the late Sultan of Selangor. 

In July 2007 he was detained, questioned and released after UMNO Information Chief Muhammad Muhammad Taib filed a police report against him for allegedly insulting the King and Islam.

7. (SBU) Raja Petra launched Malaysia Today in August 2004 "to test how far Malaysia under its new Prime Minister (PM Abdullah) can honor, respect and tolerate free speech."  The blog grew to an average of 1.5 million hits a day and was voted one of the top ten websites by local internet users in 2007. 

One reporter describes it as Malaysia’s answer to the U.S. Drudge Report, a news aggregation site, dedicated to entertaining tales of political intrigue.  In meetings with poloffs, Raja Petra has nevertheless insisted that all of his reports are backed by hard evidence.

8. (SBU) UMNO leaders have blamed internet media and bloggers, in particular Raja Petra, as contributing to the BN’s setback in the March election.  Raja Petra agreed, telling reporters on May 6, they lost in the election because of the internet war. Malaysia Today was one of the culprits. He added that his defense team would prove there was no case against him and that it was a matter of political persecution.

One sympathetic academic described the action against Raja Petra as the return to sledgehammer rule by UMNO, but added recalcitrant bloggers like Raja Petra threaten UMNO’s survival, because the ruling party has failed to find a formula for countering its internet critics.

Syed Akhbar Ali: Easy to Impress the Malays

9. (SBU) In Syed Akhbar Ali's case, the author was belatedly charged for posting a comment in June 2007 on a Raja Petra authored Malaysia Today piece alleging strong links between Inspector General of Police Musa Hassan and a major organized crime syndicate. 

Raja Petra had written that the syndicate protected by the IGP was involved in prostitution, drugs, and illegal gambling.  In his comment, titled Easy to Impress the Malays, Akhbar used crude language in maintaining that massage centers are mushrooming in the city due to the sudden increase in Arab visitors, and in a similar vein went on to make some scurrilous comments about the Arabs and Islam, and the naivety of Malays in accepting Arab ideas.

Comment

10.  (C) In another indication of the growing influence of internet media, both DPM Najib and his wife have been compelled to go public in responding to Raja Petra’s report, maintaining that the allegations are unfounded and unfair. 

The Raja Petra case will continue to keep public attention on the Altantuya murder and on allegations of Najib's involvement in the crime at a time when Prime Minister Abdullah has announced Najib as his eventual successor.  Prosecuting a blogger for sedition complicates Prime Minister Abdullah's efforts to be seen as a reformer and will further boost the profile of Malaysia's anti-government internet activists.

KEITH

WIKILEAKS: 9th Malaysia Plan: ambitious agenda and challenging implementation

Non-government economists support these goals publicly but deplore them in private. Some challenge the reliability of the government's data. For example, a significant amount of publicly listed shares are held under nominee accounts, many of which are bumiputera-owned, but the government considers all of them non-bumiputera. Others decry the added cost of business the NEP policies place on private investors and the disincentive they pose to FDI.
THE CORRIDORS OF POWER
Raja Petra Kamarudin

SUBJECT: 9TH MALAYSIA PLAN: AMBITIOUS AGENDA AND CHALLENGING IMPLEMENTATION

REF: 2005 KUALA LUMPUR 03692

Classified By: Economic Counselor Colin Helmer.  Reasons: 1.4 (b) and (d).

SUMMARY

1. (C) Prime Minister Abdullah recently unveiled the Ninth Malaysia plan (9MP) which envisages spending RM 220 ($60 billion) of government and private development funds during 2006-2010 and targets an average economic growth rate of 6.0%. 

9MP identifies five key areas, such as improving Malaysia's human capital, becoming a knowledge-based economy, and investing in key infrastructure, in which Malaysia must improve to achieve its goal of becoming a developed industrialized nation by 2020. 

Analysts are confident that the infrastructure projects, projected rate of economic growth, and some technology projects will unfold as planned, but deem projects in other areas, such as education and agriculture, to be unrealistic.  While laudatory in their public comments, Malaysian economists we have spoken to in private are disappointed with the plan.  They also question the GOM's ability to implement the reforms needed to attract a higher level of foreign direct investment. 

9MP calls for Malaysia's private sector to take the lead in further developing the country, but our sources doubt Malaysian leaders will give private industry the freedom to transform the economy.  Prime Minister Abdullah views 9MP as his top economic initiative, is aware of the challenge of implementation and is taking steps aimed at improving follow up.  End Summary.

Five Key Thrusts

2. (U) The 9MP lays out five broad goals that Malaysia is to meet by 2010 to keep on schedule for the "Vision 2020" goal of becoming an industrialized, developed nation by the end of the next decade.  The economists with whom we met agree that these goals are well laid out, pragmatic, and correctly describe the path Malaysia needs to travel. 

They are:  to move the economy up the value chain; to raise the capacity for knowledge and innovation and nurture a "First Class Mentality;" to address persistent socio-economic inequalities constructively and productively; to improve the standard and sustainability of quality of life; and to strengthen institutional and implementation capacity.

Show Me the Money

3. (U) The 9MP will provide about RM 220 billion (US$60 billion at RM 3.65=$1) of government and private development spending during 2006-2010.  Approximately 40% of this is allocated to what the GOM defines as economic programs, 40% to social programs, 12% to security and 8% to general administration.  Funding for the subsectors that follow will come from either the social or economic segments of 9MP.

Although the 9MP budget is 17.6% higher than the previous plan, 35% of 9MP's budget is earmarked for finishing up 8MP projects that were not completed during the last five year plan.

4. (SBU) About 23% of 9MP funding will be devoted to infrastructure and utilities development projects, an increase of 21.2% over the 8MP.  As compared to Mahathir-era plans with their large infrastructure projects, PM Abdullah chose to cut the pie into many small projects so that more construction contractors might participate. 

According to Dr. Yeah Kim Leng, Managing Director and Chief Economist at RAM Consultants Group, the GOM conducted cost/benefit analyses to identify projects that would produce a higher return on investment.  This apparently was not done in the past.

5. (U) Although human capital development has been one of Abdullah's stated priorities, and despite media reports suggesting education was one of the big winners in the plan, education and training will receive only about 20% of the total budget.  This is about the same as in the preceding 5-year plan (8MP) developed by Abdullah's predecessor, Mahathir Mohamad.  New initiatives include strengthening the national (public) schools so that they become the "School of Choice" for all races in Malaysia.

6. (U) Agriculture, one of Abdullah's favored sectors, will receive about 6% of the funding -- a 70% boost over 8MP. However, 9MP sets a goal of transforming Malaysia into a net food exporter by 2010, which outside analysts believe is impossible given control over land use by the individual states and the higher returns from land uses other than food and livestock production.  Biotechnology will get 1%, 2.5 times more than it received in 8MP.

Ambitious Growth Targets

7. (U) In its last five-year plan, the GOM projected an average economic growth rate of 8%, but the actual rate during 2000-2005 was about 4.5%.  In the background to the 9MP, government analysts place partial blame for the shortfall on the U.S.: "Global growth slowed due to a decelerating United States of America economy, and dampened electronics demand, exacerbated by the attacks of September 11, 2001.  Overall economic performance remained sluggish until the second half of 2003, weighed down by the invasion of Iraq and the regional outbreak of Severe Acute Respiratory Syndrome."

8. (C) The government is targeting a more modest average annual growth rate of 6% during 9MP.  The economists that we interviewed (a mixture of academics, investment advisors, consultants, and think tank researchers) voiced a variety of opinions about that target, with Yeah of RAM asserting, "this is eminently achievable." 

Dr. Mohamed Ariff of the Malaysia Institute of Economic Research presented a study to the GOM where he argued for a 5-6% growth rate as opposed to the 7-8% that many ministers supported.  He maintains that it is better to aim lower than to fail to meet the target.  The chief economist at CIMB agrees that 6% is within Malaysia's grasp. 

Wong Chee Seng, chief economist at ECM Libra Securities, is much more negative, saying "The government will not meet its targets.  It moves too slow."  University Malaya professor Andrew Sheng (formerly chairman of the Hong Kong Securities Commission and Bank Negara Assistant Governor) disagrees.  Looking at regional growth estimates from the International Monetary Fund, he wonders why the GOM did not set the growth bar higher.  He believes that Malaysia should link its growth to China and India by exploiting complementary business opportunities.

Seeking Private Help

9. (C) The 9MP calls for the private sector to lead growth, aided by the public sector in its role as facilitator and regulator.  Our economic contacts agree with this idea, but observe that it will require a significant increase in private investment, both domestic and FDI.  Under 9MP, the GOM projects private investment to grow at an annual rate of 11.2% and public sector investment at 5% -- rates that are inconsistent with recent trends. 

Under the 8MP, private investment actually contracted about 1% each year.  Changing this situation would require the GOM to give the private sector more freedom from regulation and control than its socioeconomic objectives for the bumiputera (ethnic Malay) community currently allow.  For example, the current requirement that 30% of equity and employment be reserved for bumiputeras is a significant investment disincentive.  As Yeah put it, "Why would you want to do all the work of setting up a business in Malaysia only to have to turn 30% of it over to someone else?"

10. (SBU) One of PM Abdullah's signal economic achievements has been to shrink the government's budget deficit, now down to 3.8% of GDP.  9MP appears likely to slow further progress on deficit reduction.  According to Wong, Abdullah concluded that too many people depend on government contracts to keep applying the screws to expenditures.  At the end of the 9MP, the overall federal government fiscal deficit is forecast to be RM 107.6 billion, or 3.4% of GDP, assuming the government can meet its growth targets.  The majority of our contacts are not overly concerned with this change in fiscal stance.

Sheng argues that it is reasonable for a developing country such as Malaysia to pursue deficit spending on infrastructure projects that will generate growth.  The difficulty in the past, he says, has been large public projects that do not offer a good return on investment.

Ambitious Development Goals

11. (U) Some examples of the sort of investment that University Malaya's Sheng sees as positive are biotechnology research, ICT infrastructure (such as high-speed internet and more training in schools), and development spending on tourism.  Sheng sees these as high-growth projects with the potential to leverage more investment and business for Malaysia in the future. 

Pointing to India and its back-office outsourcing, Sheng asks, "Why shouldn't Malaysia be able to offer similar services at a competitive price?  We have the education, English language, and with this type of incremental investment, we can do business with New York via the internet." 

He is similarly enthusiastic about the plan to promote the tourism sector, which in 2005 drew 16.4 million tourists and generated RM 32.4 billion (US$ 8.8 billion) -- 80% more than export earnings from palm oil, six times more than rubber, and only 30% less than the oil and gas industry.

12. (C) Some of 9MP's ambitious goals are so lofty as to appear unachievable in five years.  For example, the plan calls for Malaysia to increase the percentage of university professors with PhDs to 60% from the current level of 20%.

Time and resource constraints, coupled with the fact that highly educated workers can do better elsewhere, make achieving this goal unlikely.  As Wong of ECM Libra noted bluntly, "I tell my children to stay in New Zealand.  What opportunity does a Malaysian educated abroad have here?"

13. (C) Some of the agriculture goals seem equally unrealistic.  For example, the government proposes to increase rice production by approximately 50% by 2010.

According to Ministry of Agriculture Deputy Secretary General Zulkifli Idris, the prime minister pushed for sharp production increases to benefit Malay farmers in the politically sensitive northern states.  Traditionally, Malaysia has grown about two-thirds of the rice it consumes domestically, importing the remainder from low-cost producers like Thailand and Vietnam. 

Although the cheap imports allow the GOM to maintain low fixed retail prices for urban and rural consumers, the government loses money on every ton of rice produced domestically: it pays direct subsidies to farmers while Bernas (the government-linked monopoly rice importer and the main marketer of domestically produced rice) buys locally produced rice at a higher price and sells it at low, government-fixed retail price. 

Working-level contacts indicate that the sharp rice production increase in 9MP is unrealistic, and Zulkifli admitted as much in his statements. Nonetheless, the planned investment in such areas as improved irrigation, mechanization, and farmer organizations in the northern states will likely have a political payoff for Abdullah.

NEP Rides Again

14. (U) With the publication of the 9MP, Prime Minister Abdullah also went firmly on record in support of maintaining the National Economic Policy (NEP).  The NEP was introduced in 1970 with the goal of transferring at least 30% of Malaysia's equity and wealth to bumiputeras through affirmative action policies favoring the Malay majority's participation in the economy. 

The NEP was initially intended to have been completed in 1990, but when the target was not met the government replaced the NEP with the National Development Policy (NDP).  With 9MP, Abdullah has pledged to continue these policies through 2020 with the hope of finally achieving the 30% goal.

15. (U) The 9MP will try to raise the bumiputera equity stake to 20-25% in 2010 from 18.9% in 2005.  The plan also seeks to narrow the income gap between bumiputeras and ethnic Chinese from a ratio of 1:1.64 in 2004 to 1:1.50 in 2010, and between bumiputeras and ethnic Indians from 1:1.27 in 2004 to 1:1.15 in 2010.  It also sets a target of halving the country's overall poverty rate from 5.7% in 2004 to 2.8% in 2010, and completely eliminating "hardcore poverty" in 2010.

16. (C) Non-government economists support these goals publicly but deplore them in private.  Some challenge the reliability of the government's data.  For example, a significant amount of publicly listed shares are held under nominee accounts, many of which are bumiputera-owned, but the government considers all of them non-bumiputera.  Others decry the added cost of business the NEP policies place on private investors and the disincentive they pose to FDI.

Implementation - GOM versus Private Industry

17. (U) Since the 9MP roll-out, the government has generated a steady media buzz about the importance of effective implementation of the plan.  Abdullah has publicly promised to fire any civil servants who get in the way.  But the GOM and industry have different ideas of what constitutes good implementation. 

The GOM has announced that 9MP will feature better governance, world class project management, increased due diligence, less corruption, and speedy disbursement of funds. 

In a recent speech, Effendi Norwawi, Minister in the Prime Minister's Department for Economic Planning and Abdullah's point man for the 9MP, explained that the GOM wants to work in partnership with the private sector.  He emphasized Abdullah's personal commitment and noted the creation of a new agency, the National Implementation Action Body (NIAB) to monitor the performance of agencies implementing major projects under the 9MP. 

Abdullah will head the organization, with Deputy Prime Minister Najib Razak as deputy chairman and ministers with specific 9MP authority sitting on the council.  It will meet every two weeks and, according to Effendi, Abdullah will be demanding progress reports.

18. (C) The prime minister's own office is set to receive a large allocation under the 9MP.  Although there is no detail as to how the funding will be spent, 9MP sets aside RM 26.5 billion (13.2% of the total) for Abdullah's department - a threefold increase over 8MP (RM 7.3 billion and 4.3%). 

The public spin on these figures is that the resources will enable the prime minister to focus on his key goals and move the process along.  In private, however, economists voice concern over the potential for abuse of funds.

19. (C) When the private sector talks about good implementation, they hope the GOM will remove the mass of government red tape and regulation that increases costs and scares away investment, both local and foreign.  Minister Effendi himself related a story about a hotel venture that required 73 different licenses before it could open.  Some took so long to obtain that the operator needed to repeat the application process because they only lasted for a year.

Yeah detailed a similar process in Penang, saying "at least at the international level, there is MIDA to be one-stop shopping for the licenses.  A Malaysian investor must deal with both state and local regulations and the government needs to move to change this quickly."  But few economists believe that the GOM will move decisively to cut red tape and reduce its economic meddling. 

Sheng compared Malaysia to China: "In Shanghai, they were trying to take some business from Hong Kong and the manufacturer asked if they could move his product from China to the distribution point, including customs, in 24 hours.  Shanghai's mayor was able to make this happen.  Would that be the case in Malaysia?"

Economists Not Overly Optimistic

20. (C) Comment:  Successful implementation of the 9MP is Abdullah's top economic priority, but the economists we surveyed are not optimistic that he will be able to achieveall his goals for the plan.  While they see some good initiatives, they do not see bold steps that would lift Malaysia back up to the growth rates of the late 1980s.

There is a sense of urgency in both the senior levels of the government and among senior economists that Malaysia is at a crossroads.  Wong suggested that, "there are two camps in the government, the ones who see that if we do not make changes that we will settle into second class and the others who are happy with the way things are." 

Sheng, in a presentation to senior business leaders, government managers and economists, argued that Malaysia was in a similar situation as the U.K. and Japan in the early 1980s.  The U.K. was not doing well and opted to open its financial sector to bring in FDI and investment.  Japan, in contrast, tried to hold onto its manufacturing lead and did not open to foreign investment. 

He suggested that Malaysia might want to examine how the two nations are faring today and consider its options.  End Comment.

LAFLEUR