Who is plundering Malaysia’s wealth?

A staggering total of US$395 billion was siphoned out of Malaysia in illicit financial flows in 2003-2012.  Malaysia has the ignominy of being the top fifth country globally for illicit financial outflows (India nudged Malaysia from 4th to 5th place in 2014). According to the Global Financial Integrity report, Malaysia alone contributes to 6% of the total global illicit flows from all developing countries.

Putting it another way, for every US$1.0 of foreign direct investment that Malaysia received in 2012, US$5.0 was being smuggled out of the country. This is only a conservative estimate as the methodology to estimate the outflows is very rigorous based on reported balance of payment and trade statistics (www.glofintegrity.org has the details). Close to 20% of Malaysia’s GDP is being stolen and spirited away overseas and kept in safe havens as either cash or invested in assets. While the volumes have been declining since 2010, the question is how can such plunder on a national nay international scale, mostly through deliberate trade misinvoicing, escape the notice of Bank Negara, the Royal Malaysian Customs and the Royal Malaysian Police.

Let us look at another recent revelation through secret Swiss banking files of 30,000 accounts that were leaked last week (the Swiss Leaks). Malaysia is ranked 87 among the countries with the largest dollar amounts stashed away with one notable Malaysian who has squirreled away US$68 million. The International Consortium of Investigative Journalists (ICIJ) has named a member of the Pahang royal family. Unfortunately the ICIJ site www.icij.org  does not allow access to country level data which will reveal who are the other Malaysian luminaries who prefer to keep their money in secret accounts in Switzerland rather than in Malaysia.

Given that the top 10% own 40% of the total wealth of Malaysia (see previous post), we can safely assume that it is not the average struggling Malaysian taxpayer who is stealing the national wealth. Let me offer some questions to the Inspector General of Police and the Governor of Bank Negara. Which Malaysia based individuals and firms are well positioned to carry out trade invoice shenanigans? How many of these are either proxies or linked in some form to the Barisan National political parties and networks? How many current or former Malaysian political leaders have interests in these businesses? How can such a huge amount of money leave Malaysia without the tacit complicity of the authorities? I can't wait for a tweet on these questions from the Inspector General of Police.