Posts Tagged ‘Corruption’

Malaysia: Elections? What elections?

May 6, 2013

The ruling UMNO-led coalition has again won Malaysia’s “elections,” but after 57 years in power the process has become something of a charade. The government was declared to have won 133 seats and the anti-corruption opposition led by Anwar Ibrahim 89.

Despite its confidence beforehand, it is hard to see how the opposition could have succeeded. The government monopolises the mainstream media, which refused access to the opposition. Rather than an election campaign, there was thus a monolithic advertising campaign on behalf of the government.

The opposition was reduced to using social media and holding rallies. The latter were constantly disrupted by police mounting road-blocks to delay participants or interrupting proceedings on the grounds there was no “permit.” The opposition campaign bus, fitted out with a collapsible stage because halls were denied to them, was repeatedly vandalised. Under such circumstances, it is hard to see how they could have come out on top.

After 57 years in power, the ruling coalition has inevitably become financially corrupt. Its supporters are those who benefit from the sleaze and the ill-educated in the countryside: a coalition of the corrupt and the ignorant. The opposition has its power base among the well-educated in the major urban centres.

The government’s “election” result is nevertheless its worst ever, and Anwar claimed widespread fraud. There are even suggestions the government won less than half the popular vote. But there seems little for the educated and the open-minded to do except continue biting their nails in frustration. Many opposition supporters blacked out their profiles on Facebook after the results were announced.

Anwar, aged 65, and imprisoned for six years on a spurious pretext, was once a rising star of Malaysia, representing his country as Deputy Premier at the Davos World Economic Forum. Before this latest poll he said he would leave politics if he did not win. Malaysia will be the worse off if he does.

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Paraguay rushes out first bond issue (it tops Transparency International’s corruption index)

January 18, 2013

Yesterday I wrote about Paraguay and its piano and why investors should beware this dubious country planning to make its first public international bond issue ($500 million). Today I see that the deal is almost done and dusted. I also see that Barclays are the only ones to issue a word of caution.

I wonder why this has been rushed out only three months before a new government is elected in Paraguay, all the more since the country has a long history of one government repudiating the debts of a previous one.

I was forwarded a list of questions raised by an investor I know who invests his own money (and not earning management fees from handling other people’s). Having seen the preliminary prospectus, he had these questions for the Paraguayan Minister of Finance and Citibank (lead manager of the bond issue):

1 – Why were investors not told that Paraguay has for years kept its funds safe at the Bank for International Settlements (BIS) in Basle because it is immune from legal attachment from creditors (not vulture funds in the case of Paraguay)?

2 – Why were investors not told that Paraguay will continue to keep its money protected at the BIS and therefore, in the event of the new government reneging on payments for the bond, a judgment against it will be worthless for enforcement purposes?

3 – Although the prospectus did mention a list of problem creditors, why did it not state clearly that they all refer to undertakings by one government repudiated by another?

4 – In view of allegations by the leading candidate for the Presidency in Paraguay about corruption in the current government http://www.abc.com.py/edicion-impresa/politica/federico-franco-y-la-primera-dama-con-una-fuerte-contestacion-a-cartes-528578.html, what guarantee is there for investors that a new administration will not declare the bond issue fraudulent and that Citibank should have known better?

5 – Why were investors not told what it costs Paraguay to keep its money protected at the BIS?

6 – What difference would it make to the economy of Paraguay if the bond issue was delayed until after the elections in April and proceeded with the backing of the new government which should be in power for five years? After all the current government is temporary, its mandate dubious and not widely recognized until the elections in April.


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