Mahathir laid the foundation for 1MDB


And that is the history of 1MDB that started as ‘Wang Ehsan’ in 2000 under Dr Mahathir and then transformed into TIA in 2008 under Pak Lah and then transformed into 1MDB in January 2009, three months before Najib took over as Prime Minister.


Raja Petra Kamarudin

Bekas Menteri Besar Terengganu, Datuk Seri Ahmad Said berkata, urus niaga pelaburan itu hendak dilaksanakan ketika 1MDB mempunyai hubung kait dengan Terengganu Investment Authority (TIA) semasa penubuhannya pada awal 2008.

Bagaimanapun, Ahmad mendakwa, pelaburan itu terpaksa ditarik balik berikutan pelbagai masalah yang timbul.

“….. ini salah satu sebab saya dimarahi Perdana Menteri (Datuk Seri Najib Tun Razak), termasuk kes-kes lain sehingga akhirnya kita menarik diri.

“Buat masa ini saya tidak boleh menjawab isu ini. Saya menunggu masa yang sesuai. Tetapi, saya akui betul 1MDB asalnya TIA yang modalnya berbayar, saya bagi pihak kerajaan negeri yang membayar,” katanya. (READ MORE HERE)

That was what the ex-Menteri Besar of Terengganu, Ahmad Said, said in the Terengganu State Assembly yesterday — that 1MDB was originally TIA and belonged to Terengganu. And this is the irony of the whole thing because this would mean that Tun Dr Mahathir Mohamad laid the foundation for 1MDB back in 2000.

It all started like this.

On 29th November 1999, the opposition Barisan Alternatif took over the state of Terengganu and the next day it formed the new state government with Tok Guru Abdul Hadi Awang of PAS as the new Menteri Besar to replace Wan Mokhtar Ahmad of Umno.

So the opposition now controlled two states, Terengganu and Kelantan, which it won nine years earlier in 1990 in ‘joint venture’ with Tengku Razaleigh Hamzah’s Semangat 46.

The exciting part about Terengganu, which had only eight Parliament seats (and therefore did not really contribute much in helping the opposition march into Putrajaya), is that it had RM1 billion a year in oil royalty. And this RM1 billion was going to help finance Barisan Alternatif to win some of the other states in the next general election in 2004.

With RM1 billion a year or RM5 billion over five years, it was more or less assured that Barisan Nasional and Umno were going to be history in 2004.

But Dr Mahathir was smarter than that. He knew what RM5 billion in the hands of the opposition could do. So he stopped the RM1 billion a year payment to the state.

The state screamed that in 1976 Petronas had signed an Agreement with Terengganu, and based on this 1976 Agreement and the Petroleum Development Act 1974, Petronas had a legal obligation to pay Terengganu the 5% royalty, which came to RM1 billion a year.

But you know Dr Mahathir. Agreements, Contracts and Acts of Parliament are not going to be allowed to stand in the way of what he wants to do. Terengganu took the case to court but Dr Mahathir knew he would be long dead and gone before anything happens.

Dr Mahathir then appointed Idris Jusoh as the sort of ‘shadow’ Menteri Besar of Terengganu but based in the Prime Minister’s Department in Putrajaya. And Idris Jusoh was to handle the oil royalty that had been renamed ‘Wang Ehsan’ and which would be controlled by the Prime Minister’s Department.

The RM1 billion a year was not going to be given to the PAS-led Terengganu state government. Instead, a parallel government would be set up which will bypass the official and legally elected Terengganu state government and this ‘shadow’ or parallel government would manage the money.

So Terengganu was starved of money. All it had was RM300 million a year in timber revenue and other taxes. But it cost RM600 million a year to run the state. And the RM600 million a year is just the operational cost to run the state. That does not include development cost. If the state did absolutely nothing, not even patch the holes in the road, they still needed RM600 million a year and all it had was RM300 million, mainly from timber. The RM1 billion a year oil royalty was now gone.

There were two ways Terengganu could manage this RM300 million deficit. First it could cut its operational cost. So overtime was banned. Outstation trips were forbidden. When civil servants retired they were not to be replaced so that they can freeze the intake of new civil servants. And much more, which practically crippled the state.

Secondly, the state can increase the extraction of timber by opening up more forest reserves for logging so that the timber revenue could increase. No doubt this would create an environmental problem, possibly with more flooding, but Terengganu needed to find this extra money since the RM1 billion is now in the hands of Idris Jusoh and the Prime Minister’s Department.

The civil servants were now so pissed because the state was regressing instead of progressing. The enthusiastic support the civil servants gave PAS in 1999 soon eroded and they decided to give the state back to Umno. So, in 2004, the state fell back to Umno.

Idris Jusoh, the ‘shadow’ Menteri Besar of Terengganu from November 1999 to March 2004, was appointed the new Terengganu Menteri Besar to replace Hadi. By then, of course, the Prime Minister was Tun Abdullah Ahmad Badawi a.k.a. Pak Lah who had taken over from Dr Mahathir just four months before that.

It was promised that if Umno takes back Terengganu the federal government would reinstate the 5% or RM1 billion a year oil royalty. In March 2004 Umno did take back Terengganu. However, instead of reinstating the oil royalty, Pak Lah decided to form a new ‘management committee’ under the Prime Minister’s Department just like what his predecessor did five years before that.

And in this new committee headed by the Prime Minister were his son-in-law, Khairy Jamaluddin, Wan Ahmad Farid Wan Salleh, and Patrick Lim a.k.a. Patrick Badawi. This committee would decide how the RM1 billion a year would be spent.

So they started creating projects that would cost RM1 billion a year such as the building of more mosques, the very lavish Crystal Mosque included, the annual Monsoon Cup boat race, a new Palace for the Terengganu Sultan that would cost more than RM1 billion, and so on.

Just to digress a bit and to make a long story even longer, in the first year they held the Monsoon Cup the monsoon did not come. Terengganu was as dry as a bone. And this made them panic because how can you have a Monsoon Cup boat race with no monsoon? That would be like holding a ski competition on Bukit Besar without any snow.

So the state hired a team of rainmaking bomohs (witch doctors) and they huya-hei and hocus-pocus and, lo and behold, it poured like cats and dogs. But it rained so hard and would not stop raining that not only Terengganu flooded but the flood spilled over to neighbouring Kelantan as well. So Kelantan was forced to organise a Pesta Air or water festival so that the people could enjoy the flood.

Anyway, in 2008, Malaysia had another general election and by then about RM10 billion had gone down the drain. Umno, yet again, won the 2008 general election. But HRH the Sultan of Terengganu was so pissed that RM10 billion of the state’s money had disappeared into thin air he did not want Idris Jusoh as the Menteri Besar any longer.

The Idris Jusoh supporters were outraged and they organised anti-Sultan protests with placards calling the Sultan ‘natang’ (binatang). Anyway, the Sultan was adamant and refused to back down so Ahmad Said took over as the new Menteri Besar.

And that was when TIA was formed. Basically TIA would manage the RM1 billion a year oil royalty but in a more formal manner than how the RM10 billion had been earlier managed. However, even before TIA was formed it had already ‘lost’ RM10 billion, money that had disappeared into thin air.

Then, as Ahmad Said told the Terengganu State Assembly yesterday, TIA transformed into 1MDB the following year just before Najib took over as Prime Minister.

And that is the history of 1MDB that started as ‘Wang Ehsan’ in 2000 under Dr Mahathir and then transformed into TIA in 2008 under Pak Lah and then transformed into 1MDB in January 2009, three months before Najib took over as Prime Minister.