A renewed interest in the Bakun Dam Project coincides with the upcoming Sarawak state elections. The dam is estimated to now cost around RM9 billion, down from an original estimate of RM19 billion. A counterfeit bond was said to have been presented in London by an official Malaysian government agency as collateral for a loan. The face value of the counterfeit bond is around RM20 billion, just enough to cover the cost of the Bakun Dam.

The counterfeiting of a bond with a value of over US$5 billion is a serious criminal offense anywhere in the world, and when it is a government agency counterfeiting its own national bonds, it also affects the full faith and credit of that government. The government becomes implicated in a massive attempt to defraud the international bond market. Use of the full investigative and prosecutorial power of the national police are thus justified. In Malaysia the national police and the attorney general's office are busy with internal threats to their continued survival in office. The people are riled by this and similar perceived misconduct of the financial affairs now in the hands of the party in power. The people want a new administration, one that is accountable for the affairs of state.

In Malaysia, when the attempt to pass the counterfeit bond was discovered, the matter was turned over to the ACA, which has no record of sucess in any case involving more than token assets. Soon after the news broke, the ACA announced that their investigation would be complete "in a few days."

The original transaction seems to date around July last year, while the public only became aware of the problem this past January. Since the agency involved is a government agency, and the principals responsible are Malaysian government officials, this places a dark cloud on the Malaysian bond business in general.

Normally in situations involving the good faith and credit of national bonds a country will move swiftly to restore public confidence. Malaysia has been dilatory in this respect, and the holders of all Malaysian bonds have become uncomfortable at this seeming lack of concern on the part of the Malaysian government. The concern is compounded by the alleged involvement of government officers in a fraudulent and criminal activity.

The activity had its nexus in Malaysia's hot money tub, the island of financial love, Labuan, located nearby the site of the partially completed Bakun Dam. The announcement that the dam is to be re-inflated has brought anguished cries for aid from ambitious parties who were left high and dry after floating large equipment loans now in the dead loan box. There is an appearance that the revival of the mountainous monster is designed to provide some relief, however temporary, to these loyal dam builders, at least until after the Sarawak election. It is, like the election road, a laughable thing to the locals. If only it didn't cost so much and do such damage to the land and people.

Labuan competes with other island warrens in the laundering of the world's hot money, especially the Cayman Islands in the Caribean. Several Malaysian companies linked to the party in power in Malaysia have established a profitable busineses in the Caman Islands, but it is a long flight. Labuan is much closer, and many Malaysian ministers make merry there.

The Cayman Islands are a British territory, and with nothing much to sell, the natives manage to earn over US$ 70,000 per capita per annum. The proximity to Columbia, the home of various cocaine cartels, suggests to some that part of the income may come from the laundering of drug money. The British are a quiet lot by nature, and don't say much.

The President of Columbia made an official visit to Malaysia in the past few days, and it may be expected that Columbia's problems with the drug cartels was a subject of discussion. The US has a substantial investment in an expanded drug eradication program in Columbia. US-Malaysian relations at the moment may be said to be at an all-time low, and the appearance of the Malaysian prime minister, an accomplished West-hater, on the scene in a head-to-head conference with the Colombian president, requires reassurance the foreign minister is not going to give.

Malaysia has decided to ignore the UN embargo against Iraq, establishing a number of commercial relationships under cover of humanitarian concern. This is done at a time the US and England are actively enforcing UN sanctions with renewed bombings in the no-fly zone. The US is Malaysia's major trading partner. England is the core of the Commonwealth. Malaysia continues to flaunt its colonial independence by dodging commonwealth standards of acceptable behaviour. The unilateral acts of defiance are not free of risk. The prime minister has removed Malaysia from its traditional allies, who cannot now be relied on to support a common concerted action. Malaysia has deliberately made enemies, as if to justify defense purchases. This is a foreign policy from the dark ages.

These independent acts of the Malaysian party in power might be ignored, as for a fluffed up flyweight in fine fettle, fists flashing and flailing, facing first forward, then backward to fend off the phantom foe. Today's economic reality suggests that improved relations with major trading nations would be more prudent footwork. Next door, Singapore continues to sign free trade agreements with partners Malaysia eschews, such as Australia, New Zealand and the US. Since Malaysia derives significant benefit from these same trading partners, Singapore appears not just challenger, but acclaimed champion in the class. Malaysia has built new ports, with impressive new cranes and long-term contracts to lure away shipping lines, but empty ships earn no foreign exchange.

Malaysia has received an extensive transfer of foreign technology, often by bringing in subcontractors who perform work beyond the expertise of locals. The primary contracts are given at greatly inflated prices, without competitive tenders, to local companies. Many foreign companies report difficulty getting government contracts. Many of those report even more difficulty getting paid. The Mitsui Corp of Japan had a dark day when it became public knowledge that a large consulting fee was paid to a fictitious firm in Malaysia in connection with the sale of telephone equipment to the national telephone company. The ACA probe into this matter, involving hundreds of millions of dollars, has stalled in spite of adequate aid from Mitsui officials. Mitsui continues to receive large government contracts in Malaysia. The status of the consulting fees required are unknown.

It is routinely observed that the presence of a family relative eases business relations when chasing government contracts with Malaysia. Contracts are assured, as well as payment. An eye popping example is the successful Siemens Corp. of Germany. The chairman of Siemens, Malaysia is the oldest son of the prime minister, a bright lad if there ever was one, said to be a billionare before the age of pubescence.

The foreign policy of Malaysia has forlorn foundations. The foreign minister portrays Malaysia as a feisty flyweight in fighting form. In the arena of the world, Malaysia seems nothing more than a filthy fighter, apt to bite off an ear, gouge the eye, jab below the belt, and hit behind the head after the bell. In the business affairs of the world, such conduct carries complete condemnation.

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