M'sia an easy meal for financial scavengers
(Originally posted at http://www.malaysiakini.com/news/2728)
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The monopoly of information is a powerful tool of oppression. Past attempts to link malaysiakini
to George Soros are motivated by an official fear that independent news
will break the government's monopoly on social, political and
macroeconomic information.
Stitched together from thin fabrics of the Far Eastern Economic Review,
Southeast Asian Press Alliance (Seapa), Soros, C@MP and the Media
Development Loan Fund (MDLF) connections, this smear campaign to
discredit malaysiakini reflects a deep-seated ignorance about institutional governance and a superstition about the Soros bogeyman.
Expect more assaults. Although malaysiakini is not perfect, those who care about freedom from human oppression must defend this seedling of change, or see it trampled by the forces of old.
An institutional or venture fund manager is like a property management company; it is an agent organised to oversee several pools of funds or several apartment blocks at the same time. Each apartment block or pool of funds has its own legal entity, account, group of owners, and directors.
To jump to the conclusion that Soros finances malaysiakini - because both were using the same institutional middleman - is as reckless as accusing the Malaysian government of treason for seeking funds through the Salomon-Citigroup, which must have received deposits from some 'unsavoury' characters, perhaps even Soros and colleagues.
Naive assumption
What is important is fact, rather than na�ve assumptions. As a matter of fact, Seapa, the Open Society Institute (OSI), and C@MP have all stated in writing that malaysiakini receives no funds from Soros, directly or indirectly.
The Seapa statement was signed by five officials, and is courteous enough to explain where the only sum from OSI went to, not to malaysiakini, but to finance a particular consultant, working in Bangkok, at what time, and for how long.
These are stuff of good governance of an international standard - ensuring how specific funds are clearly delineated, and used by the manager (agent) for the specific purposes directed by the clients (principals).
Any official and media smudging in Malaysia of such details would only confirm a deep confusion about ownership, fiduciary duties, the principles of good governance, as well as the importance of independent institutions. It would explain why our economy is choked with failed projects and comatose companies and weak institutions incapable of checking abuses and manipulation.
A financial sponsor's influence through an institution is limited. Specialisation means sponsors, fund managers and entrepreneurs - three layers of decision makers.
For example, a sponsor who financed a fund, which in turn financed five percent of a company, ends up with a 0.25 percent attributable influence. The influence is even thinner and more temporary when the money is not for equity.
The Seapa funds to malaysiakini was a grant; C@MP's was for a software development project.
Readers' judgment
Even if Soros had anything to do with financing malaysiakini - which has been amply denied - it really doesn't matter as long as its reporting proves independent.
This point has been well argued but is worth repeating. And the ultimate judge of independence? Not the government, but the readers.
Besides, what could be so devilish about Soros to confer him the title of the 'official bogeyman' of Malaysia?
Contrary to popular belief, the Soros fund may have initially trusted the Mahathir-Anwar government so much so it betted in favour of Malaysian currency and stock markets - only to lose a bundle when the Malaysian government kept shooting itself in the foot.
This much I have gathered from sources close to the Soros fund managed from Hong Kong when I covered Thailand stocks from Bangkok and had one of the front-row seats watching the 1997 currency crisis fireworks.
The Soros team appeared to have initially thought they knew M
alaysia's 'strong' fundamentals much better and could profit from betting against other speculators who were pessimistic about Malaysia.
Imagine their quiet horror as the Malaysian government announced a barrage of half-witted policies starting August 1997 (currency RM2.6/US$, Kuala Lumpur Composite Index (KLCI) 900):
'Designating' securities to block short-selling in late August (currency 2.8, KLCI 850) before reversing it nine days later, threatening analysts and reporters who issued negative comments with the Internal Security Act (yes, the ISA can be used against any one), announcing a RM60 billion support fund in September (currency 3.0, KLCI 730) and changing rules to allow a UEM-Renong deal that damaged minority shareholders in November.
Epic blunders
In three ignominious days in November 1997, the Malaysian currency fell from 3.3 to 3.5, KLCI from 670 to 530).
Over three short months, the currency fell from 2.6 to 3.5, KLCI from 900 to 530. No other policy and administrative missteps can be more closely associated with a greater loss of wealth in Malaysian history. (Partially summarised from Dr KS Jomo's 1999 budget preview.)
Which is why the Malaysian government prefers to keep its Soros accusations vague, as any detailed discussion would have reminded everyone about these blunders of epic proportions.
It is not clear at what point later, but this agile hedge fund may have switched sides - since the Malaysian government believes Soros betted against Malaysia (more accurately - against the country's information and valuation infrastructure epitomised in the currency and equity markets).
There is no sympathy here for 'macro' hedge funds which borrow to make large financial bets purely for profit, without regard for the social consequences. From a nationalistic viewpoint, they look like hyenas - those ugly-looking, dog-like gangs of predators we see in documentary films.
Weak prey
But grotesque as they look, they only prey on victims who are already weak, injured, or fumbling around. They speed up the environment-friendly recycling process, allowing nature to regenerate faster - inadvertently helping the victim community to evolve and become stronger.
If they don't do the job, others will - vultures, ants, worms and bacteria. Hyenas just do it faster and with higher profile.
How the victims have become weakened in the first place is not the moral responsibility of the hyenas. That responsibility lies squarely upon the victims' leaders and civil servants, who have led the community blindly around - by suppressing the media, blocking honest attempts to disseminate and debate social and economic issues as well as price information and early warning signs.
This enforced blindness and deafness wastes the community's energy over a prolonged period of time, increasing their risk of injury, leaving them weak and the prime target for hyenas - again and again.
CHEAH KAH SENG (CFA) is trained in investment analysis and is currently studying basic computer courses.
Expect more assaults. Although malaysiakini is not perfect, those who care about freedom from human oppression must defend this seedling of change, or see it trampled by the forces of old.
An institutional or venture fund manager is like a property management company; it is an agent organised to oversee several pools of funds or several apartment blocks at the same time. Each apartment block or pool of funds has its own legal entity, account, group of owners, and directors.
To jump to the conclusion that Soros finances malaysiakini - because both were using the same institutional middleman - is as reckless as accusing the Malaysian government of treason for seeking funds through the Salomon-Citigroup, which must have received deposits from some 'unsavoury' characters, perhaps even Soros and colleagues.
Naive assumption
What is important is fact, rather than na�ve assumptions. As a matter of fact, Seapa, the Open Society Institute (OSI), and C@MP have all stated in writing that malaysiakini receives no funds from Soros, directly or indirectly.
The Seapa statement was signed by five officials, and is courteous enough to explain where the only sum from OSI went to, not to malaysiakini, but to finance a particular consultant, working in Bangkok, at what time, and for how long.
These are stuff of good governance of an international standard - ensuring how specific funds are clearly delineated, and used by the manager (agent) for the specific purposes directed by the clients (principals).
Any official and media smudging in Malaysia of such details would only confirm a deep confusion about ownership, fiduciary duties, the principles of good governance, as well as the importance of independent institutions. It would explain why our economy is choked with failed projects and comatose companies and weak institutions incapable of checking abuses and manipulation.
A financial sponsor's influence through an institution is limited. Specialisation means sponsors, fund managers and entrepreneurs - three layers of decision makers.
For example, a sponsor who financed a fund, which in turn financed five percent of a company, ends up with a 0.25 percent attributable influence. The influence is even thinner and more temporary when the money is not for equity.
The Seapa funds to malaysiakini was a grant; C@MP's was for a software development project.
Readers' judgment
Even if Soros had anything to do with financing malaysiakini - which has been amply denied - it really doesn't matter as long as its reporting proves independent.
This point has been well argued but is worth repeating. And the ultimate judge of independence? Not the government, but the readers.
Besides, what could be so devilish about Soros to confer him the title of the 'official bogeyman' of Malaysia?
Contrary to popular belief, the Soros fund may have initially trusted the Mahathir-Anwar government so much so it betted in favour of Malaysian currency and stock markets - only to lose a bundle when the Malaysian government kept shooting itself in the foot.
This much I have gathered from sources close to the Soros fund managed from Hong Kong when I covered Thailand stocks from Bangkok and had one of the front-row seats watching the 1997 currency crisis fireworks.
The Soros team appeared to have initially thought they knew M
alaysia's 'strong' fundamentals much better and could profit from betting against other speculators who were pessimistic about Malaysia.
Imagine their quiet horror as the Malaysian government announced a barrage of half-witted policies starting August 1997 (currency RM2.6/US$, Kuala Lumpur Composite Index (KLCI) 900):
'Designating' securities to block short-selling in late August (currency 2.8, KLCI 850) before reversing it nine days later, threatening analysts and reporters who issued negative comments with the Internal Security Act (yes, the ISA can be used against any one), announcing a RM60 billion support fund in September (currency 3.0, KLCI 730) and changing rules to allow a UEM-Renong deal that damaged minority shareholders in November.
Epic blunders
In three ignominious days in November 1997, the Malaysian currency fell from 3.3 to 3.5, KLCI from 670 to 530).
Over three short months, the currency fell from 2.6 to 3.5, KLCI from 900 to 530. No other policy and administrative missteps can be more closely associated with a greater loss of wealth in Malaysian history. (Partially summarised from Dr KS Jomo's 1999 budget preview.)
Which is why the Malaysian government prefers to keep its Soros accusations vague, as any detailed discussion would have reminded everyone about these blunders of epic proportions.
It is not clear at what point later, but this agile hedge fund may have switched sides - since the Malaysian government believes Soros betted against Malaysia (more accurately - against the country's information and valuation infrastructure epitomised in the currency and equity markets).
There is no sympathy here for 'macro' hedge funds which borrow to make large financial bets purely for profit, without regard for the social consequences. From a nationalistic viewpoint, they look like hyenas - those ugly-looking, dog-like gangs of predators we see in documentary films.
Weak prey
But grotesque as they look, they only prey on victims who are already weak, injured, or fumbling around. They speed up the environment-friendly recycling process, allowing nature to regenerate faster - inadvertently helping the victim community to evolve and become stronger.
If they don't do the job, others will - vultures, ants, worms and bacteria. Hyenas just do it faster and with higher profile.
How the victims have become weakened in the first place is not the moral responsibility of the hyenas. That responsibility lies squarely upon the victims' leaders and civil servants, who have led the community blindly around - by suppressing the media, blocking honest attempts to disseminate and debate social and economic issues as well as price information and early warning signs.
This enforced blindness and deafness wastes the community's energy over a prolonged period of time, increasing their risk of injury, leaving them weak and the prime target for hyenas - again and again.
CHEAH KAH SENG (CFA) is trained in investment analysis and is currently studying basic computer courses.
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