A Doctor in The House: A Memoir of Tun Dr Mahathir Mohamad (106 page)

Businesses were happy to accept the ringgit at RM3.80 whenever they changed their US dollars or other currencies. They were also comfortable with our assurances that we would maintain the exchange rate for as long as it took for the situation to stabilise. They could budget for the whole year and not have to hedge against fluctuations in the value of the ringgit, which reduced their cost of doing business. Requiring all owners of shares to register with the KLSE and stopping the sale of Malaysian shares held in trustee companies also stopped the plunge in the KLSE, and within a short period, the KLCI rose from below 300 to over 800. The number of non-performing loans declined after the period of default was returned to six months, and the economy began to show signs of recovery.

During the crisis we had introduced several measures to help mitigate the problem. When property sales became stagnant we arranged for home ownership campaigns that brought together developers, potential buyers, financiers, government officers and lawyers. At the first promotion exhibition, RM3 billion worth of property was sold. To get the construction industry going again we decided to build 40,000 flats to house urban squatters. Since retail sales were lagging, we found places for goods to be exhibited by retailers and we helped negotiate lower prices where necessary. We studied reports on electricity consumption, the movement of cargo and containers at the ports, incoming tourists and airline passengers, vehicles registered and many other things. We knew in detail how the economy was performing and often we found ways to stimulate it.

The NEAC gave particular attention to the operations of Pengurusan Danaharta Nasional Bhd (the National Assets Management Company), Danamodal Nasional Bhd (the National Bank Refinancing Company) and the Corporate Debt Restructuring Committee (CDRC) which had all been set up to address the problem of non-performing loans and bank recapitalisation.

We did not allow the shares acquired through CLOB to be sold immediately in the market, for this would cause all share prices to fall. The owners of the shares had to register first with the KLSE. Later we set up a special company to buy up these shares, oversee their repatriation and then manage their gradual sale into the market in order not to disturb share prices generally. At first, the owners of those CLOB-traded shares were unhappy. But as the KLSE recovered, share prices increased by 200 per cent by the time our special company bought up their shares. They were spared the great financial loss that they had feared, and waiting a while to cash in proved profitable for them. The company also made a profit in dealing with those shares and the Government recovered the money it had outlaid in its bold rescue exercise.

The world condemned our currency controls and many economists said that they were not in keeping with the open-market trading system. Experts predicted disaster for Malaysia and gleefully anticipated its return with a begging bowl. But we were not deterred. We believed we had found the right answer to the plundering of small countries by the rich currency traders. It may have been unconventional, but it worked. Let others uphold economic doctrine—we had a country and ourselves to save. In the end, we recovered faster than all the countries that, freely or under duress, accepted loans from the IMF and submitted to its one-size-fits-all solution. The currency traders ceased their operations. Even the IMF eventually admitted that our way had worked, though they would not recommend it to other countries.

Joseph Stiglitz, the Nobel Prize-winning economist, endorsed our view.
[4]
 Even Soros later acknowledged that Malaysia had done the right thing in not submitting to the IMF.
 

Ours was a solution that worked for us, but not many other developing countries were in our situation. It could only work for us because, in addition to our political will and rich sources of practical policy expertise, we had ample foreign currency reserves at our disposal in Bank Negara to defend our economic sovereignty. We also had huge savings which, in turn, were due to our responsible economic management over the years. Our success in turning back the challenge of the currency predators and the IMF was not due solely to our decisive actions at the time. It drew upon and vindicated the Government’s entire economic stewardship over the years, especially since the 1970s and 1980s.

The currency crisis, however, was not the only problem we were grappling with. Just one day after Zeti announced Malaysia’s currency controls, my problems with Anwar came to a dramatic head.

ENDNOTES

[
1
] Representatives from 44 countries met just before the end of World War II to discuss how to rebuild the global economy.
 

[
2
] The National Economic Action Council, or Majlis Tindakan Ekonomi Negara (MTEN), was created on 7 January 1998 to advise the Government on all issues related to the financial crisis.

[
3
] Tan Sri Dr Zeti Akhtar Aziz is the only woman Central Bank Governor in Asia. She is also the daughter of Professor Ungku Abdul Aziz Ungku Abdul Hamid, the country’s first Malay economist and former Dean of the Faculty of Economics and Administration at the University of Malaya, and is the grandniece of UMNO founder Datuk Onn Jaafar.
 

[
4
] Joseph Stiglitz’s book
Globalisation and its Discontents
 criticises the IMF’s handling of the financial crisis.
 

Four years after IGP Tun Hanif first told me about allegations linking Anwar to homosexual activities, someone sent me the book 50 Dalil Kenapa Anwar Ibrahim Tidak Boleh Jadi Perdana Menteri (50 Reasons Why Anwar Ibrahim Cannot Become Prime Minister). It was written by Datuk Khalid Jafri, a former editor of the Malay-language daily
Utusan Malaysia
.
[1]
 The book was clearly a sensationalist attempt to make money so I did not read it, but the rumours about Anwar refused to go away.
 

Then in 1997, I received a letter from a woman named Ummi Hafilda Ali. Its contents disturbed me as there were more specific and detailed allegations of sodomy against Anwar. I later learnt that Ummi was the sister of Anwar’s political secretary Mohd Azmin Ali.
[2]
 I must admit that even then, I thought the accusations were far-fetched. Had the contents been about Anwar having affairs with women, I would have been less incredulous, but how could such a seemingly pious person possibly be involved in homosexual activities? I found it very difficult to believe that anyone in such a high position, an adult and a decent Muslim at that, would do such a thing. Even though her allegations corroborated the IGP’s report of four years ago, I did
not take them seriously. About a month later, Ummi sent me another letter, this time saying that she withdrew her allegations. I wondered why she would now deny what she had said previously.
 

Meanwhile, the police had continued their observation of the Deputy Prime Minister’s activities, as was their usual practice. Even if I had asked them to stop, I doubt they would have. This time they had evidence, including pictures and confessions of the people involved. When the new IGP, Tan Sri Abdul Rahim Noor and his investigating officer Tan Sri Musa Hassan presented the evidence to me, I realised that I could not ignore the information. I said I wanted to meet the witnesses and speak to them personally. That was tricky because it meant I was involving myself directly in the matter. I was already well on the way to getting the currency crisis resolved and I wanted to concentrate on that as well as the approaching 1998 Commonwealth Games. The Games mattered a great deal to me, so I was annoyed that these distractions were also demanding my attention.

It was some time before I met the witnesses. I saw them individually, and in private, at my official residence at Sri Perdana in Kuala Lumpur. I assured them that our conversations were confidential and that I just wanted to hear their stories for myself. One of the witnesses was Azizan Abu Bakar, who was the driver for Anwar’s wife Datin Seri Dr Wan Azizah Wan Ismail. The police said Anwar had sodomised Azizan many times. I asked Azizan about the allegations and he was naturally frightened because Anwar was the Deputy Prime Minister. During our meeting he was very nervous and a little incoherent. Azizan told me in detail where the first incident took place. He said he was afraid as Anwar was a powerful man and could cause him much trouble. He said that was why he had not resisted.

I know how difficult it is to remember the exact dates and times when things happen so I was not particular about these details, but the meeting was enough to convince me that he was speaking the truth. In court, exact dates and times are crucial and are sufficient to convict or acquit someone, but I doubt if even lawyers and judges can remember exactly what they did a year ago. Some people may keep a diary but no one records everything he does every day.

I also interviewed four girls who told me about how they were persuaded to see a very influential person by an Indian man they knew by the name of Nalla. He had taken each girl separately to a house in Kenny Hills, a rich suburb in Kuala Lumpur. There they met a person they recognised as the Deputy Prime Minister. They were asked to undress with the purpose of having sex. Two of them said they refused but the other two consented. They were willing to talk to the police and to me but were adamant that they should not appear in court to give evidence. The police briefed me in detail about the results of their investigations and their opinion of evidence they had gathered. They too were convinced that the witnesses who saw me were telling the truth.

Faced with all this information from the police and from my own interviews, I felt I had to do something. I simply could not have a person of such dubious character succeeding me as Prime Minister of Malaysia; in fact, I could not have him in the Government at all. His actions and hypocrisy in masquerading as a highly religious individual were unacceptable, and I found the despicable means he employed to ensnare people and then ensure their silence appalling.

I called all the UMNO Menteri Besar, Chief Ministers and state heads to Sri Perdana for a meeting and asked the police to make the witnesses I had interviewed available. I then briefed the party leaders about what I had learnt about Anwar and showed them pictures of the witnesses. I asked whether they wanted to question the witnesses themselves, but after a prolonged discussion they all said they were convinced and there was no need to interview them.

I then asked them what action I should take. If I hid the evidence and allowed Anwar to continue in office, his behaviour might be uncovered and used to blackmail him. He would always be vulnerable, and by extension, so would Malaysia. Even I would be compromised, for if it was discovered that I knew and yet failed to take necessary action then I would be accused of covering up. Either way, I could not let him remain in office—I had to come clean and remove him. Once people knew why I had taken such action, I was confident that they would approve. The gathered leaders unanimously endorsed my proposed plan and said that they would back me if there was any backlash.

Unlike the removal of a judge, sacking Anwar did not require following Constitutional procedure. As Prime Minister I had the power to remove him as Deputy Prime Minister and dismiss him from the Cabinet just as I had the power to appoint him. But even after he ceased to be a member of the Government, he would still be a member of UMNO and continue to be its Deputy President. That, too, was not a tenable situation, but his removal as Deputy President and member of the party could be effected only by a decision of the UMNO Supreme Council.

At that time I was seriously planning to step down, so I had to make a quick decision. On 2 September 1998, I issued a statement through the national Press agency Bernama that Deputy Prime Minister Datuk Seri Anwar Ibrahim had been dismissed from the Government. By then many people had read Khalid Jafri’s book, which had been distributed to all the delegates attending the most recent UMNO General Assembly and was selling briskly at neighbourhood night markets. Many had also heard about Ummi Hafilda’s letter, but most people were either not aware or not convinced about what had actually happened. There was widespread belief that Anwar’s dismissal was political, for it was no secret that he had been trying to undermine my credibility and support among UMNO party members. His supporters had accused me of cronyism and corruption, and at the 1998 UMNO Annual General Assembly, some of them had been openly critical of me and my leadership. People knew I was aware that Anwar was behind these attacks but I was not yet in a position to publicly denounce his wrongdoing. I could only signal, but not expose these matters in my closing address. What could be explained in detail to the Menteri Besar and UMNO leaders could not be revealed to the people at large, so most understandably assumed that his dismissal was prompted by my fear that Anwar would unseat me.

Even now it is difficult to explain convincingly that I was not afraid of this happening. Believing I was popular with the majority of UMNO members, I was confident that I would win any party contest against Anwar. I had won against Tengku Razaleigh Hamzah and Tun Musa Hitam before, both of whom were known and tried UMNO stalwarts, while Anwar was a rank outsider who had been against the party in the past. I had brought him in and helped him rise in the UMNO hierarchy until he became Deputy President and subsequently, Deputy Prime Minister. UMNO members, I was sure, would see the ungratefulness of this impatient protégé and newcomer. To party veterans he was an upstart who had bruised the dignity of many a stalwart as he elbowed his way up through the UMNO ranks.

He may have had strong supporters who were committed, even obliged and indebted to him for one reason or another, but I was convinced that I would be able to defeat him should he challenge me. The belief that I dismissed him because I was afraid he would oust me is without basis. I dismissed him for two reasons only: he was unsuitable to continue serving in the Government and he was unsuitable to succeed me as Prime Minister.