Malaysian Maverick: Mahathir Mohamad in Turbulent Times Page 42

  With such a categorical dismissal of the "lies" by the person who mattered most in the prime ministerial stakes, the perpetrators might have been expected to retreat. But no action was taken against them, and the "flow of anti-Anwar literature was not stemmed".[23] Calumnious books appeared, one of them titled Talkin Untuk Anwar Ibrahim — Requiem for Anwar Ibrahim. The political conspiracy against Anwar was well-funded and real, confirmed by former deputy prime minister Musa Hitam, an UMNO elder who was neutral in the Mahathir-Anwar fallout. "Definitely", he said later. The people involved in the planning had told him, Musa said, "what will be done against Anwar to make sure he will be toppled".[24]

  The Asian economic crisis, which originated in Thailand in July 1997, put additional strain on the relationship between leader and deputy as the effects spread to neighbouring countries. Dr. Mahathir's vilification of foreign equity and currency traders as "manipulators" and "criminals" accelerated the implosion of Malaysia's currency, stock and property markets. It fell to the more urbane Anwar, as finance minister, to calm growing domestic and foreign alarm over Dr. Mahathir's pronouncements and policies.[25] While playing good cop to Dr. Mahathir's bad cop boosted Anwar's reputation abroad as the voice of "reason and moderation",[26] it was deeply resented by Dr. Mahathir. And he was even more annoyed when some international media suggested that he should step down in favour of Anwar.[27]

  As the recession bit deeper and government spending was reduced, tension between the two also increased over the continued financing of Dr. Mahathir's mega-projects and the rescue of favoured bumiputra corporations. Anwar had long grumbled about some of the big-ticket infrastructure items, and he took the first opportunity to shelve a few. Despite Anwar's public opposition to bailouts, the government threw lifelines to some major companies aligned with factions or prominent figures in UMNO. Anwar and Dr. Mahathir argued privately over payment to Ting Pek Khiing, the entrepreneur behind the postponed Bakun Dam, and to Mirzan Mahathir, the prime minister's eldest son, for the purchase of the entire shipping business and assets of his Konsortium Perkapalan Bhd. by Petronas.[28] Now, Dr. Mahathir had reason to share the doubts about Anwar's willingness to protect certain interests after Dr. Mahathir's premiership.[29] As Musa Hitam, the former deputy premier, said, "To put it simply, this is all about the search for the next leader who could ensure that the past leader and his cronies will not be in trouble."[30]

  Although Anwar said later he thought Dr. Mahathir had made up his mind to remove him by December 1997, there was little sign of it at the time, though differences between them were beginning to show. The day after a pivotal cabinet meeting chaired by Dr. Mahathir on 3 December, before Anwar could announce a second austerity package to cope with the spreading economic malaise, Dr. Mahathir made a statement that suggested it was business as usual. He declared that a RM10 billion "land bridge", comprising a road, railway and a gas pipeline, between Malaysia and Thailand would go ahead. Anwar's measures, announced on 5 December, included more curbs on government spending and mega-projects, specifically reversing Dr. Mahathir's stand on the land bridge.[31]

  Soon after, Dr. Mahathir took steps to dilute Anwar's voice in economic policy formulation. He created a National Economic Action Council to oversee the country's recovery and brought back Daim Zainuddin, the former finance minister and his most trusted lieutenant, to head it with the title of executive director. Dr. Mahathir became chairman and Anwar deputy chairman. The prime minister made it clear that Daim would exercise full power to carry out the council's directives.

  Facing rare criticism in the local media over his controversial response to the worsening economic conditions, Dr. Mahathir sought to consolidate his leadership with a strong resort to nationalism. In addition to suggesting a Jewish conspiracy linked to American investor George Soros to block the progress of Muslims, he repeatedly warned that Malaysia's independence was threatened and appealed for unity. If Malaysia were forced to follow Thailand and Indonesia and go to the International Monetary Fund (IMF) for help, he said, the government would be compelled to increase taxes on an already impoverished people, charge higher lending rates and close most of the banks and finance companies. And foreign capitalists would be free to enter the Malaysian market and scoop up bargains, amounting to re-colonization of the country, he said.

  After their breach, Dr. Mahathir blamed Anwar, aided by Bank Negara, the central bank, for having made "a bad situation worse" by slavishly following standard IMF prescriptions and adopting tight monetary and fiscal policies. Dr. Mahathir said they implemented a "virtual IMF without the IMF loans", pushing already suffering banks and businesses into "dire distress".[32] But as prime minister, and a particularly powerful one, Dr. Mahathir always had the final say in policy making and no course could have been pursued without his acquiescence at least. In reality, Malaysia's economic policies were worked out in consultation with the IMF until about the middle of 1998.[33] Internal discussions and disagreements, reflecting a wider international debate, resulted in austerity being gradually abandoned. Even the IMF adopted a more flexible stance. Along with others, Anwar modified his views, describing interest rates at the end of June as "prohibitively high".[34] A 200-page recovery plan, prepared by the National Economic Action Council and released in July, reflected the move towards looser monetary and fiscal policies, "but within a framework that economic commentators acknowledged as prudent".[35]

  If there was one area in which Anwar sought to distinguish himself from Dr. Mahathir, it was over the meaning of the Asian economic crisis and what it portended for regional societies. Where Dr. Mahathir saw it purely as tragedy, it represented opportunity as well for Anwar, a chance to promote the idea that the old order should give way to a new and better one — code for fresh leadership. In an address to the Council on Foreign Relations in New York, Anwar described the contagion sweeping through East Asia as "creative destruction".[36] He said, "The pressure has been building up in recent months in the region itself and we are aware that unless we reform the system from within, changes will be imposed from without." While Dr. Mahathir initially accepted the logic of domestic reforms and an end to crony capitalism, his attitude changed after Indonesian President Suharto was driven from office on 21 May 1998 amid economic and political chaos. With Anwar and his supporters adopting the slogan of the Indonesian Reformasi movement, opposing korupsi, kronyisma and nepotisma — corruption, cronyism and nepotism — Dr. Mahathir had no doubt they were out to topple him.

  As the June 1998 UMNO General Assembly loomed, Dr. Mahathir again took steps to restrict the possibility of being challenged, though party leadership elections were not due until 1999. He blocked moves for change by getting UMNO to limit contests for heads of divisions, each of which sent delegates to the assembly. Contests were prohibited where a Supreme Council member was a divisional head, while Supreme Council members who were not divisional heads were prevented from seeking the post. As a result, there were only 24 new faces among the 165 divisional chiefs, who were key operatives in the assembly.[37] The status quo was a positive outcome for Dr. Mahathir, a number of whose supporters otherwise would have had to defend their positions against Anwar's highly-organized machinery.

  Additional measures were proposed by Dr. Mahathir's followers to protect his leadership in the form of resolutions to be considered at the assembly on 19-21 June, one a re-run of the "no contest" for president and deputy of three years earlier. If it were carried again this time, Dr. Mahathir would be insulated until 2002. But as the balance of power in the party shifted to Anwar, with public support for a change after 17 years, pressure built on Dr. Mahathir to allow competition. After Zahid Hamidi, the UMNO Youth chief and a prominent Anwar ally, decried the "no contest" idea as inimical to democracy, Anwar welcomed Zahid's willingness to face challenges in the 1999 elections to preserve "the spirit of the constitution as well as the democracy and the healthy culture in the party".[38] Their coordinated comments fuelled renewed speculation that Anwar would challenge Dr. Mah
athir the following year.

  Dr. Mahathir, however, was convinced that Anwar was intent on unseating him immediately. Less than two weeks before the 1998 assembly, Anwar told an UMNO meeting in Johore that without reform Malaysia faced the same fate as Indonesia. Zahid and other followers joined in, picking up the Indonesian battle cry against corruption, cronyism and nepotism. Anwar's campaign was intended as a "message" for Dr. Mahathir, to get him to "understand the undercurrents in the country...we should either make adjustments now or let a smooth transition take place eventually".[39] True, Dr. Mahathir had said in 1995 that he would not stay on if UMNO members sent him a message that they were not happy with him. But in these highly charged and difficult times, the message Dr. Mahathir received was a naked threat, a conspiratorial effort to discard him like Suharto.

  According to Anwar, Dr. Mahathir had sleepless nights as the assembly approached, fearing the appearance of organized discontent, such as a no-confidence vote being taken against him, a banner calling for his resignation, or just jeering.[40] Going on the offensive, Dr. Mahathir issued a series of warnings, clearly aimed at Anwar's backers, not to make "unsubstantiated" claims about nepotism and cronyism. In a closed-door briefing the day before the youth and women's wings of UMNO were due to meet ahead of the assembly, Dr. Mahathir said delegates who raised issues that might destabilize the party must be accountable for their actions. He told a press conference, "If you want to bring up such matters, you must have the facts."[41] Daim, the prime minister's long-time confidant, called Zahid and advised him to back off from his tough talk about nepotism and cronyism for the sake of his political future.[42] It came just eight hours before Zahid was to address the UMNO Youth gathering. Zahid went ahead anyway, his attack on the existence of corruption, cronyism and nepotism approved by Anwar.[43]

  Although Anwar's own speech to the combined UMNO youth and women's delegates contained no such criticism and he urged an end to factionalism and a united stand in support of Dr. Mahathir in facing the economic crisis, it was too late. Dr. Mahathir, in his opening speech to the assembly, hit back so hard at the cronyism critics that any incipient revolt was quelled. His view, that external forces were responsible for Malaysia's problems, was endorsed in a resolution that was carried unanimously. Dr. Mahathir also turned the tables on Anwar by releasing, without notice, lists of all the Malays who had benefited from privatization and government contracts. His son Mokhzani was listed, but so too were Zahid and members of Anwar's family. While it might have been a "cheap trick", as Anwar later claimed, because it did not differentiate "between projects worth a few million ringgit and those worth billions",[44] the ploy worked. With Dr. Mahathir declaring all Malays cronies because all had benefited from the government's affirmative action policies, kronyisma was wiped from the agenda.

  A parallel development, played out in the shadows while the delegates debated, confirmed how seriously and quickly the tide had turned against Anwar. Among the items being peddled by the hawkers set up outside the assembly venue, the Putra World Trade Centre, was a book titled 50 Dalil Mengapa Anwar Tidak Boleh Jadi PM — 50 Reasons Why Anwar Cannot be Prime Minister. The poison-pen letters of a year earlier had been embellished and packaged in a more permanent format, authored by Khalid Jafri, a former newspaper sports editor. Repeating the earlier sexual charges, the book accused Anwar of complicity in a murder, and called him the most corrupt man in the country and an agent of foreign powers who wanted to overthrow Malaysia's leadership. As soon as he learned of the book, Anwar obtained an injunction through a law firm to halt its publication and distribution before the assembly opened. He described the book as "a conspiracy to smear my image and topple me" and called on the authorities to take harsh action against the author and publisher and their agents.[45] Ominously for Anwar, however, in defiance of the court order the book was packed into delegates' souvenir bags by the UMNO secretariat.

  Not only did Zahid's salvo fail to ignite a debate on domestic weaknesses and the need for reform, it also eroded any remaining trust Dr. Mahathir had in his deputy. Anwar disappointed some of his own troops by failing to back Zahid and leaving him exposed, or for not leading the charge himself against corruption, cronyism and nepotism. There was no doubt about public disquiet over the matter. In a by-election a week later, the opposition captured the parliamentary constituency of Arau in Perlis for the first time, the first parliamentary seat ever won by Parti Islam Se-Malaysia in the state. The critical factor, though denied by Dr. Mahathir: The UMNO candidate was the brother of the state's chief minister, a blatant example of nepotism that shaded into money politics and related abuses.

  Over the next couple of months, Dr. Mahathir orchestrated a series of moves, using both the government and party, to weaken Anwar's position.[46] A few days after the convention, Daim was re-appointed to the Cabinet with the title of Special Functions Minister. Having acquired full ministerial rank in addition to his role as government economic adviser and head of the National Economic Action Council, he was assigned responsibility for coordinating economic recovery, further isolating Anwar as finance minister. The editors of the two major Malay dailies, Johan Jaafar of Utusan Malaysia and Nazri Abdullah of Berita Harian, were forced to resign, as was the director general of TV3. All strong Anwar allies, they were replaced by pro-Mahathir figures.

  As police resumed investigations into 50 Dalil, as it became known, they focused as much on Anwar as those responsible for the book. While charges were laid against Khalid Jafri, the editor, also arrested was Nallakaruppan Solaimalai, a businessman and occasional tennis partner of Anwar, who was alleged in the book to have arranged sexual liaisons for him. After police searched Nallakaruppan's house, he was charged under the Internal Security Act with unlawful possession of live ammunition, an offence carrying a mandatory death sentence. The same offence under the Arms Act, more appropriate in the circumstances, carried a maximum penalty of seven years imprisonment and a RM10,000 fine. Attorney General Mokhtar Abdullah told reporters there might be more arrests. Anwar was outraged to find himself being pressed to take a DNA test to prove he had not fathered an illegitimate child, as the book claimed. DNA testing of his private secretary and secretary's wife, plus the child in question, confirmed it was theirs, relieving Anwar of the need to submit to analysis.

  On 12 August, Daim approached Anwar and informed him that Attorney General Mokhtar had told him that Anwar was to be charged that morning with sexual misconduct, Official Secrets Act offences and possibly treason. Anwar stormed into Dr. Mahathir's office and demanded an explanation. After listening to him for a while, Dr. Mahathir called Mokhtar on the phone and told him to delay the charges. "Wait for my clearance," the prime minister said.[47] In public, however, Dr. Mahathir and Anwar maintained the pretence that nothing was amiss between them, though Anwar was forced to deny rumours that he would resign. Dr. Mahathir said in an interview, "Do I have to kiss him on the street before people will stop saying there is a rift?"[48] In one appearance together in Penang, Anwar professed his loyalty and love for Dr. Mahathir, whom he described as "a teacher" and himself as "a mere student".[49]

  Dr. Mahathir toured the country, visiting all states, supposedly to explain the economic problems directly to the people, but in reality shoring up his own popularity and preparing the public for "drastic" and even "shocking" measures to follow. He was aided by souring relations with Singapore, a periodic occurrence, which enabled Dr. Mahathir to resort once again to "bristling nationalism", as a Singapore newspaper called it, and drape his leadership in the flag. An unexplained blip on 28 August was the resignation of the governor and deputy governor of Bank Negara, which was, in fact, their way of protesting the economic policies about to be adopted. On 1 September, with no public objections by Anwar, the government introduced capital controls.

  If the unorthodox economic programme sent shockwaves through the region, what happened next was a political earthquake. At 12:15 p.m. the following day, 2 September, Dr. Mahathir told Anwar: "Resign or b
e sacked with grave consequences." Responded Anwar: "I'm innocent and I'll have to expose your conspiracy."[50] At 5:30 p.m. he was handed a letter dismissing him as deputy prime minister and finance minister, and his office was sealed. No reasons were given for his removal in the brief announcement that evening by Bernama, the national news agency.

  But events the next day, 3 September, indicated the extent of the forces ranged against Anwar and how far they were prepared to go to put him out of action. In the morning, the prosecution in the case against Nallakaruppan produced four affidavits in court to support a decision to hold him at police headquarters instead of transferring him to a prison outside the city. For the most part, they were unrelated to the offence with which he was charged, possession of 125 bullets. Rather, one police affidavit outlined statements by seven unidentified witnesses, including a man who claimed he was sodomized 15 times by Anwar and a woman who alleged she was paid RM350 by Nallakaruppan after having sex with Anwar. There were also references to a driver who had been asked to fetch Chinese, Mexican, Eurasian and women of other races for illicit sexual activities, two women who rejected Anwar's advances and a third who reportedly said she discussed politics after having sex with him. According to the affidavit, police had received a complaint that Anwar had tried to seduce the wife of a businessman, when the couple were in Anwar's delegation on a trip to Washington. The affidavit said Nallakaruppan, who was believed to have access to national secrets through Anwar, frequently accompanied Anwar abroad and "his activities could be exploited by subversive elements in and out of the country which could jeopardize national security".[51] In another affidavit, Mokhtar, the attorney general, reaffirmed that the police investigations involved national security. If there was prima facie evidence, "Nallakaruppan and/or the national leader could be charged in court under the country's laws".[52]