The Treasury, the report said, had become the front-line of a battle with CEP head Daim Zainuddin as decisions over mega-projects and government-linked companies, including sovereign wealth fund Khazanah Nasional, were being contested.
The ST reported about speculation that Khazanah’s top management had been asked to step down by the CEP and that similar requests had been made to other government-linked company captains. This has not gone down well with everyone.
ST quoted an unnamed official as saying: “There is even a cabinet paper on moving Khazanah to the Prime Minister’s Office waiting to be discussed”.
A source told the ST that efforts to renegotiate contracts for the Light Rail Transit and Mass Rapid Transit systems were opposed by Daim, who pushed for these projects to be re-tendered.
Finance Minister Lim Guan Eng eventually announced on July 12 a new RM16 billion package for the third Light Rail Transit line, reducing it by 47%.
The report said the cost of the MRT2 line could also be cut by at least RM8.5 billion, or more than a quarter of the RM32 billion overall cost.
“The fact that the cabinet approved Lim’s proposal shows that Daim and (Prime Minister) Dr Mahathir (Mohamad) are not totally of the same mind,” a PH leader told the ST, adding that both men had their own teams looking into the 1MDB scandal.
The newspaper said at the first meeting of the cabinet on July 4, ministers sought and gained an assurance from Dr Mahathir that the CEP was merely tasked to make recommendations and not decisions.
Dr Mahathir announced the setting up of the CEP – led by his long-time lieutenant – immediately after being sworn in as prime minister on May 10, saying that it was needed to stabilise a government of inexperienced ministers.
The ST report said there was growing concern, both in and out of the ruling Pakatan Harapan (PH) coalition, over the “implicit power” of the five-man CEP which had effected important personnel changes in government.
These include the resignations of Bank Negara governor Muhammad Ibrahim and the country’s two top judges Raus Sharif and Zulkefli Ahmad Makinudin.
According to the ST, the latest incident where the CEP triumphed over PH politicians was in the selection of the speaker of Parliament “which left the two largest parties in PH – PKR and the DAP – embarrassed when their nominee Johari Abdul had to withdraw”. Retired Court of Appeal judge Mohamad Ariff Md Yusof was nominated and elected speaker.
The extent of the cull and restructuring overseen by Daim has led to a pushback from PH leaders, several of whom, including DAP supremo Lim Kit Siang, have warned against the slippery slope of a fullscale witch-hunt, according to the ST report.
It quoted Lim as saying: “PH must never give anyone any basis to think that it is finding any and every excuse, even the slightest one, to get rid of the current crop of leadership at government agencies and government-linked companies to replace them with people aligned to PH. The PH government cannot allow these pernicious practices of the past to take hold again.”
The ST quoted PPBM deputy policy and strategy chief Wan Saiful Wan Jan as saying there had been discussions about the role of the CEP and “not just among ministers and party leaders, but also senior officials”.
But, he quickly added, they had been “comforted by the assurance” from both Dr Mahathir and Daim that the CEP would be disbanded after 100 days of forming the government.
The report said some leaders were concerned that changes involving the economy, including placement of strategic institutions and individuals, would lock in Daim’s influence beyond 100 days without the need for him to be accountable in a formal role.
The ST quoted S Rajaratnam School of International Studies’ senior fellow Johan Saravanamuttu as saying: “Yes, that would be a major concern if appointees are to protect Daim’s interests. Mahathir has to be careful about not overplaying Daim’s hand as a troubleshooter, but then again, can Mahathir even stop someone like Daim?”
The report said the business community was watching the CEP and its actions closely, adding that financial executives and risk consultants said meetings with Daim and his team were as highly sought after as briefings from the finance and economic affairs ministries.
“The CEP reduces the cabinet’s role to some extent, raising the risk of policy confusion and concerns about parallel administrations. Investors want to avoid having two finance ministers and have clarity over who is calling the shots,” said Eurasia Group’s Asia director Peter Mumford.