TIME Magazine

Another Man Down?

A politically cornered Mahathir takes aim at an old friend, Finance Minister Daim

BY SIMON ELEGANT Kuala Lumpur

Reading the papers on April 23 must have sent a chill through Malaysian Finance Minister Daim Zainuddin. His boss and friend of 20 years, Prime Minister Mahathir Mohamad, had given a speech in which he said that "abundantly rich" members of the ruling United Malays National Organization should be barred from holding important posts in the party. Daim, who has been in the party's top echelon for 20 years, just happens to be one of the country's wealthiest individuals. Coming at a time when relations between the two men were already strained, it must have made for a particularly unpleasant Monday morning.

Why is Mahathir throwing veiled barbs at his old pal? Apparently because he has his own back to the wall. Faced with hemorrhaging support in his core constituency, the country's indigenous Malay population, Mahathir is setting out on a major cleanup campaign aimed at refurbishing his own image and that of his party. Both have long been tainted by allegations of cronyism, corruption and arrogance. For many observers both in and outside of the party, the Prime Minister will almost surely be forced to jettison some of his closest political allies. "He will do things that no other politician will do," says Sharir Samad, a senior UMNO member and frequent Mahathir critic.

Many among the party faithful concede that the Prime Minister has to take action or risk losing the next election, which has to be called by early 2004. The party has been in power for 44 years; critics say it is neglecting its mission to serve the people. "The image is that UMNO is a party of rich people, with ostentatious wealth both at the bottom and the top," says Sharir.

Just how far the Prime Minister is willing to go to restore the party's image will become evident in the next few weeks. "We are definitely at a major turning point," says Manu Bhaskaran, chief Asian economist at SG Securities. So far, most of the casualties have been relatively small fry: six party functionaries were suspended for practicing "money politics" during recent party elections. But a clear indication of Mahathir's resolve will come when the party's Supreme Council decides whether or not to take disciplinary action against UMNO secretary-general Khalil Yaacob. Although accusations of corruption against Khalil were brought by a lowly state assemblyman, they have received extensive coverage in the tightly controlled press, potentially a bad sign for Khalil.

But most of the discussions taking place in Kuala Lumpur's smoke-filled rooms center on the Daim-Mahathir split. Daim is currently traveling in the U.S., following the Prime Minister's announcement in mid-April that his longtime confidant was taking an unusual three-month break from his job. When asked whether the decision to take leave was a precursor to Daim's resignation, Mahathir declined to elaborate, saying: "If you ask me and I answer, he might get angry."

Officials, meanwhile, are said to be attacking the absent Finance Minister freely, particularly his recent decisions to bail out-with public funds-businessmen regarded as protEgEs. Just how far Mahathir will go to distance himself from his old friend is unclear. Political analysts in Kuala Lumpur say they are watching closely to see whether Daim's business associates come under intensified official scrutiny. But the Prime Minister might decline to escalate the rift to the public sphere. Conspiracy theorists say he wouldn't dare. "Daim just knows too much, all the political and financial secrets of the past 20 years," says a veteran observer who knows both men well. Both have repeatedly denied there is any bad blood between them or that Daim plans to leave office. Many political pundits expect Daim to quietly resign after a decent interval. That would allow him to return to private life-something he has been talking about for years-and allow Mahathir to show that he is serious about reform. "He can say, 'You see, I am getting rid of my closest friends as well as my enemies,'" says Sharir.

But the Prime Minister's high-stakes political strategy is fraught with danger. If figures like Daim and Khalil are in trouble, other politicians in Kuala Lumpur can't help but feel nervous. That's surely the case with Deputy Prime Minister Abdullah Ahmad Badawi. Three previous Deputy Prime Ministers have fallen by the wayside, including his imprisoned predecessor Anwar Ibrahim. And now, with the Prime Minister apparently renewing contacts with perennial contender Razaleigh Hamzah, the last thing Abdullah needs is to get caught in the middle of a political earthquake. "Mahathir had better make sure that while he's trimming the deadwood he doesn't saw off the branch he's sitting on," says a political analyst in Kuala Lumpur. But, then, Mahathir is the great survivor of Malaysian politics.