Malaysia’s Daim Zainuddin: From power broker and tycoon to cross-border controversy

DAIM Zainuddin, Malaysia’s influential two-time finance minister, has passed away at 86. His big business manoeuvres and economic policies from the 1980s to early 2000s marked a career that was anything but ordinary.

Under Mahathir Mohamad’s reign as prime minister, Daim played a key role in reshaping Malaysia’s corporate and financial landscape, championing privatisation and liberalisation.

Known for his discreet, behind-the-scenes influence, he also shrewdly navigated the country’s complex political terrain to wield significant power in both business and government.

Rise in business – 1960s to 1970

Kedah-born Daim began his career in law, working with firms like Pillai & Co and Shearn Delamore, before joining Allen & Gledhill. In 1968, he founded his own firm, Daim & Gamany, but soon shifted to business, where he initially faced setbacks in the salt and plastics industries.

His big break came with Syarikat Maluri, a successful venture in real estate, which paved the way for his expansion into banking with the acquisition and rebranding of Indo-Suez Bank as the Malaysian-French Bank.

Web of wealth

Known for his vast wealth, Daim held significant stakes in prominent and big Malaysian companies, such as SimeUEP (now Sime Darby), Guthrie, TV3, Maybank, Consplant, Cold Storage and Nestle Malaysia.

He also used to be the major shareholder in Alliance Bank, which was created from the merger of seven financial institutions, including Hock Hua Bank, Bumiputra Merchant Bankers and Multi-Purpose Bank.

His family also owns the iconic 60-storey Ilham Tower in Kuala Lumpur, built at an estimated US$580 million, which was seized by Malaysian authorities on Dec 18 amid ongoing investigations.

Earlier this year, the International Consortium of Investigative Journalists disclosed that documents from a Cayman Islands financial firm listed Daim’s wife and two younger sons as beneficiaries of a trust valued at US$52.5 million as of 2020, adding further intrigue to his financial affairs.

Political powerhouse – early 1980s 

Daim’s political rise began in the 80s with his Senate appointment, followed swiftly by his role as finance minister under Mahathir in 1984.

He became a key figure, championing bold privatisation of entities such as Malaysia Airlines and Telekom Malaysia, while advancing Bumiputra economic participation aligned with the New Economic Policy. This cemented his reputation as a powerhouse in Malaysian politics and economics.

Strategic alliance – 1984-1991

Daim and Mahathir shared a strategic alliance, especially during the latter’s first term (1981–2003), with Daim as his trusted economic adviser, driving banking consolidation and policies promoting Bumiputra economic ownership. 

Their relationship, however, was a complex one, with tensions leading to Daim’s resignation in 1991 amid rumours of disagreements. Mahathir then took over the finance role, fuelling further speculation of a rift.

Tycoons rising

Robert Kuok, a business magnate and one of Asia’s richest, and Daim – a key political figure – both influential individuals from Kedah, likely crossed paths through Malaysia’s business and political circles in the 1980s and 1990s amid the country’s economic transformation.

In 2018, both men were appointed to the Council of Eminent Persons (CEP) by Mahathir to advise on economic matters.

‘Daim’s boys’

During Daim’s tenure as finance minister (1984-1991), several Bumiputra tycoons, often referred to as “Daim’s Boys”, rose to prominence through lucrative government contracts and close ties to Daim.

Prominent tycoons such as Halim Saad, then of Renong Berhad, and Tajudin Ramli, then of Malaysia Airlines, exemplified how Bumiputra policies provided significant advantages for those connected to powerful political figures. Both are no longer associated with these companies.

Anwar-Daim duo – mid-1980s to late-90s

Daim and Malaysian Prime Minister Anwar Ibrahim began as close allies in Mahathir’s inner circle, with Daim as finance minister and Anwar succeeding him in 1991.

Their relationship soured due to power struggles and economic differences, leading to Anwar’s dramatic dismissal in 1998. Following this, Daim returned briefly as finance minister. 

Recently, Anwar’s anti-corruption campaign has spurred investigations involving Daim, fuelling speculation of a political vendetta.

Post-Asian financial crisis – 1999 to 2001

During the 1997-98 Asian financial crisis (AFC), Daim supported Mahathir’s bold capital controls, helping to stabilise the economy despite global criticism.

Returning as finance minister from 1999 to 2001, Daim spearheaded banking consolidation efforts that transformed Malaysia’s financial landscape.

From over 50 banks in the late 1990s, mergers and acquisitions reduced this number to around 10 by the early 2000s, creating some of the country’s largest and most resilient financial institutions.

Clob controversy – 1998

Daim, wielding influence as Mahathir’s adviser, backed the bold and controversial closure of the now-defunct Singapore’s Central Limit Order Book (Clob), halting the offshore trading of Malaysian stocks to curb the outflow of hot money during the AFC.

This move to freeze some S$17 billion of investments in Clob shares belonging to over 170,000 Singaporean investors sent shockwaves through cross-border financial ties and has not been forgotten by investors even two decades later.

Closure with bitter aftertaste – late 90s

Akbar Khan, a reclusive Singapore property developer and close associate of Daim, was instrumental in the late 1990s in repatriating over US$4 billion in frozen Clob shares.

His firm, Effective Capital, offered to purchase these shares at half their last traded price before returning them to shareholders for a fee, reportedly earning RM300 million (S$90.1 million) – a move that infuriated Singapore investors even further.

In March 2024, the 83-year-old Khan was temporarily detained and questioned by Malaysia’s anti-graft watchdog.

Ties that bind – 2018

Mahathir and Daim continued to share close ties. Malaysians voted for change and ousted the long-ruling Barisan Nasional.

During Mahathir’s second term in 2018, he returned to head the CEP, which included Kuok, former central bank governor Zeti Akhtar Aziz, and former Petronas chairman Hassan Marican. 

Empire unravelled? – 2024

Daim pleaded not guilty to charges of failing to disclose assets, which include luxury vehicles – a Rolls-Royce, three Mercedes-Benz and a Jaguar – companies and properties scattered across several states in Malaysia.

The probe was linked to the release of the Pandora Papers by the International Consortium of Investigative Journalists.