Infrastructure is a wonderful thing for an investment bank because it involves government guarantees and large commissions for raising money which taxes can pay back. Many times around the world, the infrastructure is actually done or much of it not including cost overruns. Sometimes, government officials at the President or near him get very greedy and that has happened in Malaysia. The government set up the fund 1 Malaysia Development Berhad or 1MDB which raised $ 6 billion and Goldman Sachs received a $600 million in fees. This was considered a good thing at the time. Unfortunately, the fund became a front of corruption for people close to Najib Razak who was the Prime Minister and Jho Low who provided directions of where the money needed to go and very little went to infrastructure. Two former Goldman bankers who were lead bankers to Malaysia have been charged.
The only good news is the new Prime Minister and Attorney General are trying to recover the money, although much of it went to lifestyle living.
Linking to dividend paying stocks, if you buy a company which does infrastructure except once in while there will be scandals with the company. It is often too easy to have over runs, however once the infrastructure is built the fees or tolls or revenue from the operations are generally healthy for a long time.
There are more questions than answers, till the next time – to raising questions.