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Further, there is a lack of trained and skilled staff to investigate the numerous allegations of corruption and lack of independence of the Malaysian Anti-Corruption Commission (MACC) in so doing, as even the institutional forces, i.e., the police and judiciary, also face the challenge of ethical practices.
Hence, in relation to the institutional police force, the government should not rely on the police to curb corruption as demonstrated in the force’s questionable reliability in the TI Indices. This probably contributes to the success of both Singapore and Hong Kong in curbing corruption without relying on the police via the establishment of the Corrupt Practice Investigation Bureau in October 1952 in Singapore and the Independent Commission Against Corruption (ICAC) of Hong Kong in 1974 as independent anti-corruption agencies. Though MACC is set up with similar objectives, in essence it lacks independence. This brings us to the next contributing factor on the investigation stage where prosecution is subject to the sole discretion of a powerful position.
The provisions relating to the extensive power of the public prosecutor is tantamount to ineffectiveness as it is dependent solely on him to prosecute. The position of public prosecutor is a political appointment by the government. There have been many cases where individuals escaped prosecution due to political influence despite their perceived involvement and investigations conducted. As provided in the legislations, notwithstanding anything in any other law contained, where the public prosecutor is satisfied that there are reasonable grounds and evidence, only then a prosecution shall be instituted.
Without effective detection and punishment, and without a comprehensive legislation periodically reviewed and enacted to deal with loopholes and administer credible laws to punish offenders seriously, corruption cases will continue to rise. Corruption will thrive with increasing opportunities of bureaucrats on red-tape procedural processing if these are not minimized and made easy for business activities.
9.3 Recent Corruption Scandals
Corruption scandals in Malaysia often have some common themes, such as lack of transparency, vested interests, and costs that are borne by the public sector. Many scandals include these elements systematically embedded. The following are some examples.
9.3.1 Cases Involving Bureaucrats and Executives
The situation is perpetuated by the lack of enforcement from every single government body, from the town councils, to the ministries, to the law enforcement agencies. Examples include illegally clearing forests, forging official documents, destroying public property, illegally operating gaming machines, ignoring traffic regulations, stealing metal installations, pirating CDs and software, giving and taking bribes, misusing public office, illegally occupying government land, under-declaring income, dumping rubbish and toxic waste, poaching protected animals, etc.
One notable case in 2007 is that of an assemblyman, who was acquitted of charges despite violating the rules of being an elected representative and a civil servant holding multiple offices. TI Malaysia and the public were concerned about the decision to withdraw the 37 charges against him and six other directors for offences under the Companies Act as it might question the standard of independence, integrity, and professionalism of the institutions concerned. The Companies Commission of Malaysia (CCM) withdrew all the charges against him and six other directors
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of Titi Steel Sdn Bhd and Harvest Court Industries Sdn Bhd in the Klang magistrate’s court for, among others, not holdings AGMs, not submitting financial statements, and not submitting profit-and-loss accounts. No reasons were given to the court, but CCM officials and lawyers for the assemblyman said that the charges had been dropped after “representations were made” to the CCM.
Another issue relates to the recent inconsistencies in the awarding of Approved Permits (AP) to import cars where politicians were among the recipients. These AP licenses have been monopolized by politically connected Malay ethnic businessmen and politicians to import foreign vehicles. These vehicles are then resold to local businessmen, who do not have access to the APs for imports, at higher rates of at least three to fourfold. There is no transparent guideline for who could apply for the licenses as many who have applied had been rejected over decades and the reservation policy as seen from the list recently released. Transparency was only witnessed, in addition to the many dissatisfactions of certain quarters, when the administration of previous Prime Minister Tun Abdullah Badawi released information pertaining to the full list of AP recipients resulting in the government enforcing stricter regulations pertaining to the issuance of APs.
Money laundering among politicians to a certain extent is appropriately dealt with—if convicted under the Anti-Money Laundering Act 2001, one could be fined up to RM5 million or jailed for up to five years, or both. Allegations of money politics appear especially during party elections. The fact that actions were taken despite lack of clear regulations by the Disciplinary Board of the political party, which exercised much discretion, resulted in 61 found guilty out of 99 cases with punishments ranging from warnings for 15, to suspensions for 46 for various periods up to two terms of office or six years, and 32 have appealed in 2007.
On November 2, 2007, the Federal Commercial Crime Investigation Department director, became the highest-ranking police officer to be charged with corruption. He claimed at trial to two counts of failing to declare his assets and with business involvement in his capacity as a civil servant and abuse of power totalling RM27 million.
Given the trend for more transparency, it is not suitable for one single person, i.e., the attorneygeneral, to decide if there is sufficient evidence to prosecute corrupt officials. As such, the Bar Council has proposed a commission to promote a transparent process and better judicial conduct extended to the Judicial Appointment and Promotion Commission. A recent incidence of alleged brokering of judicial appointments appeared in an incriminating video clip and those involved included the former prime minister, a cabinet minister, judges, and a prominent businessman. The Bar Council called on the government to set up a Royal Commission to investigate the video scandal currently ongoing and to set up a judicial appointment committee in order to restore confidence in the judiciary. With power, there is always a chance of misusing it, but a good and transparent complaints mechanism that takes into account the rights of public administrators and the public will serve all well. The public administrators must be aware that they are serving the public and society and not the reverse. Efficiency and authority are subordinate to the fundamental objective of the state, which is public interests, and public officials should be consistently reminded of such consideration and reconcile professional ethics and self-interests as represented by the rational choice school of thought, with much firmness.
Another case in point, in September 2007, in the report on the Treasury’s response to the main issues raised by the Auditor-General’s Report 2006, some departments justified their huge spending, which ran into millions of ringgit, as part of efforts to expand operations or upgrade information technology systems that had become outdated. There were questionable spending decisions that involved huge discrepancies between what the ministry or government department
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had forked out for a purchase and the actual market rate, such as the Youth and Sports Ministry and the Women, Family and Community Development Ministry. Among the questionable expenditures were the Youth and Sports Ministry paying RM181,900 for 17 sets of technical books when the market price was RM417 each; RM224 for a set of screwdrivers worth RM40 each; a RM50 car jack bought for RM5700; and purchases totaling RM8.39 million at the Kelantan National Youth Skills Institute. The report was not taken very seriously because it was tabled in Parliament but not debated on. As a result, the ministries and departments did not feel obliged to make rectifications fast enough and the issues repeatedly occurred. Efficient expenditure management is important and necessary to safeguard the people’s interest and if there is no proper practice of governance, integrity, transparency, and accountability, such wastage would continue to occur.1 A week later, in his annual report, the auditor general announced the implementation of report cards with star ratings based on the financial management skills of ministry secretaries-general. A month later, the Anti-Corruption Agency (ACA) charged ten people as a result of cases of fund mismanagement highlighted by the auditor general. Six Welfare Department officials, two Youth and Sports Ministry officers, a negotiator, and a contractor were charged on October 22 under the Anti-Corruption Act.
9.3.2 Procurement Issues
Calls for transparency in public procurements have become a constant feature of national affairs. There are enough provisions in the statute books to ensure that public procurement is conducted with integrity and accountability. These include the Financial Procedure Act 1957, the Government Contract Act 1947, Treasury Instructions, and Treasury Circular Letters. Open tendering is prescribed for purchases above RM200,000 and each procurement exercise has to be evaluated by committees set up by a tender board that registers the bids and evaluates the financial and technical aspects of the offers. As the rules go for such large purchases, they then report their findings to the Finance Ministry, which makes the final selection. These are procedures that require procurement personnel to declare any conflicts of interest and withdraw from the tendering process. Dissatisfied bidders can complain to the procuring agency, which may cancel a tender that is marred by irregularities. Institutions that have made effective gains against corruption include those that have adopted the practice of posting all bids on their website and stating the reasons for the failure or success of each bid.
Significantly, little has been offered in the way of explanations of how those government contracts are selected, much to the acclaimed transparent tender system. In a sense, such functionality is a result of the political and social processes by which the state form evolve, notably for its functionality for the politicians’ interests that represent it.
Another much-debated policy is privatization and public-private partnerships. There is a widespread view that the privatization policy in Malaysia has favored the vested interests and many beneficiaries were chosen based on political and personal connections [2]. Privatization programs and government procurement in Malaysia are conducted through non-transparent processes. Only notifications of tenders are made public, but concession agreements are considered official secrets. Owing to the non-transparent selection process, the concession agreements and government procurement lead to sub-optimal outcomes. This has also led to allegations of corruption. For instance, the Public Works Department is under siege for the multi-billion ringgit fi ascos involving the Middle Ring Road 2 (MRR2), the Matrade Building, and the
1 The Sun, September 10, 2007, p. 2.
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Navy Recruit Training Center. Poor maintenance of government buildings such as leaks, burst pipes resulting in the collapse of ceilings, air-conditioning malfunctions, power interruptions and other incidents leading to records being damaged are common issues.
Interestingly, the latest call for greater scrutiny into highway privatization deals stems from an admission by former Prime Minister Mahathir Mohamad that concession agreements that his cabinet had approved in the past had been flawed. The government appears quite willing whenever possible to permit the private sector to do what it can, but the public is increasingly demanding full disclosure as the country’s commitments in infrastructure projects keep increasing. Audit reports reveal high incidence of failures on the part of the federal, state, and local governments to comply with relevant rules and regulations, loss and embezzlement of public funds, improper monitoring, and supervision regarding procurement issues.
One recent example of Malaysia’s economic and political landscape having had vested interests is the complex case of the Port Klang Free Zone (PKFZ) project. The fallout of a deal between Jebel Ali Free Zone (Dubai) and the PKFZ was because of red tape, political meddling, inaccurate land sale dealings, and attempted tax evasions. The government conducted a RM4.6 billion bailout through the issue of bonds between 2005 and 2006 for the project. According to the government, the PKFZ is a viable national project that will enhance Port Klang as a loading center, stimulate the economy as well as create spin-off activities and more jobs. This project is the government’s second biggest investment in the port industry since 1990. There was a falling-out between Dubai-based Jebel Ali Free Zone and the Port Klang Authority (PKA) resulting in a pullout from a long-term contract (15 years) to manage the Free Zone’s development and investments for strategic reasons in July 2007. So far, there has been no proper accountability to the parliament by the Finance Ministry on the scandal, despite the exposes in the public domain. The turnkey developer, Kuala Dimensi Sdn Bhd (KDSB), had been involved in irregularities of between RM500 million and RM1 billion in a preliminary report by the PKFZ special task force and an independent report by Pricewaterhouse Coopers. It is suspected that previous transport ministers and other top bureaucrats are involved in the scandal, though whether any of these individuals will be prosecuted at the end of the investigation remains to be realized. Currently, the Minister of Transport, Ong Tee Keat, is committed to a transparent investigation into the malpractices and corruption. The country has not seen the enthusiasm and openness of a minister who is bent on seeking justice to a problem that he inherited. As of mid September 2009, all kinds of accusations have been leveled against the minister of transport in the name of politics and political donations and even appointments of key personnel are questioned. Again, those making the accusations are the same people against whom the special task force alleged has shortchanged the government and there suspicion exists that the higher echelons of the government are involved. The special task force set up to investigate this case has found that there were elements of conspiracy to cheat the PKA of up to RM12.5 billion, hence the PKA is expected to file two suits against KDSB amounting to RM1.64 billion involving over-charges.2 However, in a recent development in early 2010, the decision to prosecute the director(s) of PKFZ in court was instead acquitted coincidentally soon after the Minister of Transport who was also the President of the Chinese ethnic based political party Malaysian Chinese Association (MCA) lost his presidency post after much inside party tussle.
If the PKFZ had been successful, the profits would have been enjoyed by shareholders, but if it continues to pile up losses, these losses would be borne by taxpayers. Such bailout creates a moral hazard and this case also shows the unhealthy proximity between politics and business and the
2 The Sun, September 25, 2009, p. 1; The Star, September 26, 2009, p. 1.
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