Aug 16, 2003

Malaysia's weak war on graft

By Anil Netto

PENANG, Malaysia - Deputy Premier Abdullah Badawi's call for a corruption-free Malaysia has sparked a debate into the extent of graft in the country.
Abdullah said on Monday that he was concerned over Anti-Corruption Agency (ACA) statistics that showed that more than half the 1,352 people arrested for graft been 1998 and 2002 were civil servants.
"Corruption is a terrible disease that can hurt our competitiveness and image because it brings about a loss of public confidence in the civil service," said Abdullah, due to succeed Prime Minister Mahathir Mohamad in October. The deputy premier said a clean image was vital so that the public, the business community and foreign investors would have a positive perception of the civil service.
Malaysia ranked 33rd in Transparency International's Corruption Perceptions index last year. Although this was a slight improvement from the 36th place in 2001, it was well below the 23rd position achieved in 1995.
Abdullah said what was needed was a change in the mindset and attitude of civil servants to be trustworthy and to resist the temptation of "easy money".
His comments came just a couple of days after a young couple on a date at the Kuala Lumpur City Center park complained that they were issued a summons for "indecent behavior" after they had refused to pay off city council enforcement officers. The complaint alleged that the couple were told the summons would involve between RM300 and RM500 (US$79-$132) and the officers then offered to help them settle it at a reduced rate without issuing a summons.
Many Malaysians reading this news report would not have been surprised, to say the least. The incident sparked a torrent of debate and discussion as to what should be done to wipe out corruption in Malaysia.
It is understandable why Abdullah is so keen to clean up Malaysia's act when he assumes power. Competition among Southeast Asian nations and China for foreign direct investment in the region has become intense. As scarce funds flow to North Asia, the need for reforms in countries like Malaysia assumes greater urgency.
But many critics have been quick to point out that by focusing on civil servants, Abdullah risks missing the forest for the woods. The biggest obstacle to improving transparency in Malaysia and wiping out graft is the worrying extent to which politics and business are intertwined. This close nexus between politics and business inevitably results in cronyism and political patronage.
No sooner had Abdullah spoken than questions started being asked about the involvement of his brother, Ibrahim, in a consortium that would buy a Malaysia Airlines (MAS) subsidiary in a favorable deal that was said to guarantee returns over nine years. Ibrahim's company reportedly has a 51 percent stake in the consortium.
The deal prompted an opposition parliamentarian from Parti Islam SeMalaysia (PAS), Husam Musa, to write to Abdullah asking whether the privatization deal would lead to a loss for MAS and the nation. "If the revenue-guarantee clause is true, then the contract is no longer privatization but a profit guarantee by the government to [the purchasing consortium], where family ties exist between the main shareholder of the company and the deputy prime minister," he was reported as saying.
Abdullah's call for an end to corruption has a parallel. Soon after Mahathir became premier in 1981, he unveiled the rallying cry for his new administration in April 1982: "Bersih, Cekap, dan Amanah" (Clean, Efficient and Trustworthy). But by July 1983, that policy was in tatters after investigator Jalil Ibrahim was found dead - strangled and stuffed into a large suitcase in Hong Kong. Jalil had been sent to Hong Kong to investigate massive losses in Bumiputra Malaysia Finance, a subsidiary of state-owned Bank Bumiputra.
From then on, scandal after financial scandal plagued the Mahathir administration, the largest and yet to be resolved involving spectacular unexplained losses totaling RM10 billion at Perwaja Steel, a government-backed heavy-industry project shrouded under allegations of irregularities.
One of the biggest stumbling blocks in the battle against corruption is that the ACA is hardly independent, reporting as it does to the Prime Minister's Department. This major structural flaw makes in almost impossible for the agency to investigate high-level corruption involving ministers and senior officials without clearance from the very top. Where such cases are actually investigated, the probe can take years to be completed, often with a finding of insufficient evidence. Many have called for the ACA to be converted into an independent commission against corruption, accountable to an independent authority.
It doesn't help that the ruling-coalition parties have extensive business interests either directly or via proxies. Political patronage and privatization have been abused to consolidate politically linked businesspeople and firms. What's more, affirmative-action policies favoring the economically disadvantaged Malays and other indigenous groups have been abused to assist well-connected officials, ministers and businesspeople. This would include the lack of open tenders for infrastructure projects and the special allocation of shares and licenses to those who are not exactly disadvantaged.
Critics have pointed out that the battle against corruption should start from the top through "leadership by example" - another Mahathir administration slogan that failed to inspire. Unless Abdullah has the political will to tackle the structural and deeply rooted systemic problem of graft, few critics expect his campaign against corruption to amount to much.