July 18, 2008
I highlighted previously that the state of corruption in Malaysia is now at its gravest level of concern. Corruption is one of the major causes of poverty and inequality in wealth distribution. It has dire consequences resulting from manifestations including behaving dishonestly, corrupting the administration of law and order, squandering of public funds to eliminating the independence of a judicial system. It is most worrying when corruption in Malaysia is institutionalised (see previous article) and the government and the ACA seem to turn a blind eye despite the scale and obvious act of corruption in various high-profile cases involving senior government ministers (e.g., the purchase of the Scorpene submarines, the RM4.6 billion Port Klang Free Zone scandal).
We often heard the ACA’s official line that there was no evidence to press charges or solve an alleged corruption case. One must wonder how did large sums of funds, computer records and trails of evidence disappear into thin air. Does the government think that the people and the international community were easily misled into believing the ACA’s excuses? How can our leaders live with their conscience and face the outside world? Are they not shameful of being vilified and ridiculed?
What signs do the government and ACA need that the nation is tired of this institutionalised disease of corruption? Malaysia is a lucky country with plenty of natural resources (e.g., oil and agricultural resources) but yet our economic progress in terms of standards of living and distribution of wealth seems to be deteriorating rather than improving, e.g., after more than 30 years of NEP only a small group of Malays benefited from the distribution of corporate equity shares, the Indian community unrest was related to economic marginalisation and the public support for the Coalition Against Inflation rally.
Corrupt practices are becoming more voracious as the ruling government scrambles for survival, e.g., a petrol price hike of 41 percent, the use of both police and the armed forces to intimidate and prevent peaceful public assemblies. Over the years, our country has built some world-class infrastructure (e.g., Cyberjaya, Multimedia Super Corridor, Petronas Twin Towers, major highways, IDR project, etc) - but our public services, corporate governance, economic competitiveness and education systems are sliding. These mega projects presented the best opportunities for kick-backs in the absence of competitive tenders and their negative effects could last for many generations through national debts, ineffective allocation of resources, and flight of private and human capital. This is why one of the best ways to silence government critics is to announce several mega public investments (e.g. IDR and similar regional corridor development projects).
The root of corruption has become even deeper and widespread to the extent that the independence of our judicial system is questionable. How will the ACA pursue high level prosecutions against government officers without operating in a transparent and accountable legal system? It is widely acknowledged that for anti-corruption strategy to be effective, the government must relinquish and distribute its power and monopoly control over governance to countervailing agencies. To this end, the government has recently announced plans of setting up an independent corruption prevention advisory board, a parliamentary committee and a substantial increase in the anticorruption workforce. These are supposed to turn the ACA into a totally independent commission - the Malaysian Commission on Anti-corruption (MCAC).
The ACA is at the forefront of reducing corrupt practices and it should be the strongest legitimate force against graft. Let’s examine the basic structures of the proposed MCAC. Firstly, members of the advisory board would be appointed by the King but based on the Prime Minister’s advice. This would only create an additional layer of structure delaying investigation into serious corruption cases, which are often time-critical. Apart from the fact that the board is not independent, the board also serves to provide corrupt officials time to prepare their cover stories and counter any allegations of corrupt practice. The board would also complicate the process of investigation and hence create opportunities for corruption. Research has shown that over-regulation and complexity increase the level of corruption1.
Secondly, members of the parliamentary committee have control over what corruption cases are to be tabled or heard in the parliament. This defeats the purpose of having an independent agency as well as creating additional administrative and operational tasks. Furthermore, if allegations of corruption were against government ministers, members of the parliamentary committee would be involved. At worse, this proposal would discourage people from coming forward and report corruption. Furthermore, the process would be time-consuming for the parliamentary committee to approve and represent corruption cases. Again, investigators would lose crucial time and provide the opportunity for evidence on corruption to be destroyed.
Thirdly, the appointment of the head of MCAC by the King on the Prime Minister’s advice would break the cardinal rule of independent countervailing actions against the government’s monopoly over decision-making. This provides an indirect leverage of control for the government over the MCAC activities – by recommending the appointment of its leader. The institutionalised nature of corruption means that the selected head of the MCAC would be expected to conform to the norms. Such high profile appointment should be based on merit scrutinised by independent organisations and/or civil societies.
Fourthly, the MCAC and the Attorney-General (AG) do not enjoy total independence when they have to report to the Prime Minister. This makes it impossible for the MCAC and the AG to prosecute ministers in the Prime Minister’s department/office. An appropriate structure would be a tightly audited system with checks and balances through a distributed control of power. The basic principle of anti-corruption strategy is to reduce asymmetric information in the proposed reporting structure, and raise accountability and transparency by a checks and balances system.
Fifthly, current laws on comprehensive protection for whistleblowers are ambiguous or the agency could certainly do a better job in communicating clearly the measures of protection provided for whistleblowers or even reward whistleblowers for coming forward to report corruption. For example, a committed government in fighting corruption could strengthen the incentive to inform on corrupt acts by a proven penalty system based on ‘prisoners dilemma,’ which encourages one or other party to break the deal, as corruption involves two or more people making a deal.
Finally, the Prime Minister had announced that the number of officers in the anti-corruption force would be increased substantially. As noted above, complexity creates a propitious environment for corruption. While increasing the number of workforce may help strengthen the agency, the need to implement measurable anti-corruption strategies, tougher bribery laws and strengthen our judicial system – still sit on the fence. The voters deserve an explanation. Also, the increase in the workforce suggests that the focus is on investigating escalating corrupt practices rather than introducing preventive measures.
On the whole, the restructured MCAC would provide further opportunities for corruption and fail the crucial test of independence. Recall that a corrupt institution tends to stay corrupt unless the leader of the institution begins in earnest to dismantle the concentration of power in the government, and subject ministers, senior officials, and government departments to both ex ante and ex posts checks on the use and allocation of public funds and resources. The ACA is administratively and structurally crippled or implicated by the institution in terms of its ability to conduct full and objective investigation into allegations of corruption at the highest levels of the government. The ACA’s past success records in prosecuting and punishing influential people at the top of the system would affirm this.
The crucial question is how this burden of institutions on the ACA be disentangled. This does not mean that the ACA should have a monopoly power; instead, the agency must be accountable and transparent, which can be achieved through distribution of power, and a checks and balances system. Realistically, to expect the Prime Minister of the country and its party components to eradicate corruption in the system is not an option. What about our country’s courts and legal systems? With the tarnished reputation of the judicial system and repeated failures to act and solve high profile corruption cases through the courts, it is evident that courts are also not autonomous and it remains impossible to solve corruption in a particularism context.
So, where do we turn to and what lessons can we draw from countries that had successfully fought corruption? It is important to recognise that anti-corruption instruments that work in one country would not necessarily apply to every country. Because corruption is highly politicised and institutionalised in Malaysia, histories suggest that clean governance cannot prevail in governments laden with corrupt institutions. It cannot be over-emphasized that anti-corruption legislation must be supported and upheld by an independent judiciary. For instance, legal mechanisms of anti-corruption would not work effectively without dismantling the essentials of particularism2. The prospect is daunting as honest citizens are fighting against an institutionally corrupt system or those who are on top. Let the truth be known that through perseverance and collective efforts in the fight against corruption our country, children and future generations would live in a better society. Research evidence has shown that per capita real income, business integrity and public sector integrity are positively interrelated3. A clean government leads to economic efficiency and in turn enhances national competitiveness.
Historically, a strong political opposition and civil society tend to promote the greatest stride forward in fighting graft. But the people must be aware that populist parties who jump on the slogan of anti-corruption have also in the past ended up to be as corrupt as their predecessors. What the people need is not rhetoric and constant bickering of personal issues from the government and opposition. The opposition must show leadership by pursuing justice and laying down the law to demonstrate to the people that they are accountable alternative governments. The good news is that the fight against corruption has parallels with greater modernization and democratisation process. Also, the lower the level of corruption, the more economically developed a country4.
Historically, in a society where corruption is the norm, small and incremental efforts would not work. Economists would attest to this as a locally stable equilibrium: small efforts to reduce corruption will be overcome by the incentives, which return the society to its initial pattern of behaviour5. After each failed attempt, it will appear that no strategy is effective and people will resort and conform to the norm. Is this how you feel in Malaysia? In order to dislodge the society from the local equilibrium of high corruption, history has shown there is a need for a massive coordinated effort that may at times look like civil war. As the history of democracy shows, civil wars are sometimes needed to advance the cause of accountable government.
Critically, when is the most appropriate timing in the fight against corruption? The obvious answer is not when we are content with our standards of living, law and order, public services and governments. The results of the recent general election will indicate that the majority of people have had enough of the ways national resources and public funds are being squandered and inappropriately allocated for personal gains. In fact, the recent price hikes in almost all basic commodities coupled with worsening crime rates, questionable credibility of some members of the government, and high inflationary pressures signal the best timing for turning against the forces of corruption. What are these forces and how do we deal with them? What anti-corruption strategy would be considered as a massive coordinated effort? I would welcome your thoughts while I take a breather and return to these questions in my next article.
1 Gatti, R. (1999) Corruption and trade tariffs, or a case for uniform tariffs, mimeo, Development Research Group, World Bank.
2 Bertram, I.S. (ed.) (2005) Fighting corruption in developing countries: strategies and analysis. Bloomfield, Conn: Kumarian Press.
3 See e.g.: Kang, C-K. & Lee, J-H. (2003) A new paradigm on strategy against corruption: an objective management by scientific evaluation. Journal of Korean Economic Development 9, Summer, 59-84. Lee, J-H. (2005) Business integrity, public sector integrity, income, and national competitiveness: a cross-country level analysis. Seoul Journal of Economics. Summer.
4 See e.g.: Huntington, S.P. (1968) Political order in changing societies. New Haven: Yale University Press. Choi, W-J. (2004) E-government and corruption: a cross-country survey. paper presented at the 4th international seminar on anti-corruption strategies in public and private sectors. Seoul Institute for Transparency, June.
5 Klitgaard, R. (1988) Controlling corruption. Berkeley: University of California Press.
