113TH INTERNATIONAL TRAINING COURSE VISITING EXPERTS’ PAPERS

INTERNATIONAL CASE STUDY : STAMPING OUT CORRUPTION IN MALAYSIA

Tunku Abdul Aziz*

I. PUTTING CORRUPTION IN A the efforts made to curb it. HISTORICAL CONTEXT When Malaya became independent in In 1957 when Malaya1 became 1957, it inherited a form of government independent, corruption was hardly an based on the Westminster model which, issue. Both British and Malayan officers with a few local adaptations, remains very maintained the highest standards of much in place. Of equal significance, it also integrity and the proud traditions of the inherited an economy based on British Malayan Civil Service and were, on the colonial mercantile interests, centred whole, incorruptible. They lived well almost exclusively on the export of rubber within their means. Ten years on, in 1967, and tin. Palm oil came a little later. the Government, sensing a gradual shift Malaya boasted the most efficient of attitude towards corrupt practices, an plantation economy in the world, so attitude that could be fairly described as efficient, in fact, that in the immediate ambivalent, felt constrained to create a post-war years, Malayan foreign exchange special bureau to combat corruption, the earnings enabled Britain to repay much of forerunner of today’s Anti-Corruption its American war debt. It was not for Agency. As you can see, the ACA has a nothing that Malaya was known as longer history than, for example, the ICAC Britain’s Dollar Arsenal. Economic of Hong Kong, arguably the most successful prosperity, by the standards of Asia, is corruption-busting organisation in the nothing new to Malaya or Malaysia, as it world today. It all goes to show that age is became later on. But it was a different kind not always everything in fighting of prosperity, an agriculture-based corruption. Political will is! economy, offering nothing like the opportunities on which corruption was able In my experience, it is impossible for us to thrive in the 1970s. to even begin to understand the impact of corruption on a country without our being As a result of the race riots in Kuala acquainted, however superficially, with Lumpur in 1969 between the Malays and that country’s social, economic and political the Chinese, the Government, recognising background. I make no apology, therefore, that economic disparity between the two for delving a little into Malaysia’s recent major races was at the heart of the tension, history, so that we may have a clearer idea decided that unless the politically of the causes of corruption in Malaysia and dominant, but economically deprived, * Vice-Chairman of the Board of Directors, Malays were brought into the mainstream Transparency International, Malaysia. of the nation’s modern economic life, 1 Malaya became Malaysia in 1963 following the prospects for lasting peace and economic merging of British North Borneo, Sarawak and prosperity would be greatly reduced. The Singapore with the Federation of Malaya. prescribed solution came in the form of Singapore was given independence by Malaysia in massive social and economic engineering, 1965. going under the somewhat grand name of

393 RESOURCE MATERIAL SERIES No. 56 the New Economic Policy or the NEP, for the closing years of the 1970s, corruption short. had become a factor of quite considerable significance in the national business A. Opportunities for Corruption equation. Unlimited The NEP was to be implemented over a Corruption and abuse of power had 30 year period. It ran into controversy from reached such unprecedented heights that day one, and was seen by Western liberals the normally staid The New Straits Times, as unwarranted discrimination against a Malaysia’s oldest English language section of the Malaysian population. Its newspaper, was moved to run an editorial motive, though, was wholly transparent; on the subject; it did not pretend to be anything other than positive discrimination, in the interest of “There was a time when a Malaysian national unity. could indulge in a little smile of condescension when stories about The Malaysian Government’s diagnosis corruption in developing countries - was spot on, and the prescribed remedy, other countries, of course-were painful and unpopular though it was, detailed. That pride was entirely produced the desired results. justified: virtually every aspect of Economically, the country took off, and with public administration was clean, it came political stability which Malaysia abuse of power was unheard of, continues to enjoy to this day. In less than departmental morale was high, 30 years, an agricultural economy was public confidence vibrant. Perhaps totally transformed, and, apart from a there was a tendency to take this state hiccup here and there, the country has not of affairs for granted. For whatever looked back. The lesson that Malaysia reason, the present conditions have recognised, and learnt quickly, was that in called forth a litany of exhortation a multi-racial and multi-cultural society, from the various rulers, the Prime extreme economic disparities along racial Minister, his deputy, and a number lines, if neglected, could and would quickly of ministers and departmental create political and social instability, to the heads.” detriment of the democratic values we profess to uphold and cherish. Malaysia had taken the first eager step on the slippery slope of national While the NEP has generally been degradation. successful in meeting nearly all of its main social and economic objectives, the creation II. GOVERNMENT ANTI- of dozens of public enterprises to CORRUPTION MEASURES implement hundreds of socio-economic A. The Early Years measures (enjoying wide discretionary As mentioned earlier, the Anti- powers) produced some not totally Corruption Agency was set up in 1967. Its unexpected results. As with most main function was to combat corruption, government-inspired initiatives anywhere previously handled by the police. It was in the world, more often than not operating thought that with the growing without the benefit of effective central sophistication of the economy, specialists coordination, they soon create enormous were required to deal with white-collar problems of their own; the most pervasive crimes, including corruption. In the initial was corruption, both grand and petty. In

394 113TH INTERNATIONAL TRAINING COURSE VISITING EXPERTS’ PAPERS years, the ACA, with full government vital information.” backing, notched several notable successes, including the prosecution and conviction of I have quoted Harun Hashim at some several political leaders and senior civil length because there are important lessons servants. to be learnt from his pioneering work. The most important lesson is that combating Harun Hashim, the first Director of the corruption requires public support and ACA, and arguably the most effective in a cultivating public confidence in the system long line of dedicated officers, recalled is crucially important. This involves, recently that his first duty was to know the among other things, guaranteeing an extent of corruption in the country - what, informer that their anonymity will not be where and who. Let him tell us what he compromised, and they will not be did in his own words; victimised. Every scrap of information is important, nothing should be consigned to “Initially, pleas for information on the waste paper basket without checking corruption from the public, with the out and verifying the information given. As assurance that their identities would the saying goes, “nothing succeeds like be kept a secret, did not meet with success”, and nothing is more encouraging much response. The people were to the public than a few successful afraid of being victimised by the very prosecutions. The ACA, under Harun people they had bribed. Bribery is a Hashim, was perceived to be free to act. secret transaction between two The fact that he also had the power of a individuals and if the secret is not deputy public prosecutor was not lost on kept, it must have been revealed by the corrupt. the giver. Victimisation is a natural consequence. But I had to know. So I B. Methods of Stamping Out established P.O Box 6000. The public Corruption in Malaysia were invited to write to me on In the 1970s, when the NEP was anything they knew about corruption installed, the Government intervened in government, or by any of its actively in economic activities, setting up servants, without having to disclose large numbers of agencies to regulate and their identity if they did not want to. control every aspect of commercial and Postage was free. The response was industrial life. Licensing, in particular, was tremendous. Sometimes I received the key instrument used to enforce the new about 200 letters in a single day from requirements of the NEP. It is said that all over the country. I read them all. the British invented the red tape and the I was then able to implement a plan Indians subsequently improved it by tying of action of instituting measures to it up in knots. The Malays, ever prevent corruption (the primary resourceful, turned it into a profitable objective of the Agency) and where personal revenue service. there was sufficient evidence, to sanction criminal prosecutions. The Without naming names, the public would not have kept writing to departments of government that exploited the Agency if they did not see any the opportunities presented to them by the result. Indeed the Agency could not need to obtain various approvals before a have functioned without the manufacturing license was granted, were assistance rendered by the thousands those with powers to grant or withhold of anonymous letter writers who gave specific approvals. The approval process

395 RESOURCE MATERIAL SERIES No. 56 was complicated and extremely time public servants (a recent Hong Kong based consuming. Several departments were survey put Malaysia just behind Hong involved and many businessmen were Kong and Singapore in a public service forced by circumstances to oil the wheels efficiency poll. The comparison of two tiny of bureaucracy. I speak from personal city states with vastly different problems, experience as a former businessman of the is not, in my view, strictly valid. Malaysia procedures involved, though not, is placed ahead of Japan, Taiwan and mercifully, of having to bribe anyone. South Korea in terms of efficiency). Foreign investments soon dried up, and the Government, recognising the need to In 1993, the Public Officers (Conduct reduce opportunities for corrupt practices, and Discipline) Regulations came into streamlined the procedures and introduced force. Disciplinary Board Regulations were what came to be known as a one stop introduced. In December 1994, the Judges’ approving authority. The new system Code of Ethics was put in place, followed worked like magic; foreign, as well as local in 1995 by the adoption of Ethics in the investments, poured in and, the rest, as Administration of the Institution of His they say, is history. Majesty the King. The recently retired head of the Anti-Corruption Agency, Dato’ In time, various administrative reforms Shafee Bin Yahaya, believes that “all these were put in place to improve civil service measures have made the Malaysian Civil discipline. Among the more visible ones: Service more efficient and less prone to corruption. This has definitely contributed (i) Clocking-in and clocking-out, towards Malaysia’s high rate of growth in involving every member of the civil the last eight to nine years.” service, the police, the armed forces and members of the cabinet, III. FURTHER MEASURES including the Prime Minister. Even AGAINST ABUSE OF AUTHORITY & judges are not exempt. FINANCIAL MISMANAGEMENT As early as 1988, the government (ii) The wearing of name tags by civil recognised the need for a high-level servants so that they can be national body to address weaknesses in identified. public service financial administration. For this purpose, a Special Cabinet (iii) The introduction and improvement Committee on Government Management of the desk file and office procedures was set up under the chairmanship of the manuals. Minister of Finance. Matters highlighted by the Auditor-General, the Anti- These measures were intended to Corruption Agency and the Treasury, are improve time management, accountability given serious attention, and remedial and facilitate work and decision-making action taken. Compliance by heads of processes. Subsequently, other departments is crucial to the success of the innovations, including quality control Committee’s work. Creative switching circles, total quality management, clients’ from one expenditure head to another goes charter, and more recently, the ISO 9000 on all the time, and eternal vigilance is the were introduced. While the emphasis has name of the game as far as the Committee been on making the civil service more is concerned. efficient, attention has also been given to improving the conduct and discipline of

396 113TH INTERNATIONAL TRAINING COURSE VISITING EXPERTS’ PAPERS

In Malaysia, members of the public who General, ACA, August 1997. are aggrieved by bureaucratic misconduct may take their complaints to the Public IV. INTEGRITY - A NEW FOCUS Complaints Bureau or PCB. The PCB A. New Legal Framework & Greater comprises of the Director-General of the Resources Public Services Department, the Director- In April 1997, the Government took General of the Anti-Corruption Agency, the another important step to develop and Senior Secretary-General of the Prime strengthen its own integrity system by Minister’s Department and the Director- setting up a high-powered Cabinet General of the Malaysian Administrative Committee on Integrity in Government Modernisation and Management Planning Management. It is significant that the Unit. The PCB is responsible to the Chief Government has chosen to embrace Secretary of the Government, the country’s integrity, a word first used widely in the top civil servant. To date, more than 70% context of good governance when TI started of the complaints received have been to be active in Malaysia with a series of successfully resolved. integrity seminars, as part of its anti- corruption public awareness programme. A. Conflicts of Interest in the Public Coalition building is TI’s strong point; Service working with individuals, civil society and The Federal Constitution prohibits a organisations, both government as well as member of the Executive Council from the private sector, fighting the same battle. engaging or taking part in any decision of In Malaysia, we have been able to develop the Executive Council respecting any trade, an active, and effective, professional business or profession which may have a relationship with the Anti-Corruption bearing on their pecuniary interests. Agency. Members of the Administration and Public Officers who abuse their position in order To give practical effect to public concerns to obtain financial or other advantages will about the damage caused by corruption to be subject to criminal proceedings, as national life and prestige, the Government provided under the Emergency (Essential passed the Prevention of Corruption Act Powers) Ordinance No. 22/70. The 1997, the most important weapon in the Ordinance has been enacted “to widen the Government’s legal arsenal with which to campaign against bribery and corruption, deal with the new, more sophisticated and now makes a penal offence any practice forms of corruption the country was facing. that comes within the definition of corrupt For the first time, the ACA was given wider practice in the Ordinance, which previously investigative powers. Other features new would have escaped the net of the Penal to the corruption-busting scene are: Code”, Mr. Justice Chang Min Tat in a Federal Court ruling. In practice, the (i) Minimum of 14 days mandatory Ordinance has proved to be an important imprisonment and a ten thousand instrument in preventing corrupt practices ringgit fine or 5 times the amount or among members of the Administration, value of the bribe received, whichever Members of Parliament, both State and is the higher. Federal, as well as public officers. “Over the years, the Anti-Corruption Agency has (ii) Requiring a suspect to explain how been fairly successful in taking action s/he has acquired their assets to the against the corrupt practices of public satisfaction of the Public Prosecutor. officers and politicians....”, Director

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If s/he fails to do so, s/he will be more inclined... to come forward to give presumed to have acquired their information on corruption and other wealth by corrupt means. The court malpractices when their identities are may order forfeiture of the assets in concealed and protected.” such circumstances. The relevant provision in the Act states: As part of its ongoing “cleaning up” process, the government has established, “Except as hereinafter provided, no in departments and agencies in a position complaint as to an offence under this to engage in corruption, a departmental Act or any prescribed offence shall be Committee on Integrity, Quality and admitted in evidence in any civil or Productivity. Quite apart from improving criminal proceeding whatsoever, and efficiency and transparency, the inculcation no witness shall be obliged or of “high moral values and good work ethics” permitted to disclose the name or is an important element in preventing address of any informer, or state any corruption in the public service. The ACA matter which might lead to his has been revamped. Its functions have discovery.” been expanded, and it is now required to: I have taken you through a maze of (i) Examine the practices, systems and methods, measures and legislation which procedures of public bodies in order have been put in place to minimise to facilitate the detection and opportunities for corruption in my country. discovery of corrupt practices and to You may well ask, at this juncture, how secure such further improvements as effective the various measures have been to make it difficult for corruption to in stamping out corruption in Malaysia? rear its ugly head. V. CONCLUDING REMARKS (ii) Instruct, advise and assist any The measures I have described, person, upon request, on ways in unfortunately, have not succeeded in which corruption can be prevented. stamping out corruption. No anti- corruption measures known to man, and (iii)E ducate the public against no country in the world, can claim to have corruption. succeeded in stamping out corruption. All that we can hope to do is contain it, and (iv) Enlist and foster public support in make corruption a risky and an combating corruption. unprofitable business. The ACA is committed to working in That is precisely what Malaysia has partnership with civil society, and is been doing since the ACA was first prepared to ensure, under the law, that established in 1967. The seriousness with members of the public reporting corruption which the Government views corruption is cases, are protected against victimisation. evident in the range of legal and In this context, the Director-General has administrative measures and resources said “Through public support, cases of that it has put at the disposal of the ACA. corruption could be brought to light, the The political will is apparently there, but perpetrators prosecuted, and punishment it is important for the Government to meted out accordingly. The ACA also accept that corruption is not just about believes that members of the public will be

398 113TH INTERNATIONAL TRAINING COURSE VISITING EXPERTS’ PAPERS bribery; corruption is about the abuse of entrusted power for personal profit, a definition widely used by Transparency International. Corruption thrives in the absence of transparency and accountability. A grave shortcoming in the Malaysian anti- corruption mechanism is that the ACA is not an independent commission. It is a government agency, and members of the public suspect its impartiality, reporting as it does to the Prime Minister.

Happily, for the present at any rate, the Government has taken to heart the lessons of good governance, and the days of crony capitalism, the misuse of public funds for rescue operations of politically connected corporations and negotiated contracts are numbered. Malaysia, therefore, remains a good place in which to do business precisely because corruption, unlike in many countries, is not a major factor in our business equation.

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