Malaysia PM’s fund scandal clouds anti-corruption summit

Ayee Macaraig
Malaysia PM’s fund scandal clouds anti-corruption summit
The pressure for Prime Minister Najib Razak to account for a state investment fund scandal builds as Malaysia hosts the world's top anti-corruption conference this week

PUTRAJAYA, Malaysia – The Wolf of Wall Street Journal. Lord of the Ringgits: The Fellowship of 1MDB. Bad Man: The Debt Knight Rises. 

Malaysian Prime Minister Najib Razak has been the butt of jokes and memes since the Wall Street Journal reported in June that the state investment fund indirectly supported his 2013 election campaign. As more allegations of graft in the so-called 1MDB scandal surfaced, humor turned to anger and drove Malaysians to the streets this weekend to demand that Najib step down. 

The pressure for the embattled leader to explain how $700 million from the fund supposedly went to his bank accounts builds as Malaysia hosts the world’s largest anti-corruption conference on September 2 to 4. In a twist of irony, Malaysia’s urbane, British-educated premier was listed as keynote speaker but he suddenly backed out without any explanation. 

“[The conference] should go on as scheduled as Malaysia would be presenting a perfect and rare counter case study why the theme of ‘Ending Impunity: People, Integrity and Action’ is so difficult or even impossible to achieve,” said Lim Kit Siang, the opposition Democratic Action Party’s parliamentary leader, in a blog post reeking with sarcasm. 

Still, the gathering of 1,000 anti-corruption advocates does not just push Malaysia’s leadership to confront its worst crisis but also provides an opportunity for Southeast Asian nations to exchange lessons and best practices in a region with high levels of corruption. 

NETIZENS' TARGET. Malaysian Prime Minister Najib Razak's alleged involvement in the 1MDB scandal sparked a series of memes, with netizens using movies to deride the premier.

‘It’s about institutions’

The Berlin-based Transparency International (TI) chose Malaysia’s political capital of Putrajaya as host of the 16th International Anti-Corruption Conference (IACC). The bi-annual summit brings together government, private sector, and civil society representatives from over 130 countries to swap expertise and experience. 

In many ways, the controversy surrounding Malaysia’s debt-ridden 1Malaysia Development Berhad (1MDB) illustrates the conference’s emphasis on the need for strong, independent institutions probing corruption, and transparency in state funds and political party financing. 

Initially meant to spur Malaysia’s transition to a high-income economy, 1MDB allegedly overpaid for the purchase of power assets, and its funds went missing in complex overseas transactions. 1MDB was Najib’s brainchild, and he heads its advisory board as Malaysia’s finance minister. 

At the eye of a political storm, Najib sacked or reassigned officials investigating the scandal, and shuffled his Cabinet to weed out critical voices. He also blocked websites and suspended newspapers that reported on the fund, and the ties binding him to it. 

He and his ministers said that the money transfers were “political donations” from an unnamed Middle Eastern benefactor, with no further details on what happened to the funds. 

The scandal threw into uncertainty this Muslim-majority nation of 30 million, pitting Najib against his loudest critic and ex-mentor, former Prime Minister Mahathir Mohamad. Worries that 1MDB will collapse or need a bailout contributed to the slide of the ringgit to 17-year-lows, making it Asia’s worst-performing currency this year. 

BERSIH 4. Malaysians gather for a two-day demonstration this weekend to demand Prime Minister Najib Razak’s resignation and electoral reforms in Kuala Lumpur. The protest was organised by the Bersih movement, the Malay word for ‘clean.’ Photo by Mohd Rasfan/AFP

TI urged Malaysia to reform structures posing “clear conflicts of interest” in a set-up where the attorney-general is both government legal adviser, and decision-maker in investigating cases. The prime minister helps appoint members of a commission that select judges, while the anti-corruption body lacks independence. 

There, too, is the issue of cross-border corruption as Switzerland investigates alleged money laundering, and Singapore froze bank accounts related to the 1MDB probe. 

Beyond Malaysia and political corruption, the IACC shows the depth and sophistication of global corruption. There are sessions on stolen asset recovery, “sextortion,” the post-2015 development goals, why Prada’s falling profit is linked to China’s corruption crackdown, and the role of philanthro-journalism, ICTs and open data in eliminating the corruption scourge. 

On the agenda is corruption in sectors ranging from the judiciary, defense, police to wildlife trafficking. There are cross-sectoral transparency initiatives to speak on public construction, fisheries, garments and the climate. 

ASEAN anti-corruption body? 

Alongside the G20 and the Open Government Partnership, the conference highlights the need for cooperation in global bodies like the 10-member Association of Southeast Asian Nations (ASEAN). 

The region home to fragile democracies and emerging markets continues to grapple with corruption. In TI’s 2014 Corruption Perception Index, 9 ASEAN countries scored an average of 38 out of 100 in a scale where 0 is highly corrupt and 100 is very clean. Only Singapore and Malaysia scored above 50. The Philippines and Thailand followed with a score of 38. 

The police, political parties, public officials, judiciary and parliament were the institutions seen as most corrupt in ASEAN, based on another TI survey in 2013. Almost 50% of ASEAN respondents said corruption increased while only a third said their government’s efforts to fight corruption were effective. 

TI identified 3 key areas for transparency in Southeast Asia: whistleblower protection laws, asset declaration, and access to information laws. Only Indonesia and Thailand have a Freedom of Information (FOI) law, a measure Filipino transparency advocates recently proclaimed “dead” with the lack of political will from the Philippine president and Congress. 

As the region moves toward integration this year with the ASEAN Economic Community, the global watchdog is pushing for a regional body to fast-track anti-corruption policy measures. 

Called the ASEAN Integrity Community, the body is envisioned to ensure that regional integration does not worsen corruption.

“There are regional concerns but also regional initiatives to have a synergy in fighting private and public corruption. We can expect collaboration for increased impact given the new challenges that come with ASEAN economic integration,” TI-Philippines Executive Director Cleo Calimbahin told Rappler. 

Calimbahin will participate in the conference, along with Filipino speakers Transparency and Accountability Network’s Vince Lazatin on transparency in the construction sector, and Occidental Mindoro municipal mayor Eric Constantino on accountable local governments.

‘Creative ways for reform’ 

Malaysia’s neighbors wage their own battles with impunity for corruption. 

The Philippines seeks to sustain gains from what local pollsters call “record lows” in graft under the Aquino government. Yet it also deals with setbacks like the Supreme Court decision allowing the release of Senator Juan Ponce Enrile on humanitarian grounds despite facing a plunder charge. 

Indonesia saw this year a renewed clash between its police force, and its vaunted anti-corruption agency KPK, sparking criticism of President Joko Widodo. Public outcry against political interference weighed in favor of the multi-awarded KPK, now in a crucial search for new commissioners. 

Calimbahin said it is this wealth of international experience that delegates will benefit from in the IACC. 

“We would like to see convergence and synergy of efforts. But we also stand to gain from the creative ways institutions and systems were reformed in other countries,” she said. 

In a break from IACC tradition, Malaysia’s head of state will not be among those talking reforms. 

Yet the beleaguered Najib’s absence and silence offer no shield from scrutiny, be it from the global anti-corruption community, enraged protesters, or witty netizens cooking up the sequel to “Crouching PM, Hidden RM.” – 

Rappler multimedia reporter Ayee Macaraig was chosen to be part of the Young Journalists Initiative of the IACC. She is in Malaysia to cover the anti-corruption conference of Transparency International. 

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